February 8, 2024

Texodus: what’s behind the trend where Californians choose Texas over the Golden State

Over the past decade, California has faced an exodus that reached its peak in 2022 with three straight years of population decline. The reasons? High housing costs, quality-life issues, pandemic deaths and even remote work are some key contributing factors. What’s the Texodus and why is Texas the main star of the US?

A significant factor in California’s population loss has been residents moving to other States —mainly Texas, hence, the Texodus; as housing costs are fundamental aspects to be considered: in a recent PPIC survey, 34% of Californians considered moving out of the State due to housing costs. 

According to recently released census data the State’s population fell by 1.4%, or more than 538.000 residents, from 2021 to 2023, (0.9% in 2021, 0.3% in 2022 and 0.2% in 2023) 

Although the exodus may be slowing, its impacts are leaving their mark, as the State is reported to have lost $5.6 billion in taxable income to Texas during the pandemic. 

And the question has to be asked… what does Texas have that has attracted people so much that they decided to leave California? 

What’s more, what are the economic consequences?  

$29 billion lost in taxable income to other States 

During the COVID-19 pandemic, California started experiencing a population decline, marking the first decrease since attaining statehood in 1850. Although the pandemic had an immediate impact, growth rates have gradually slowed since the start of the 21st century. This decelerated growth stands in contrast with the previous century when California’s population scaled from under 2 million to 34 million. The dynamics of population change hinge on four key factors: births, deaths, international immigration, and interstate migration. 

And if California residents leave the State, so do their personal income. 

According to Bay Area News Group, California lost $5.6 billion in residents’ taxable income to Texas alone. Then, $4.4 billion to Nevada, $3.5 billion to Florida and $2.6 billion to Arizona, in 2021. That makes a total of $29 billion to other States. 

In addition, not only are a significant number of lower- and middle-income individuals leaving California, but an increasing portion of higher-income residents are also choosing Texas. Remote work, now considered the new normal in many professions, has contributed to the texodus with the relocation of some higher-income workers to move. 

Texas: the main star

According to Bellisario, Executive Director of the Bay Area Council Economic Institute, it was unsurprising that States such as Texas and Florida, which became prime destinations for fleeing Californians during the pandemic, saw the largest gains. In addition to offering less expensive housing and a lower cost of living, many also have growing tech sectors that undoubtedly attracted high-income workers. 

And, of course, the big concern is that some of the population moving out are the future entrepreneurs and the people who are going to be starting businesses. Who wouldn’t want them in their State? 

Moreover, between July 2020 and July 2022, Texas’ housing stock grew by almost 5% —the third-biggest gain of any State, while California’s housing stock increased by just 1.6%. 

Texodus: California experiences the biggest population decline in three years straight

And besides the housing stock, here are some benefits that boosted the texodus:  

  • Living costs: Texas offers a lower cost of living compared to California, particularly in terms of housing, taxes, and overall living expenses. This can be especially appealing for individuals looking to stretch their budgets further. 
  • Housing affordability: while the median home price in California is $793,600, Texas’ is $336,400, which proves how affordable the housing market is compared to California. Lower home prices and property taxes can make homeownership more accessible, and… why buy one house when you can have two in Texas? 
  • Job Opportunities: even before the texodus, the State experienced job growth in various industries, including technology, energy, healthcare, and manufacturing. The diverse economy provides opportunities for employment across different sectors. 
  • No State Income Tax: Texas is one of the States that does not impose a State income tax. This can result in significant tax savings for individuals. 

While officials and experts believe a return to growth is on the horizon, there’s still plenty to unpack in the recent migration shifts and their potentially lasting consequences. And if you’re one of those moving with the Texodus, let us give you a warm welcome in our Friday Open House sessions where we can assist you as we delve into potential career opportunities that can drive to your success. Get on board! Your deal is our mission