The Texas SoCal Connection

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April 19, 2016

If you throw a rock into a lake, the immediate splash only affects the area directly around where the rock entered the water. The splash is, for the most part, contained, but that doesn’t mean there are no other disturbances caused from that rock hitting the water. Ripples emanate from the epicenter of the splash and, in their own subtle way, cause disturbances of their own in more distant areas of the lake. Local real estate and regional housing markets can be thought of in this way. Large splashes in local real estate markets may put on the more impressive show, but the repercussions of these local markets create a ripple effect that can alter regional housing markets in more far-flung locales.

Take Texas and California for example. These two states, without a doubt, have more differences than similarities, but they are connected via the migration patterns and local real estate markets between two of their most populous cities.

Typically, the metro areas of Houston, Austin, and San Antonio account for about 14 percent to 16 percent of households moving to the Dallas-Fort Worth area, by far the largest amount from any other cities, Zillow reports. However, over the past 20 years a pattern has emerged showing a connection between Dallas and Los Angeles. During periods of economic hardship, specifically 1994-1995 and 2007-2008, Los Angeles became a major point of origin for households moving to Dallas-Fort Worth.

Additionally, when real estate in Southern California becomes very expensive compared to the real estate in Dallas, migration from SoCal to Dallas tends to increase. In 1994, 1995, 2007, and 2008 Los Angeles was second only to Houston in terms of origin points for households moving to Dallas.

At the end of 2015 the median home value in the Dallas-Fort Worth metro was $177,600 compared to $451,300 across Southern California. Another factor may be the fact that many large companies have recently announced plans to relocate or expand to the Dallas-Fort Worth area. Toyota has already moved its North American corporate headquarters from Torrance, Calif., just outside of L.A., to Plano, Texas. Big moves like this are sure to bring many new residents with them. Facebook and State Farm Insurance are other major companies that have expanded to the Dallas area recently.

To view all of the data along with accompanying graphs, click the link below.

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