JANUARY 2008PUBLICATION 1841

A Reprint rom

Tierra Grande

Texas Economy

Looming Boom

Texas Through 2030

By James P. Gaines

The Lone Star State is being “discovered” by the rest of thecountry because of its affordable housing, lower cost of livingand cost of business, greater employment opportunities andappealing lifestyle. Events and circumstances point toward aTexas-sized boom between 2005 and 2030.

he state’s population and economyas well as its housing and com-mercial real estate markets arepoised to explode in volume and prices.Unless something as catastrophic as the1980s oil bust occurs in the next couple odecades, the momentum born in the rstve years o the new century should onlyget stronger.The costs o growth and prosperity willbe increasing congestion in urban areas,overburdened school districts that willrequire a greater percentage o the state’swealth, escalating demands on local andstate inrastructure, and potentially rising levels o politicalactivism with regard to local planning, growth policies, growthlimits, regulatory controls, environmental concerns, taxes anddevelopment impacts. In short, things will change dramaticallyrom what many Texans are used to.This discussion takes a “100,000-oot view” o the Texaseconomy and housing markets rom 2005 to 2030 with simpletrend extensions to lay out the possibilities or the next 25years.

Population Growth

The U.S. Census Bureau projects the country will add 68million people by 2030, growing rom 296 million in 2005 to

Sources: Texas State Data Center and Texas State Demographer,Average of Projections

60504030201002000 2005 2010 2015 2020 2025 2030

Figure 2. Total Texas Population by Race

P e r c e n t

Year

Anglo Black Hispanic Other

Table 1. Projected U.S. and Texas Populations (Millions)

200520102015202020252030U.S. Census Bureau

United States

295.5308.9322.4335.8349.4363.6

Texas

22.924.626.628.630.933.3

Texas State Demographer

50 Percent ImmigrationScenario22.624.326.228.029.931.8100 Percent ImmigrationScenario23.326.129.232.736.741.12000–04 ImmigrationScenario22.925.127.630.333.236.3Texas StateDemographer’s Average22.925.227.730.333.236.4Average Increase rom2005–2.44.97.510.413.6

Sources:

U.S. Census Bureau, Population Division, Interim State Population Projections, 2005.

Texas State Data Center and Ofce o the State Demographer, 2006 Texas Population ProjectionsProgram, “Population Projections or the State o Texas.” Projections are rom the 2000 Census, thus2005 is a projected population or the 50 percent and the 100 percent scenarios.

Figure 1. Central Texas Triangle

364 million, a 23 percent increase or an average o slightly lessthan 1 percent per year (Table 1). Texas’ population is projectedto grow by ten million people, rom about 23 million in 2005to 33 million by 2030, a 43.5 percent increase or roughly 1.7percent per year.The Texas state demographer projects Texas’ population willadd between nine million and 18 million people, expanding toa total population between 32 million and 41 million (rom 41to 77 percent). The wide growth variance depends on the rateo population immigration, both domestic and oreign (Table 1).The projections refect immigration rates equal to the 1990–2000 rate (100 percent case), hal the 1990–2000 rate (50 percentcase) and equivalent to the 2000–2004 immigration rate.Averaging the state demographer’s projections results in aprojected 2030 population o 36.4 million people, an increaseo 13.6 million or 59 percent. This is the equivalent o anotherDallas–Fort Worth metropolitan area, another Houston metro-politan area and another San Antonio metropolitan area withenough let over to add another Corpus Christi.

Source: Real Estate Center at Texas A&M University

Despite the popular images o Texas ranchesand armland, Texas’ population is primarily ur-ban. Nearly 64 percent o all Texans reside in oneo the our major metropolitan statistical areas(MSAs), and nearly 87 percent live in one o the25 MSAs in the state.Approximately our out o every ve Texanslive within the “Central Texas Triangle” (Figure1), which runs rom the Dallas–Fort Worth MSAalong I-45 to the Houston MSA (which includesHuntsville, Conroe and The Woodlands), alongI-10 to the San Antonio MSA (which includesKaty and Seguin) and along I-35 (which includesSan Marcos, Austin, Temple and Waco).Growth and prosperity will spread throughoutthe state, but most o the growth will occur inthe state’s urban areas (Table 2). Future urban spatial designwill be a key variable in the distribution o the expectedpopulation increase. For decades, primary growth has been inthe suburbs o the major cities. This expansion has prompted acontinual redenition o theMSAs to include more sub-urban and ormerly exurbancounties within the metro-politan areas.The racial and ethnic com-position o the state’s popu-lation will reverse by 2030.The Anglo population willdecline rom 53 percent in2000 to 32.5 percent by 2030,while the Hispanic popula-tion will grow rom 32 percentin 2000 to 51.3 percent by2030 (Figure 2). During thisperiod, the black populationwill decline slightly, and the

Table 2. Texas Metropolitan Area Population Estimates

MSA2005 Population(millions)Percent of TotalState Population

Austin1.56.6Dallas–Fort Worth5.825.3Houston5.423.6San Antonio1.98.3Total Four Major MSAs14.663.8Total All Texas MSAs19.986.9Texas22.9100.0

Source: Population Division, U.S. Census Bureau

“other” population group (primarily Asian) will double rom3.3 percent to 6.7 percent.

Job Growth

opulation and employment growth go hand in hand.Population grows because jobs are available, and jobs arecreated because o available low-cost labor produced bya growing population. I Texas maintains its average employ-ment-to-population ratio as it is expected to during the next 25years (around 42.7 percent), the state will add another 4.5 to 5.8million jobs (Table 3).Job growth is expected to be stimulated by overall U.S. eco-nomic growth and enhanced by Texas’ employment-riendlycharacteristics (compared with most other states):

•amplesupplyofrelativelylow-cost,nonunionlabor;•continuedimportanceoftheenergyindustryalongwithenergydiversicationacrossthestate;•relativelylowbusinessoperatingcostsandtaxes;•nonobstructive,pro-

business state and local

businesspolicies;and•affordablehousing.

Texas’ current employ-ment growth is roughlytwice the national rate andshould continue that patternover the coming decades,barring any major upheavals(Figure 3).Texas leads the nation injob creation. The Houstonand Dallas metropolitan areaslead U.S. metro areas in creat-ing jobs (Figures 4 and 5).

Table 3. Texas Employment ProjectionsBased on Projected Population

U.S. Census BureauYearProjectedPopulationProjected Numberof Jobs at AverageJobs/Pop RatioNew JobsAddedSince 2005

200522,928,5089,734,808201024,648,88810,533,620798,811201526,585,80111,361,3531,626,544202028,634,89612,237,0272,502,218202530,865,13413,190,1113,455,303203033,317,74414,238,2264,503,418

Texas State Demographer

200522,928,5089,734,808201025,164,94110,754,1531,019,345201527,650,56811,816,3772,081,569202030,331,67312,962,1393,227,330202533,245,88314,207,5164,472,708203036,427,03115,566,9695,832,161

Sources: U.S. Census Bureau, Texas State Data Center and Ofce o the StateDemographer

Source: Real Estate Center at Texas A&M University

43210–1–2

Figure 3. Employment Growth Rates

P e r c e n t C h a n g e

2000 2001 2002 2003 2004 2005 2006 2007

TexasUnited States