In recent years, Sun Belt cities such as Dallas, Houston, and Atlanta have attracted millions of domestic migrants who left expensive coastal cities to find a lower cost of living. From the years 2013 to 2017, for example, about 6,174 residents per year left New York’s metropolitan area for Houston alone—two and a half times as many as went the other way.

According to Texas Monthly, they don’t know what’s good for them. Quoting an analysis of census data by New York’s Citizens Budget Commission (CBC), Texas Monthly contributor Peter Holley said, “monthly median housing costs in Houston in 2016 … were $1,379, nearly $400 less than New York City. However, median transportation costs were $1,152, a figure 38 percent higher than for New Yorkers. In total, the study found, living in Houston was only $79 cheaper each month than New York.”

But, Holley continues, the news for Houstonians gets worse: “When considering housing and transportation costs as a percentage of income, Houston (and Dallas-Fort Worth, for that matter) appear significantly less affordable than cities with much more expensive housing, including New York, San Francisco, Chicago, and Boston. The annual median household income in Houston was just under $61,000 in 2016, while in New York that same figure was just over $69,000. As a result, Houstonians spend just under 50 percent of their income on those combined costs, whereas New Yorkers spend just over 45 percent.” The reason New Yorkers can save money: a cheap mass transit system that lets them escape the expense of car ownership.

These figures seem alarming. Are the domestic migrants swarming into Texas fooling themselves? As it turns out, no: The CBC’s and Texas Monthly’s conclusions rest on a series of questionable methodological assumptions and poor inferences. Here’s where they went wrong.

Step 1: Ignoring New York’s rent control (See our correction)

Almost all American cities that once had rent control have abolished it. New York is one of the few holdouts: about half of New York’s apartments have some form of rent control or rent stabilization; on average, rent-stabilized apartments rent for more than a thousand dollars less per month than market-rate apartments. New York also has by far the most public housing in the nation: Between public housing developments and Section 8 vouchers, over 253,000 households live in subsidized housing in new York—about three times per capita the number served by Houston.

This means that most current residents of multifamily housing in New York are paying significantly below market rates. Would a middle-class family newly arrived in New York have such luck, though? Unlikely. Such a family would be unlikely to qualify for public housing, and even if they did, they’d have to wait decades for a spare apartment: NYCHA turns over only 2.5 percent of its apartments each year. They might have better luck finding a rent-stabilized apartment, but even then, they’d be at a severe disadvantage. Rent-stabilized apartments turn over much less frequently than market-rate counterparts, and getting them often requires specialized local knowledge and connections within the real-estate world.

Newcomers would most likely end up renting for market rates, which are inflated in New York in large part because rent stabilization artificially takes much of the housing stock off the market. (Or they would live in the New York suburbs excluded from the CBC’s calculations, which typically have no rent control and much higher transportation costs.) Thus, while ignoring rent control and public housing may leave an accurate picture of what current New Yorkers actually spend on housing, it significantly distorts the Texas Tribune’s interpretative lens, which is whether moving between New York and Houston makes economic sense.

Step 2: Counting taxes selectively

The CBC report includes property taxes in the cost of housing for homeowners and expresses housing and transit costs as a percentage of before-tax rather than after-tax median income. Therefore, the CBC’s methodology will overstate the burden of housing costs in areas where property taxes are an unusually large portion of overall tax revenue. As it turns out, Texas is exactly such a place.

Property taxes in Texas are high. In Harris County, which includes most of the Houston metropolitan area, the effective tax rate is 2.31%—in the top five percent of all counties in the United States and about three times the average effective rate of 0.8% in New York City proper. (New York’s convoluted system of property assessment gives many wealthy homeowners even bigger breaks on property taxes: Mayor Bill de Blasio, for example, owns two $2 million townhouses on which he pays property taxes of 0.2%.)

Texans, however, enjoy much lower taxes than New Yorkers in other domains. The state has no income tax, for example, whereas state income taxes in New York range from 4% to 8.82%. According to the Tax Foundation, in 2010, property taxes accounted for 45.2% of total state and local tax receipts in Texas but just 32.4% in New York state (most of which has higher property tax rates than the city). New Yorkers also pay for most of the costs of their public transit through tax subsidies, which come out of residents’ taxes but isn’t counted as a transportation expense in the CBC report.

Step 3: Overlooking differences in quality

It’s easy to compare the prices of average houses in different metropolitan areas, but what about the houses themselves? The envious responses to a viral tweet by a new Houstonian showing off her apartment might suggest a big difference in housing quality, and this is borne out by some figures. Houston proper and Manhattan, for example, have about the same population, but Houston’s apartments are about 20 percent larger, averaging 877 square feet compared to 733 in Manhattan. Likewise, Houston apartments have better amenities: 36 percent of them have in-unit washer-dryers, for instance, compared to 20 percent in New York.

The quality of transportation also differs. The biggest expense of travel is not money but the value of one’s time, and New Yorkers spend about 25% more time commuting than Houstonians—the average one-way commute time in New York is 37.6 minutes, compared to just 30 minutes in Houston.

Step 4: Making misleading income adjustments

Even after these questionable methodological choices, the CBC still finds that living in Houston costs less in absolute dollars. But as a percentage of income, New York, which has a higher average household income, is cheaper. This is true, but the lesson that Texas Monthly draws by implication—that workers moving from New York to Houston would see their incomes drop by more than enough to offset the lower cost of living—rests on a false inference that ignores the differences between the two regions’ economies.

The New York metropolitan area has a high average income because it is unusually filled with skilled professionals who could earn high incomes anywhere; meanwhile, the region’s high housing prices have driven lower-income workers to leave. The Houston region, on the other hand, has a proportionally larger working-class population. This difference is reflected partially in educational attainment figures: 38.7 percent of NYC residents aged 25 and above had a BA or higher, compared to just 31.8 in Houston. Therefore, if a worker earning an average salary in New York left for Houston, he would quite likely earn well above Houston’s average income.

The perils of the CBC’s income adjustments are exemplified by the fact that the San Jose area, where small bungalows sell for a million dollars or more, had the third lowest housing expenses relative to income. This is largely because San Jose is filled with extremely high-earning technology workers: the average household income in the region is above $124,000. But if you’re not a computer programmer, you would be foolish to think that you could save money on housing costs by moving to San Jose.

Texas Monthly told a story that a lot of people wanted to hear: loosely regulated housing markets like Houston have long embarrassed ideological opponents of free markets who insist that only rent controls and massive public subsidies can provide affordable housing. There is a ready audience for the argument that Houston’s affordability is a mirage. If you ever find an argument like this tempting, though, ask yourself: is it more likely that you’re mistaken, or that the millions of Americans voting with their feet are?

This post has been updated. The original argument under the heading “Step 1: Using metropolitan-area averages” assumed the figures were calculated using data for the entire metro area, when it was in fact just from central areas. The author regrets the error.

Connor Harris is a policy analyst at the Manhattan Institute. Follow him on Twitter here.

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