Once a separate nation, Texas has recently been behaving more like an independent economic republic than a regular state. While it hasn’t been immune to the problems plaguing the nation, the Texas housing market, employment rate, and overall economic growth are relatively strong. Chalk some of this up to accidents of geology and geography. But Texan prosperity also reflects the conscious efforts of a once-parochial place to embrace globalization.
On several measures of economic stress, Texas is doing quite well. The state unemployment rate is 8.2 percent—high, but still one many states would envy. (California’s is 12.5 percent; Michigan’s is 14.1 percent.) It entered recession later than the rest of the country—Texas was adding jobs through August 2008—and started slowly adding jobs again last fall, thanks mostly to its great position in the largely recession-proof energy industry.
The Texas housing market also has fared better than many. The mortgage delinquency rate (the portion of borrowers three months behind on payments) is 5.78 percent, compared with 8.78 nationwide, according to First American CoreLogic. That’s partly because relaxed zoning codes and abundant land kept both price appreciation and speculation down. “House prices didn’t experience a bubble in the same way as the rest of the nation,” said Anil Kumar, senior economist at the Federal Reserve Bank of Dallas. But it’s also because of two attributes not commonly associated with the Longhorn State: financial restraint and comparatively strong regulation. Unlike many of its neighbors, Texas has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes. The upshot: Dallas housing prices have fallen only 7 percent from their 2007 peak, according to the Case-Shiller index.