Why are So Many Californians Moving To Texas?

According to the U.S. Census Bureau’s report on state-to-state migrationStories 2023 11 State To State Migration.html Library, 102,442 people moved from California to Texas in 2022. This figure tops all other state-to-state migration flows in the nation. There are many reasons why Californians are moving to Texas, including the lower cost of living, the more affordable housing market, lower taxes, increased job opportunities, and the lack of wildfires. 

Keep reading to learn more about the reasons people are leaving the state, along with what it means for the Texas real estate market.

What Is Driving the California to Texas Migration?

While California has a lot to offer, the state has its downsides. What factors are causing residents to go? Here are the most common reasons Californians are moving.

Cost of Living

One big factor causing Californians to flee the state is the high cost of living. As of February 2024, a full-time worker in California needs to earn 30.6% morePages Methodology Livingwage.mit.edu than a full-time worker in Texas just to meet their basic needs.

MIT calculates that in CaliforniaStates 06 Livingwage.mit.edu a single full-time worker needs a yearly income of $56,825 before taxes to meet their basic needs. But in TexasStates 48 Livingwage.mit.edu, you need to earn much less — about $43,508 to meet your basic needs.

Housing Market

The tough California housing market has many residents packing up and moving to more affordable areas. One survey found that 34% of participants were considering leaving California for other statesWhats Behind Californias Recent Population Decline And Why It Matters Publication (including Texas) due to high housing costs.

As of June 2024, the median home sale price in Texas54 Tx Home Values was $342,167. Compare that to California’s median sale price9 Ca Home Values of $746,667, and you’ll see why some people are flocking to Texas to get on the housing ladder.

But it’s not just lower home prices that have caught the attention of California residents. Rents in Texas are significantly lower as well. As of September 2024, the average monthly rent for a two-bedroom apartment in TexasTx Rent Market Trends was $1,565. In California, the average two-bedroom apartment rentCa Rent Market Trends comes in at $2,572. 

Taxes

California ranks number one in the nation with the highest state income tax rateTax Tips Fun Facts States With The Highest And Lowest Taxes L6HPAVqSF Turbotax.intuit.com. Depending on income levels, the tax rates range from 1% to 13.3%. Texas, on the other hand, has no individual state income taxLocation Texas Taxfoundation.org.

Drive much? You’ll pay a gas tax of 68.1 cents per gallonData All State State Gas Tax Rates 2024 Taxfoundation.org in California, whereas the gas tax in Texas is only 20 cents per gallon. 

These tax savings alone make Texas a big draw for Californians looking for a more financially attractive place to live and work.

Job Opportunities

The California job market has weakened post-pandemic, causing many residents to look for work elsewhere. The state Legislative Analyst’s office estimates a loss of 340,000 private sector jobsNews Californias Weak Job Market Propped Up By Public Money As Private Sector Sheds Jobs Laist.com in the state since reaching a peak just two years earlier.

Big-name tech companies—like Apple, Google, and Facebook—have shed jobs at an alarming rate. The information sector laid off 98,000 California workers, while the financial sector accounted for 43,000 layoffs. 

While some of these layoffs might be permanent, it looks like a good number of jobs have gone to Texas. For example, in 2021, Tesla moved its corporate headquarters from Palo Alto to its Austin factory, where it employs more than 10,000 workers. And just recently, energy company Chevron announced plans2024 Q3 Chevron Announces Headquarters Relocation And Senior Leadership Changes Newsroom to relocate its San Ramon headquarters to Houston. Hewlett-Packard and Oracle are two other Californian companies that made the jump to Texas.

This migration of good-paying jobs to Texas has lured many Californians seeking employment.

Fires

California wildfires are nothing new. What is new is the increase in their severity and spread. This has left many Californians fleeing to safer areas. Following the 2020 wildfire season, a survey of 1,108 California residentsArticle 10.1007 S11111 022 00409 W#Abs1 Link.springer.com revealed that a third said they intended to move within five years. About 25% cited wildfires as moderately impacting their decision.

The state's fire season runs from July to December and coats cities with choking smoke and causing electricity blackouts. More than 1.1 million buildings in the state — approximately one in 10 — are at high risk for wildfiresWildfire Hazard Zone Lookup Map Projects. 

What Does This Mean for the Texas Real Estate Industry?

By adapting their marketing strategiesReal Estate Marketing 101 Blog, Texas real estate agents can work with new California buyers. California buyers may have different preferences and expectations compared to long-time Texas buyers. 

For example, having come from a more expensive market, Californians may be willing to pay higher prices for properties. Some may prioritize properties with potential for appreciation, viewing them as investments. This might contrast with Texas residents who prioritize affordability, community ties, and family proximity.

To effectively target both local and out-of-state buyers, Texas real estate agents might consider showing buyers suburban areasFastest Growing Texas Markets Blog just outside major cities like Austin and Houston. Located near major employment hubs, homes in these areas offer more space and better affordability.

To specifically target California clients, Texas real estate agents might also consider:

• Networking with California agents to find new clients

• Reaching out to California companies that are moving offices to offer help to employees

• Creating marketing materials that emphasize the state’s lower cost of living and taxes