Why Are Californians MOVING to Texas the Lone Star State?
One of the most pressing and popular topics these days is the real estate market exploding across the country and the subsequent dismantling of what we considered normal for so long.
High on the list of places discussed is California, as the state has been experiencing an insane real estate market, which has helped contribute to higher trends of people leaving the state in recent years and even more so in the last year since the pandemic began. In fact, according to the Census Bureau, California lost more people than it gained in 2020, meaning for the first time in 100+ years, the state did not grow, and instead, it declined in population in the 2010s.
With the pandemic in full swing and a large portion of the work model switching to online, Californians are fleeing the state for numerous reasons, including more space, lower prices, and a slower pace of living.
Reasons Californians Are Moving to Texas 2021
When investigating the reason for this trend, the answer is unique to each family’s own unique situation. However, regardless of individual needs and wants, the pandemic has provided a unique framework for people to switch up their lives completely as they realize they no longer need to be in California. So, why are people leaving California? The answer lies in tax rates, the housing market, and politics.
High Taxes
A common complaint amongst Californians is the high tax rate. As one of the highest income states, the tax code is structured so that the wealthy bear the brunt. However, that is not to say that other Californians of lower socioeconomic status are free from its impacts. With taxes at the state, local, and federal levels, California is among the top ten for highest taxes states in the entire country. Additionally, since 2010, the tax rate has continued to increase year after year with continual legislative and voter approval. As a result, the wealthiest California residents have the nation’s highest personal income tax rate. While the federal rate is non-negotiable, Californians may desire lower or no state and local taxes if they don’t have to.
Competitive Housing Market
It’s no secret that the California housing market has been insane since the beginning of the pandemic. As the real estate market went into a frenzy and prices rose far above their value, many realized they could get a better deal outside of California, particularly in low tax states. With the world switching to a remote working environment and some employees able to stay working online, many are looking to permanently move to states that offer more housing at less competitive prices because they can. As long as there is wifi in the new place, there is no longer a need to stay in California if your company no longer meets in person. Even if prices in other states are rising because of inflation, they still remain lower than typical California prices. Carrying your California salary over to states like Texas means more bang for your buck.
According to Norada Real Estate Investments, the median sales prices for homes for preexisting homes have risen an average of 34% since last March! This means even though California’s base home prices were inflated, they have since grown exorbitantly, pricing California natives out of the state. The places most affected by these raised prices are the Central Coast region, the Bay Area, and the Los Angeles area, all with price gains of 30-40%.
More Space & Less Activity
Hand in hand with the crazy real estate market, California residents are expressing extreme distaste for the state’s fundamental housing characteristics. Realizing city dwelling is not a necessity anymore and that they can perhaps have a yard or twice the size of their current home for the same price, people are seeking more value in other states. Also fond of a slower life and “settling down” into a more family-centric life, people want to leave the hustle and bustle behind.
Politics
Specifically looking at conservatives, many have been vocal about relocating because of non-approval for the state’s government. As evident in the pending Governor Gavin Newsom recall campaign, many are not in favor of the progressive political agenda and believe leaving the state is the best choice.
So, Who is Leaving California?
Those with a Lower Socioeconomic Status
Anyone with the means is able to leave California, regardless of social class or socioeconomic background. Still, with that being said, data shows those who tend to emigrate from California describe the reason why as occupation, housing, or family issues. All of the problems described are money-related, meaning Californians who cannot afford to stay are being priced out of the state. Instead, data shows that the people who are moving into California as those immigrating tend to be young professionals with degrees, employed or equipped to earn higher wages. The new group is completely replacing the old and will contribute to the problem growing.
The Wealthy
Though poorer populations are choosing or forced to leave the state, the trend occurs for the wealthy as well. Even major tech moguls like Elon Musk are relocating from California for one reason or another, including to avoid the rising California tax rates. Citing over-regulation on the government’s behalf, Musk decided to pack up and leave the state for Texas, though his businesses remain headquartered in the state. The move, particularly if he also moved SpaceX and Tesla operations to Texas, would save him billions and billions of dollars in the end, and he’s not the only one hoping to find some relief in the south. Other major investors and executives have also left the state in search of better conditions.
Why Are Emigrants Choosing Texas?
Strong Job Market – Low Taxes
Many reasons explain the immigration trends, but the mass migration to Texas from California is most likely due to the state not having income taxes compared to California’s high-income tax. The state also has a low cost of living where residents can get the most value for their paychecks. In addition, Texas has a strong and growing economy with job opportunities, a high median salary expected to grow stronger as major brands continue moving to the state. And according to Rice University’s Kinder Institute For Urban Research, Texas is well on its way to becoming a global powerhouse. This means the state is expected to see massive growth and more stability in the near future.
Strong Housing Market
Texas is a massive state with plenty of land available for purchase and affordable housing across the state. Even in or near major cities, the average prices of homes are significantly lower than in California. The median price for a home in Texas was just $177,000 last year, and in a major city like San Antonio, it is only $243,000. California’s median home price was $612,000 in 2020 – an incredible difference between the two housing markets. Those looking for similar major cities comparable to California’s, such as San Diego, should consider Austin, Dallas, or Houston.
With California home prices on the rise, particularly in major cities and tech hubs, such as Silicon Valley and San Francisco/ the Bay Area, many Californians are leaving The Golden State for places like the Lone Stare State, Montana, Idaho, even across the country to areas neighboring the New York state hub.
What Are the Implications?
If current trends persist, California will continue losing residents, especially as the housing market stabilizes and the world continues to shift to a sense of normal after pandemic ramifications improve.
It’s important to remember that in places like Texas, residents may see prices begin to rise should the local government capitalize on the influx of wealthy people. Though this trend of people leaving California has been happening for over a decade at a nominal pace, nothing compares to the current numbers that are expected to continue increasing.
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