Californians Moving to Texas: Pros, Cons, and What to Expect

Over half a million Californians have moved to Texas since 2010 – that's an estimated 13% of the Golden State's population!

Californians outnumber all other transplants, and that's a trend that isn't stopping anytime soon.

As a real estate agent, the mass relocation to Texas can be a great opportunity, for both existing real estate and new development. Understanding your potential clients, however, will be the key to successfully welcoming them and winning their business.

 

Is Texas or California Better to Live In?

Benefits of Moving From California to Texas

As you begin to market to individuals in the California exodus, you'll want to understand your talking points for why they should choose your neck of the woods rather than some other place.

For those whose minds are made up, these same arguments can help you get leads through calibrated advertising. Understanding the benefits of moving to Texas will certainly help you connect with prospects.

Here are some points to consider:

Texas Property Taxes vs. California

Californians moving to Texas can expect to pay lower state taxes in nearly every category.

At a personal level, Californians pay as much as 13.3% in state income tax and, depending on local rates, between 7.25% and 10% in sales tax. In Texas, they'll pay NO state income tax whatsoever, and sales tax ranges from 6.25% to 8.25%.

Businesses also benefit. Texas has no corporate income tax. California's is 8.84%.

The only exception that Californians need to be aware of is property tax. California's average effective property tax rate is just 0.72% – among the lowest in the country. In Texas, they'll pay 1.9%.

It's worth forewarning but be sure to tell them they may still end up paying a lower dollar amount, since real estate is so much cheaper.

How do all these tax differences shake out overall? According to USA Today, Californians lose roughly 10.3% of their income to state and local taxes. In Texas, it's 8.7%.

"You'll Get More House for Less Money in Texas, Compared to California"

The average home value in California is $618,016, according to Zillow. In Texas? It's $222,507.

Oof.

The difference in cost per square foot is also amazing. The median listing price in California is $324 per square foot. In Texas, it's just $129.

In other words, they can double the house and still save money.

Of course, these are state-wide numbers. Savings will vary depending on your local market and the market of the potential clients you target. The savings for someone who moves from Sacramento to Austin are very different than the savings a San Franciscan can expect from their move to Dallas.

Do a little homework on target markets to avoid setting unrealistic expectations.

"You'll Save Money on Nearly Everything Else with Relocation to Texas"

Although taxes and real estate are some big tickets, the overall cost of living in Texas is also astonishingly low compared to California.

This is another matter of "location, location, location" – the cost of living can vary a lot by city. Luckily for you, Nerdwallet will readily do cost of living math between two cities.

For example, the overall cost of living in San Francisco is a whopping 108% that of Houston. Looked at from the other direction, a San Franciscan moving to Houston can expect to almost halve their costs and maintain the same lifestyle.

A lot of the difference is housing costs – San Franciscans can expect to spend less than a quarter of their old mortgage on an equivalent property – but the cost differentials are significant in other categories as well. Transportation, food, and healthcare costs will all be roughly 30% lower than they're used to.

"You'll Keep Great Work, Educational, and Cultural Opportunities"

The reason those in the California exodus consistently chooses Texas as their destination isn't entirely financial. After all, there are plenty of places in the country that are cheaper than California.

However, few of them allow you to keep some of the benefits of California at a lower price tag. Texas, on the other hand, does.

Here are some things that will feel like home to Californians:

• Lots of Fortune 500 employers
• A rising start-up culture (especially in Austin and Dallas)
• Great primary and secondary education
• High-ranking universities
• A diverse population (both are majority-minority states)
• Authentic international food from immigrant communities
• A strong Hispanic cultural influence (though the Mexican-inspired food is very different)

California and Texas differ on many things, but they share robust economic opportunities and diverse populations. Make sure your clients know it!

Reasons Not to Move to Texas

Obviously "reasons not to move to Texas" shouldn't be in your marketing strategy. But there are a few downsides from a Californian's point of view to keep in mind for those who are moving to Texas.

Income Will Be Lower in Texas

The vast majority of Californians will find moving to Texas an overall financial gain.

However, transplants need to realize that their paycheck will inevitably shrink, at least a little. Even if they're keeping the same employer, they should expect a "cost of living adjustment."

Given the numbers in aggregate, this is hardly a true downside. However, make sure potential clients are using the right numbers when doing their math, so they don't wind up in trouble.

Texas is More Conservative Than California

Even those moving to Texas' liberal bastion of Austin are probably going to feel the difference in political climate.

They can find like-minded individuals in Texas's major cities, especially as the migration from high-cost blue states drives other liberals down south. It's likely to still be a culture shock for some.

They're definitely going to feel the conservatism concretely through state-level policies. Texas and California politics are almost diametric opposites. That includes:

• Poorly implemented Obamacare
• Greater obstacles to abortion
• Lower minimum wage
• Limited power for organized labor
• No "sanctuary state" protections (though major cities battled the state)
• Laxer environmental policies
• Fewer business regulations
• Less investment in public transportation
• Open-carry gun laws (which can be frightening to those who aren't acclimated)

These are just a few of the cultural shifts that liberal Californians might feel keenly.

From your perspective as a real estate agent, this may mean toning down your own opinions to appeal to your prospects, or just realizing that even if you consider yourself liberal, your new clients might see you as more conservative!

Summers in Texas are Much Hotter Than California

Sure, California has Death Valley, but nobody actually lives in it. You might think of Southern California as hot, but the state's hottest city (Bakersfield) is only ranked #12 in the nation.

By comparison, Texas cities occupy numbers 4 through 11 on the same list.

Part of the problem is that Southern Californians are used to dry summers and wet winters. They may underestimate the impact of Texas humidity.

If the heat index is likely to be a shock for Southern Californians, it can be downright dangerous for those from the north. This is particularly true of those from the Bay Area and anything up the coast, where summer temperatures range from the 50s to the 80s (yes, really).

As a real estate agent, you may need to remind Californians to prioritize cooling measures in their home choice: air conditioning, fans, swimming pools, insulating measures, and more.

These things might be a given to your native clientele, some of whom can even make an informed choice to live with fewer heat amenities. For Californians, they'll be essential and they may not even know it.

That's where you come in.

What the California Exodus to Texas Means for Real Estate Agents

You're off to the right start with this article – understanding your potential clients is half the battle. You need to understand the issues that clients face.

It's important to prepare California natives for the reality of living in Texas: downsides as well as the benefits. They'll thank you for your part in helping them adjust their expectations and acquire the right home amenities.

You should also remember that California a big state like Texas and just as diverse. You'll have to tailor your messaging a bit based on a client's point of origin – otherwise, your marketing might hit wrong and make them doubt that you're the right fit.

Some tips for getting a jump on this market:

• Learn what companies are migrating to your city and reach out to their corporate relocation specialist.
• Target advertising to Californians who are using keywords that indicate the intention to move to your city.
• Create content marketing and lead magnets designed to interest and benefit the California exodus. Show them you understand their needs and concerns.
• Network with California agents for referrals. Someone's selling each transplant's house, and they know who's looking to buy when they move!

Here's another problem: as California homeowners move to Texas, you might gain competition from transplanted real estate agents!

You'll still have the home-court advantage. Stay sharp, continue learning, and you're sure to come out on top.