Internal Migration

A few days back, I published my inaugural post at the new Finance and Economy community, where I explored how much does it take to own a home at various urban population center across the United States. We saw four cities in the state of California tops the chart on the most expensive housing in the United States:

• San Jose
• San Francisco
• San Diego
• Los Angeles

So obviously it is probably not a surprise that people are leaving the state of California in large numbers. This 2023 data below shows that state is losing population at a rate of 268K/year.

Source

The next on the list is no surprise, New York. The reason is the same. Where do all these people are going to you think? Yeah, you guess it right, Texas! My home state! Well, also Florida. Why do you think they are moving Texas and Florida?

source

• Job Market: Texas has a strong and diverse economy with opportunities in various sectors like energy, technology, healthcare, and manufacturing. Did I say Energy sector? (not to show by bias, but large in-bound movement is in fact in technology)
  • Healthcare, with largest cancer research, numerous hospitals perhaps provides stability
• Lower Cost of Living: Housing and everyday expenses are generally more affordable in Texas compared to many other parts of the US, especially California
• No State Income Tax: This can lead to significant savings, especially for higher earners
  • While this is indeed correct, property tax is very high here to offset the state tax
• Business-Friendly Environment: Texas offers lower taxes and fewer regulations attracting businesses and creating more jobs
• Diverse Culture and Lifestyle: Texas has a wide range of lifestyles and cultural influences, offering something for everyone
• More Space: Texas provides more space and less population density compared to many other states

Same data plotted differently to show the net migration, positive up, negative down, obviously!

Again, to bring the story back to houseing, because in the US that controls 60% or higher of our total expenses is the most important factor in personal finances.

This is the median single family home prices plotted as solid lines in Texas (green), and California (red). Also plotted the change of prices as a fraction (%) compared to previous year in dotted lines in Texas (green dotted) and California (red dotted). What are the observations?

• Well, prices in California are always higher than Texas (probably will be as well)
• Over the last 20 years the average gap between the two states is $345,930, say $350K
• Gap was lowest in 2011 ($195K), and highest in 2022 ($525K), at post covid high
• Prices in California are dropping rapidly, and likely will continue to drop

Hopefully you can sell your home soonish, if you live there. I will likely be in the market as a buyer in 2027!