This is a first: we are pulling a comment and posting it as a blog post, because it is so right on. The author, Dormand Long, brings up another point on why it’s good for Texas to keep our housing affordable: how can Millennials pay $800K for a house when they have $300K in student loans to pay off? That, by the way, would just be for four years of med school. Dormand Long is a retired Dallas commercial lending executive. In 2011, Dormand turned a dispute with his credit report into a national crusade to end the practice of classifying home equity loans as an installment loan rather than a real estate loan. Tons of installment loans can harm credit reports. He says that despite our screwy politics, the Young Turks like the way Texas living makes their numbers work:
This economist’s projection would have been very valid in the near depression years of the mid-80s when
12 of the 13 Texas based bank holding companies failed after Saudi manipulation of global oil prices ( see documentation in “Twilight in the Desert” by Matt Simmons, whose work papers were endorsed by Nobel Laureate Richard Smiley of Rice University) .
At that point in time Dallas had a significant portion of jobs that were oil patch related.
Currently, the job market in Dallas has vastly fewer jobs in the mining/extraction industry. Houston is in that market up to their adam’s apples, and last year the average oil patch driven job paid over $200,000 in Houston.
With all of the corporate headquarters relocations that are coming to DFW to escape fiscal irresponsibility in Illinois, Connecticut, New York, New Jersey and California, there will be demand pull inflation prompting a rise in home prices.
As the very best companies absolutely have to recruit the creative class innovators, they have to mitigate the impact of these Young Turks having to service their student loan indebtedness, which is frequently in the lower mid six figures for both spouses combined. It is hard to pay $800,000 for a home if you have $300,000 in student loans to service.
If you have to pay city and state income tax and if your taxes become non-deductible due to the vagaries of the Alternative Minimum Tax, Texas begins to look good, even with the weirdos that have taken over in the Texas Legislature. You just hold your nose and move there to be able to attract the creative class individuals who are capable of rendering your competitors inventory, plant and equipment and intellectual property obsolete with one single elegant innovative step.
Having two of the major airlines headquartered here enables those young Turks to fly out to solve problems and still get home in time to see their kids soccer games, piano recital, Hamlet play or swim meet.
You cannot do that from either the East or West Coast.
As long as the State of Illinois cannot even pay their lottery winners, there will be companies bailing out of that state, particularly as Moody’s has downgraded Chicago’s debt to junk level.
Let’s just hope that Moody’s does not look too close at those illiquid investments in the Dallas Police and Fire Rescue Pension Fund. That is a crisis that is ready to blow.
