Business & Government

Dirt Isn’t Cheap: Land Costs Are Increasing Texas Home Prices

May 21, 2018

San AntonioTexas suburban housing development neighborhood - aerial view. (Getty Images)
San AntonioTexas suburban housing development neighborhood – aerial view. (Getty Images)
By David Jones, Texas A&M University Real Estate Center

Texas’ vast supply of land is legendary. Ironically, the rising cost of land is now contributing to the state’s higher home prices.

“Historically, Texas’ home prices have been comparatively low mainly because of the state’s abundant supply of low-cost land,” said Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University. “In addition, the land acquisition process — including costs of property titles, zoning requirements, covenants, deed restrictions, easements, right-of-way restrictions, surveying and boundary markers — is efficient in Texas. Local platting and permitting have been quick and low cost.”

At least as far back as 2005, Texans have enjoyed more affordable homes than U.S. residents as a whole and those in states with the largest populations.

Median Texas home prices trended upward from $106,000 in 2005 to $161,500 in 2016. That is lower than the corresponding nationwide median prices of $167,500 to $205,000. However, the price gap has narrowed in recent years because of Texas’ higher price growth rates.

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“Land accounts for an increasing portion of a home’s overall price,” said Dr. Ali Anari, center research economist. “Land accounted for 20.4 percent of the cost of a single-family Texas home in 2016, less than the nation’s 33.5 percent and less than the corresponding shares in the most populous states, namely California’s 61.1 percent, New York’s 31.2 percent, and Florida’s 31.4 percent.”

At the metro level, Dallas has the largest share of land as a percentage of home cost (29.4 percent), followed by Houston (25.1 percent), Fort Worth (22.4 percent), and San Antonio (15.2 percent).

“Texas’ more affordable home prices have played a key role in the state’s economic growth,” said Gaines. “They attract more people and businesses from other states and result in more demand for goods and services, higher economic growth rates and more jobs. These combine to attract even more people.”

“But when land price growth outpaces home price growth, land cost accounts for a larger portion of overall home cost.”

Read more about Gaines’ and Anari’s land cost research in “Dirt Isn’t Cheap . . . Anymore: Land’s Impact on Home Prices.”


Media contact: David Jones, 979-845-2039,

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