Why is Texas so cheap to live in 2023? Also, why are houses so cheap in Texas? We uncover and explain the real reasons behind Texas’ strong affordability.
To determine what continues to drive the low cost of living in Texas these days, we had to look at all the angles. That includes evaluating the reasons that are more transparent, including things like housing and the cost of goods, but also digging a bit deeper to understand the full infrastructure and economy of Texas.
Texas is a unique state in our nation and has greatly benefited from its physical location as well as its state legislation to make it what it is today.
Let’s take an in-depth look to answer the questions of “why is Texas so cheap?” and “why are houses in Texas so cheap?”
Table of Contents
Why is Texas so Cheap – Background Research
Before we start our list of the reasons why Texas is so cheap, we want to note that “cheap” is a relative term and that every city in Texas is not really the same.
There are still expensive places to live across the state, both in relative and absolute terms.
But, if you compare its cost of living to popular places like California or New York, then it will be clear that Texas is more affordable.
Still, there are places in the US (and the rest of the world) that are even cheaper than Texas.
Therefore, for the purpose of this article, we refer to the “cheapness” of Texas as a relative term compared to other large states in the US that offer similar amenities and quality of life.
1. Why is Texas so Cheap? Houses are Inexpensive to Build
The major reason why Texas is so cheap is because houses can be constructed at a low cost in Texas. But, why are houses so cheap in Texas then?
First, it is due to the type of land in Texas. The Lone Star State is mostly flat land with almost no large mountains or rough terrain for developers to contend with.
Also, Texas is huge. It is the 2nd largest state behind Alaska in terms of area, with roughly 270 million square miles of land. That is more than Montana and Arizona combined.
Therefore, developers can buy up cheap plots since there is so much supply of buildable land and construct in virtually every direction away from a core city.
Texas’ zoning laws are also quite lax and generally encourage development rather than restrict the type of buildings that are being constructed.
Since space is not an issue, the premium that a location usually commands gets diluted.
Not only is the land cheap, but the labor is as well. Why are houses in Texas so cheap to physically construct then? That is due to another supply and demand issue. Texas attracts many low-wage workers, including immigrant labor, which helps lower the cost of labor.
The state has been able to rely on these types of workers due to the relatively weak labor laws that help protect workers. Therefore, cheap work remains plentiful.
Finally, the cost of raw materials in Texas is a bit lower than in the rest of the nation. Texas can source many of its own building materials in-state from quarries, sawmills and cement producers. There are less costs for transportation since it is all close by.
Similarly, the cost for energy is lower in Texas, which we will cover later, so transportation costs are lower overall as well.
2. Why is Texas so Cheap? Tax Friendly for Individuals and Companies
Another major reason why Texas is so cheap is because of its low tax structure.
Texas is one of only nine states in the US that does not charge a state income tax on its residents.
It also has quite favorable corporate tax rates, which may allow companies to charge less for the same profits.
As the 2nd largest economy in the US behind California, Texas’ tax-friendly environment also attracts many businesses, which in turn pumps more money into the state and helps improve wages overall.
As a result of these higher earnings, residents can get more bang for their buck as well.
3. Why is Texas so Cheap? Texas’ Thriving Oil and Gas Industry
Texas is the king when it comes to energy production in the US.
The state’s strategic location next to the Gulf of Mexico, along with the natural resources located within its borders, allows Texas to produce a lot of oil.
It produces over 5 million barrels of oil per day, which represents almost half of the nation’s total output.
In the energy industry, the cost to transport oil and gas is usually about 10% to 20% of the total cost per barrel. Since it is all originating within Texas, the cost to transport to customers within Texas is quite cheap.
Therefore, gas stations, restaurants, office buildings, and homes all benefit from having access to cheaper fuel compared to the rest of the nation.
Cheaper gas makes the rest of life cheaper in almost every aspect. As we mentioned above, cheaper fuel allows the transport of building materials to be lower and, therefore, the finished product to be lower in cost.
The cost to ship other types of products, including food, automobiles, electronics, clothing, and furniture, is also lower, which allows the producer to pass the savings onto the end-users.
Ultimately, that helps to make the overall cost of living lower, which we will now detail further.
4. Why is Texas so Cheap? Cost of Living is Lower
The cost of all major consumer goods is generally lower in Texas. How are they able to achieve this?
Let’s look at food as an example. Groceries are a bit cheaper in Texas because the state has lots of land and farmers who are able to locally raise a lot of the food that ends up on the shelves.
Since the food doesn’t have to be transported long distances, producers can save on shipping costs and can pass these savings on to the consumer.
Also, restaurants can buy this cheaper supply of locally-grown food to put on their menus. Restaurants also benefit from our first point about housing since all types of properties are relatively cheaper.
Therefore, restaurants don’t have to pay as much rent or pay as much to own their building, so they don’t have to raise their prices to cover their overhead.
As we noted above, the cost of energy is also lower for all consumers and businesses.
When you add up all of these savings, Texas comes out to be about 5% to 10% cheaper than the US average.
Why is Texas so Cheap? – Summary
As you can see, there are four major reasons why Texas remains so affordable even in 2023. The state was lucky to be located where it is, but also took proactive measures to promote a lower cost lifestyle with less administrative burdens.
If you are looking to move to a lower cost state, then Texas should surely be one of the places that you put on your shortlist.
But, be wary of the consequences that may come with these perceived benefits. Less government interference and lower taxes may be good for your wallet, but may not be so great if you require support or assistance for other things, such as healthcare, education, or safety.
Still, we think that Texas is a great place to eventually call home. If you are interested in the top cities, check out this list of the best places to live in the Lone Star State.
Frequently Asked Questions
Why are Houses so Cheap in Texas?
Houses are so inexpensive in Texas primarily due to the high supply of land, which in turn means there is less demand and lower costs, along with lower input costs for labor, building materials, and transportation.
FAQs
Why is Texas so cheap to live? ›
There are plenty of building supplies available for new homes. The cost of living is affordable, the state has low tax rates, and it has a strong economy. These reasons and more make Texas a cheap state and a great place to live. What is this?
Is it actually cheaper to live in Texas? ›Food and transportation costs are both about 9 percent lower than the national average, and healthcare is 5 percent lower. Collectively, the cost of living in Texas is 8 percent lower than the national average. While it conjures up images of prairies and oil fields, Texas is actually home to some appealing cities.
Why is Texas gas so cheap? ›Why is gas cheap in Texas? There are two basic reasons why gas is cheap in Texas – low fuel taxes and proximity to major oil refineries. Texas doesn't just produce a huge part of the nation's oil. It also has far more refining capacity than any other state.
Is Texas good for living? ›Warm and tax-friendly, living in Texas is a great idea. With many diverse cities and endless job opportunities, Texas is a popular destination for young professionals, families, and retirees. Compared to living in Florida, Texas is slightly cheaper and just as warm as the sunshine state.
How much money do I need to live comfortably in Texas? ›With that in mind, a good salary in Texas is between $55K and $73K. To live comfortably anywhere, it helps to track your spending and saving with SoFi Insights. The free budget app also provides credit score monitoring.
Where in Texas is it cheapest to live? ›- Breckenridge. The cheapest place to live in Texas is Breckenridge. ...
- Beaumont. The second cheapest city in Texas is Beaumont. ...
- Wichita Falls. Located in north-central Texas, Wichita Falls is a cheap destination for nature lovers. ...
- Harlingen. ...
- Texarkana. ...
- Abilene. ...
- Amarillo. ...
- Odessa.
Though Texas has no state-level personal income tax, it does levy relatively high consumption and property taxes on residents to make up the difference. Ultimately, it has a higher effective state and local tax rate for a median U.S. household at 12.73% than California's 8.97%, according to a new report from WalletHub.
What are 3 benefits of living in Texas? ›Some of the most significant advantages of moving to Texas include highly affordable cost of living, tax free income, delicious and vast cuisine, diverse cities, rich history, and varied career opportunities. It also boasts some of the biggest oil reserves, the NASA space center, and other world-famous attractions.
Why do people move to Texas? ›Cost of living
One of the main reasons why people are moving to Texas is that the cost of living is much more affordable compared to expensive coastal states. In Texas, the average cost of living is 8% lower than the national average.
Texas is a popular destination for working families and retirees for a variety of reasons. Some common motivations include the warm climate, no income tax and plenty of employment opportunities.
Is Texas a safest place to live? ›
In fact, four out of the top five safest cities in the U.S. are in Texas. According to SmartAsset, “All four have violent crime rates lower than 90% of the cities across the study.” Located in the Dallas-Fort Worth Metroplex, Frisco has placed at the top for safety its second consecutive year.
Is it better to live in California or Texas? ›Cost of Living in California vs. Texas. In Texas, you can get a lot more bang for your buck. A MyMove study evaluating the cost of living in the United States in 2022 shows that California has a cost index of 151.7, while Texas has a cost index of only 91.5.
How much is a gallon of gas in Texas? ›Basic Info. Texas Retail Gas Price is at a current level of 3.097, up from 3.033 last month and down from 3.938 one year ago. This is a change of 2.11% from last month and -21.36% from one year ago.
What city in Texas has the highest gas prices? ›El Paso has the most expensive gas in the state. Drivers there are paying, on average, $4.88 per gallon. That's 34 cents more than a week ago, the biggest increase of any Texas city. Houston has had the biggest jump in gas prices over the past year, up $1.97 from June 9, 2021, to June 9, 2022.
Why is gas going up Texas? ›AAA says the reason for the slight rise is an increase in demand. “As a busy Spring Break season gets underway, increasing pressure on fuel demand is causing retail gas prices to increase,” said AAA Texas spokesperson Daniel Armbruster.
What is the best city in Texas to live? ›- San Antonio. Coming in at number one on our list, San Antonio is a dream destination for history lovers and foodies alike. ...
- Austin. As the capital, Austin earns its reputation as one of the state's best cities to live in. ...
- Fort Worth. ...
- Houston. ...
- Dallas.
Unique Culture. There is no place quite like Texas. Bold, big, and distinctive, the friendliness of its people, the vibrancy of its art scenes, the distinctiveness of its cowboy culture, and the richness of its diversity make it a one-of-a-kind place to live and work.
Where is the best small town to live in Texas? ›1. Fredericksburg, TX. Fredericksburg is one of the best small towns in Texas. It's known for its strong German influence, delicious peaches, and outstanding local wineries — which makes sense since it's located in the heart of Texas wine country.
What is a good hourly wage in Texas? ›$13.11 is the 25th percentile. Wages below this are outliers. $26.43 is the 75th percentile. Wages above this are outliers.
What is the most common job in Texas? ›| Rank | Job Title | Count |
|---|---|---|
| 1 | Customer Service Representative | 11,014 |
| 2 | Cashier | 10,175 |
| 3 | Sales Associate | 6,458 |
| 4 | Internship | 5,539 |
Is $15 an hour good? ›
But even at $15 an hour, life doesn't get a whole lot easier. Two adults who work 40 hours a week each and earn $15 an hour make $62,400 before taxes. That's below what the Economic Policy Institute calculates as a living wage for most of the country.
What is the 2nd best place to live in Texas? ›Houston ranks #2 in Texas on Wallethub's rankings of the best foodie cities in the U.S. Houston has some of the best cultural institutions in the country and draws in over 7 million visitors annually to its Museum District. This diverse metropolis is also known as the epicenter of hip-hop culture in Texas.
Is Texas or Florida more affordable? ›...
1. Affordability: Living Wage and Cost of Living.
| Category | Texas Cost of Living Index | Florida Cost of Living Index |
|---|---|---|
| Overall | 92.3 | 100.7 |
| Housing | 83.5 | 99.6 |
| Utilities | 103.3 | 103.1 |
McAllen. If you're looking for one of the cheapest cities in Texas, consider McAllen, a populous city close to the Mexico border. You'll get year-round warm weather and access to all the amenities that come with living in a larger town.
What taxes do you avoid in Texas? ›Texas does not have a state income tax, which means that residents of the state do not pay capital gains taxes on investments.
Do Texans pay a lot of taxes? ›Texas does not have an individual income tax. Texas does not have a corporate income tax but does levy a gross receipts tax. Texas has a 6.25 percent state sales tax rate, a max local sales tax rate of 2.00 percent, and an average combined state and local sales tax rate of 8.20 percent.
Why are Texas taxes so low? ›Tax Structure in Texas
The key feature of the Texas tax structure is no personal income tax. Because of this, municipalities, counties and school districts rely on property taxes for funding. Property tax rates vary by county. In some counties, the tax rate is relatively low.
The Census also estimated 435,000 - 471,000 Texans moved to other states, yielding a net gain of approximately 100,000 people. The Lone Star State also welcomed approximately 192,000 - 222,000 new residents from outside the United States in 2019.
What is Texas biggest source of income? ›...
Monthly State Revenue Watch
- taxes.
- federal income.
- land income.
- fees.
- interest.
- lottery proceeds.
LIVE FREE Texas aims to end mass incarceration and gun violence in Texas by organizing directly impacted people, their allies, and supporting clergy. Led by a diverse group of faith leaders, we fight against mass incarceration, police brutality, and violence against black, brown, and low-income people.
Why are so many people fleeing to Texas? ›
One of the BIG reasons to move to Texas from California is the taxes. California state income tax is the highest in the country, on all levels. Californians pay as much as 13.3% in state income tax and, depending on local rates, between 7.25% and 10.75% in sales tax.
Where in Texas are Californians moving? ›From his research, Clark has found that Californians are almost exclusively moving to Texas' four large metro areas — Dallas-Fort Worth, Houston, San Antonio and Austin.
Why are rich people moving to Texas? ›Like Florida, Texas has warm weather and no state income tax. In fact, the majority of the top 10 states high-earners moved to are in the Sunbelt. And two others on the list—Tennessee and Nevada—also don't have a state income tax.
Are people of Texas friendly? ›But Texans Are All Still Big On Being Friendly
Native Texans are the most genuinely friendly people you will ever meet. There's no such thing as a quick trip to the grocery store in Texas because someone is sure to strike up a conversation with you in the checkout line, whether they know your or not.
Ideally, you want to move in September or October. By doing so, you will avoid all the bad weather conditions of moving in the summer or winter. And, you will start your new life in Texas during its most pleasant months.
Is Texas a peaceful state? ›Texas is the 44th most peaceful state in the union, according to the annual United States Peace Index. Overall, the country is at its most peaceful level in twenty years, the index found.
What city in Texas is safest? ›Frisco, Texas, was ranked as the safest city in the nation for a second year in a row, according to a new report from SmartAsset. The city, located north of Dallas, was joined by McKinney and McAllen, Texas, which ranked second and third overall, respectively.
What is the #1 city to move to in Texas? ›Austin. Known for its booming economy; excellent education, entertainment, and recreational opportunities; diverse dining scene, and sunny weather, Austin is one of the most popular cities in Texas — and the country.
Where is the friendliest place to live in Texas? ›The Alamo City wins out, and for a lot of different reasons, according to the article.
Where is the lowest crime in Texas? ›- Trophy Club. The safest city in Texas is Trophy Club, which has a crime rate that is 87% below the state average. ...
- Highland Village. Highland Village is another suburb of Dallas and sits on the south side of Lewisville Lake. ...
- Colleyville. ...
- Friendswood. ...
- Keller. ...
- Hutto. ...
- West University Place.
What city of Texas has the most crime rate? ›
Houston, often associated with the Space Center and the Theater District, the Historic District, and Houston Grand Opera has earned the dubious distinction of being the most dangerous city in Texas. What is this? Out of a population of 2.3 million, Houston has a violent crime rate of 2.67 per 1,000 residents.
What is cheaper in Texas? ›Food and transportation costs are both about 9 percent lower than the national average, and healthcare is 5 percent lower. Collectively, the cost of living in Texas is 8 percent lower than the national average.
Who pays more taxes Texas or California? ›Though Texas has no state-level personal income tax, it does levy relatively high consumption and property taxes on residents to make up the difference. Ultimately, it has a higher effective state and local tax rate for a median U.S. household at 12.73% than California's 8.97%, according to a new report from WalletHub.
Is Texas education better than California? ›Teacher to student ratio was better in the lone star state 14 to 1 as compared to the golden state, which was 22 to 1. U.S. News and World Report ranked California 44th for K-12 education and Texas did better coming in 33rd.
What salary do you need to live in Texas? ›With that in mind, a good salary in Texas is between $55K and $73K. To live comfortably anywhere, it helps to track your spending and saving with SoFi Insights.
Is Texas really cheaper than California? ›Texas has a much lower cost of living and plenty of options for entertainment and culture. It only makes sense that people are trading in their surfboards and sunglasses for cowboy boots and lower rent prices.
Is Texas one of the cheapest states to live in? ›Texas. Texas isn't just one of the largest states in the United States and one of the few states without state income taxes, Texas is actually also one of the more affordable states given its 2022 Second Quarter Cost of Living Index of 90.9.
What is considered low income in Texas? ›| Fiscal Year (FY) 2022 Median Family Income = $110,300 | ||
|---|---|---|
| ADJUSTED INCOME LIMITS BY HOUSEHOLD SIZE | ||
| 1 person | $23,200 | $61,800 |
| 2 person | $26,500 | $70,600 |
| 3 person | $29,800 | $79,450 |
People are moving to Texas primarily for economic reasons. They want good job opportunities and to be able to afford the type of lifestyle they want to live. When you look at the West Coast compared to Texas, there's a gigantic difference in housing prices. And that is by far the biggest driver.
Are Texas taxes high? ›Texas Tax Rates, Collections, and Burdens
Texas has a 6.25 percent state sales tax rate, a max local sales tax rate of 2.00 percent, and an average combined state and local sales tax rate of 8.20 percent. Texas's tax system ranks 13th overall on our 2023 State Business Tax Climate Index.
How much taxes do I pay in Texas? ›
Overview of Texas Taxes
Texas has no state income tax, which means your salary is only subject to federal income taxes if you live and work in Texas. There are no cities in Texas that impose a local income tax.
1. Mississippi. Coming in as the cheapest state to live in in the United States is Mississippi with a cost of living index score of 83.3. It also has the lowest average housing costs in the nation at 33.7% below the national average.
Which state has more crime Texas or Florida? ›Crime Rates
Specifically, there is a 10.5% higher violent crime rate in Texas vs Florida per 1,000 people. And 11.2% higher property crime rate. So, the statistics make this category straightforward. The edge goes to Florida as the safer state to live in.
Most Expensive Places to Live in Texas
Dallas-Fort Worth is the largest metropolitan area in Texas and the most expensive, according to the index.
Average Cost of Living in Texas: $45,114 per year
When it comes to expenses in this sprawling state, MERIC data gathered in 2022 found that Texans enjoy the 15th lowest cost of living in the country.
National report ranks Texas among worst states for affordable housing; major metro cities also land at the bottom for low-income renters. AUSTIN, Texas — Texas is one of the worst states for affordable housing. That's from the National Low Income Housing Coalition 2021 study.
What state is the cheapest to move in? ›1. Mississippi. Mississippi is the cheapest place to live in the United States, with a cost of living 15.6% lower than the national average.