What does a population boom mean for Texas housing and infrastructure?

Texas is now home to 30 million people, a population record shared with only one other U.S. state: California. What does the influx of new residents mean for the state’s resources?

By Glorie MartinezJanuary 10, 2023 10:45 am,

Texas leads the nation in population growth, according to new data from the U.S. Census Bureau. The Lone Star State is now home to 30 million people, adding roughly half a million new residents since the summer of 2021. About half of that growth came from domestic migration from other states in the U.S. 

What does the population boom mean for Texas’ resources and infrastructure? To answer that question, the Standard spoke with Jake Wegmann, an associate professor at the University of Texas at Austin’s School of Architecture, and Pia Orrenius, vice president and senior economist at the Federal Reserve Bank of Dallas. Listen to the story above or read the transcript below.

This transcript has been lightly edited for clarity. 

Texas Standard: Let’s talk about the large influx of new residents over the past several years. In terms of demographics, who seems to be moving here and why? What’s the big motivating factor? 

Pia Orrenius: Everyone who’s coming in has a much higher education, on average, than the native Texans. They’re a very significant boost to educational attainment in the state. They come into the STEM fields, corporate management, finance — occupations where we have a relative deficit in the state. 

The big motivating factor is the economy. When we observed domestic migration to Texas, most people moved here for jobs. That stands in contrast to other states like Florida, where they move to retire. At the same time as they come when the economy is doing well, they also reinforce that economic growth by moving here. So, it’s sort of a virtuous cycle. 

Jake, what are the biggest challenges this rapid population growth poses for Texas? 

Jake Wegmann: At the top of my list would be the big run up in housing costs. We’ve seen that around the country, but it’s been especially fast in Texas. Above all, in Austin. This was once one of the cheapest places to live in the country. Now, that’s a little bit less true than it used to be. 

Pia, when you factor in those housing costs, is the magnet of jobs going to continue to be a major factor in driving migration to Texas? Or could we start to see a boomerang effect? 

Pia Orrenius: What Jake is saying is very true, in the sense that we’re not as sort of affordable as we used to be. In fact, by some measures, we’re less affordable now than the national average, because of the run up in housing costs, especially in Dallas and Austin. There’s definitely some growing pains to the population growth and to the in-migration. People were moving here because it was very affordable 10 or 20 years ago. That’s going to be less of a draw going forward. 

Jake, is this largely something that local leaders are responsible for in terms of coming up with prescriptions to address the problem? Is this a statewide problem? How can we best address this issue of the sharp spike in housing costs? 

Jake Wegmann: Both have a role to play. A big factor is that cities are riddled with rules that make it unnecessarily difficult and expensive to build housing. That didn’t get much attention in the past because we just thought, “well, we’re Texas, you know, we’re very lightly regulated. It’s really easy to build housing here.” We’re finding that’s actually not as true as we thought. There’s a lot of improvement that could be made.

The legislature is getting ready to begin its session. Any advice for lawmakers looking at how to deal with this issue of rising prices and a housing shortage? 

Jake Wegmann: To be sure, there are certain things that the state can’t do anything about. Like high interest rates, for example. But there definitely are things they could do something about. Let me give just one little example. There’s something called a valid petition law, which basically lets neighbors stop development projects near them, or at least makes it a lot easier for them to do it. The state could get rid of that. Lots of other states don’t have that. So, there definitely are things the legislature could do.

Pia, I want to move into this transportation issue. It seems like that always takes a backseat to other considerations when folks are coming to Texas. Could this end up strangling a lot of the growth that we’ve been seeing here in Texas? 

Pia Orrenius: We’ve already seen some examples of it strangling some growth and forcing up the cost of living even higher than they would otherwise be. I think the Austin area is an example of that. I want to keep it in perspective, though, because Texas in general is pretty pro-growth, in terms of regulations regarding the economy, but also with infrastructure, with water and other utilities, and with housing. I mean, we do build a lot. We are typically the number one state in terms of building per capita — both single family housing and multifamily housing. 

We also do a lot of toll roads and private-public collaboration on infrastructure. So, it is a very pro-growth state. But I think it’s telling that despite that, we’re not keeping up with demand in terms of so many people migrating here. 

That sounds like this is going to mean a push toward more roads, more construction… more of those sorts of projects.

Pia Orrenius: Absolutely. I think we’re still on that trajectory. It should slow some, though, because the outlook for the demography — not just of Texas, but of the nation going forward — is for aging of the labor force and slower growth of the workforce. I think it’s going to slow economic growth in general and it’s going to slow migration. So, I think we’re looking forward at a little bit slower trend growth in the future than we’ve seen in the recent past. Given that, I think that’ll take some pressure off of the infrastructure.

Going into December, there was only one state in the nation that had more than 30 million people. That was California. As we wrapped up December, we learned that is not true anymore. Texas has now reached that psychologically-significant 30 million person level. Is there a point at which Texas should be pulling back on a pro-growth philosophy when it comes to the state? Jake, do you have any thoughts on that? 

Jake Wegmann: I’m pro-growth all the way, personally. Growth creates a lot of problems. But if you think that growth has a lot of problems, try not growing. That’s how I look at it. Crossing that 30 million threshold, it’s just psychological. But I think it is a good reminder that the state needs to act like it. We’re not a rural state anymore. We’re a heavily urbanized state. Pia is absolutely right that the state’s investing in a lot of highway infrastructure. 

But, right next door, New Mexico is a tiny state that has a successful commuter rail system connecting Santa Fe and Albuquerque. Meanwhile here in Austin and San Antonio, with three times the population of all of New Mexico combined, we don’t have anything like that. I think the state needs to consider ways to further support this massive growth that’s happening here. 

Pia, what does 30 million mean to you?

Pia Orrenius: Well, 30 million to me is mostly a problem, because everybody is going to the same places. I think more than half of Texas counties haven’t grown at all in terms of population. So, what ideas can we come up with, especially now that we can work from home? Is there a way that we can come up with incentives for people to move to medium-sized cities, to move to small cities, to move to rural counties, where the housing costs and living costs are still low and there’s still lots and lots of space? 

I bet that could be a driving vision for the future, instead of packing everybody into Dallas, Austin and Houston. It would be nice to diversify the locations where people are settling. That could spread some of the byproducts of this growth far and wide. 

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