Authored by Ben Isaac via Free Market Shooter blog,
In the years following the housing crash of 2008, most local housing markets have made a full rebound from the dire straits that befell a huge portion of the population and took the economy with it. Many markets are now even stronger than they were in that time. The recent tax deductions passed by Congress and signed by President Trump in December have put more after tax cash in the pockets of virtually all Americans, yet there is one feature of the bill that has been seen as a detractor for the health of the American economy: State and local tax deductions.
The major reduction has many high earners in higher tax states and cities in a bit of a panic over their new tax liability which they can no longer write off, which has resulted in some high revenue companies and large income earners looking to other parts of the country where the cost of doing business is much less burdensome.
The South has been a large beneficiary of its collective policies of low taxes and other barriers to entry over the past couple decades, particularly in the automotive industry. Since 2000 foreign car manufacturers have anchored themselves in various places throughout the South, creating first, second, and third tier supplier jobs in the surrounding localities and reviving small southern towns, and continue to do so.
Nissan, already based in Smyrna, Tennessee, announced a new $1.8 billion plant in Hunstsville, Alabama. An industry that was once reserved for Detroit and nearby suppliers who could access the Great Lakes has now moved to states filled with blue collar workers and colleges who partner with these manufacturers to produce educated and knowledgeable career employees.
This phenomenon is not reserved for just the South either. High taxes and unwelcoming political landscapes have chased software developers out of its typical Silicon Valley oasis in California to places in Texas, Arizona, and North Dakota. Even the movie industry which gave California its glamour in the first place has found new roots in Atlanta. Boston’s medical research industry has begun migrating toward North Carolina, while Boeing has focused on growth in their South Carolina plant rather than investing in their Seattle headquarters. Charlotte, NC has become a hub for consumer banking when it used to all be set in New York City.
The real estate markets have been affected in similar ways. Costs of living have inflated in places like Chicago, Washington DC, NYC, Los Angeles, San Francisco, and plenty of others to the point that you need a hyper inflated income just to maintain an average, ordinary life. A 2 bedroom in a desirable neighborhood of DC could just the same get a 4 bedroom house on an acre in South Carolina, and more and more people are taking notice of that.
Developers and home builders...