Key similarities and differences between New York, California, and Texas
New York, California, and Texas couldn’t be more different in terms of culture and lifestyle, but all three states are diverse, dynamic, and prosperous. Not to mention iconic – each state occupies a unique place in the American psyche. New York is known for art, music, creativity, and finance. California is still a world-class tech hub while Lone Star State will always be home to rodeo culture and some of the best BBQ in the country.
With large populations, skilled workers, and strong economies, each state could very well be a country in its own right.
But there is a huge difference between these states when it comes to taxation and governance. New York and California are known for having some of the highest marginal income tax rates in the United States, which help fund extensive social programs and government services.
Texas by comparison has no income tax and offers more streamlined social programs and services.
So when deciding where to relocate, buyers should ask themselves the following questions: In which state will they see their tax money at work? Do higher taxes and more bureaucracy create necessarily better outcomes for residents and can lower taxes create similar if not better outcomes?
Why are people from NY and CA moving to TX?
The COVID-19 outbreak has accelerated an exodus from New York and California to Texas, with high net worth individuals like Elon Musk, Joe Rogan and Carl Icahn moving across state lines, according to Bloomberg.
Some of the most common reasons New Yorkers and Californians are relocating to Texas include:
Favorable Tax Policies
Texas doesn’t have state income taxes, which allow workers to keep more of their take-home pay. Bonafide residents living and working in Texas can take advantage of favorable tax policies like this one to maximize their savings and investments.
Each state has its own tax policies on income and other assets. With the pandemic driving people out of major NY and CA cities, and with more employees working remotely from out of state, certain individuals might still have to pay taxes to their home state even if they are temporarily working out of Texas.
So far, more than a dozen states have announced that they will not be enforcing tax rules for remote workers due to COVID-19. But New York and California are known for having aggressive tax policies and are expected to levy taxes on remote workers for 2020, according to The Wall Street Journal.
So for example, if you’re a New York or California resident who has been working remotely in a different state during the pandemic, you’ll likely face extra taxes or tax filings for 2020. NY taxes remote workers who live and work in a different state if their job is connected to a New York office.
Moreover, NY is heavily dependent on high-income earners for a major percentage of its income-tax revenue. With the state being hard-hit by the pandemic, it’s likely that NY will levy taxes for remote workers for 2020.
In fact, NY Gov. Andrew Cuomo announced that out-of-state health workers who offered assistance during the pandemic might have to pay taxes in NY unless the state receives more federal money.
Remote workers in low- or no-tax states, on the other hand, might end up with lower total state taxes for 2020. As already mentioned, TX has no state income tax, so a tech employee from the Bay Area who moves here for several months might find a way around higher California income taxes on money earned while working in the Lone Star State.
But these remote workers need to proceed with caution – CA will still tax their income if their absence from Golden State is temporary. They’ll be better off if employers record them as Texas residents on paychecks and W-2 forms while working in TX.
With schools and businesses shuttered during COVID-19 restrictions in 2020, many employers started offering flexible work-from-home arrangements as parents took over homeschooling their children. Homeowners began to realize the importance of having dedicated work and learning spaces.
However, as states began to reopen, and children started going back to school, many employers allowed Americans to work remotely either permanently or partially, at least. Major companies like Dropbox, Facebook, Hawke Media, Salesforce, and Shopify have offered permanent and fully remote work arrangements to employees.
The ability to work from has allowed buyers to broaden their search and consider more locations outside of NYC, LA, and the Bay Area. As workers spend more time at home, they’ve begun prioritizing larger living spaces over centrally located but smaller homes that are closer to the office
NY and CA residents have long endured exorbitant home prices, rental fees, and living costs, particularly those living in and around metro areas, in exchange for quick access to better-paying jobs, entertainment options, and more. But when the pandemic upended lives, shuttered businesses, affected employment, and forced people to stay home, many NY and CA residents no longer felt that the higher cost of living was justifiable. Texas has a relatively lower cost of living and reasonable home prices.
The pandemic and ensuing stay-at-home orders imposed in 2020 have changed buyers’ preferences. According to Forbes, buyers now prefer having more space to being in a central location. An increasing number of Americans also moved away from densely populated cities and into suburban or vacation towns.
Outdoor space has also become a major consideration, especially for buyers with children. Compass reported three thrice as many searches for homes with outdoor pools and double the searches for properties with outdoor spaces.
NY and CA are known for crowded urban metro areas where buyers often have to settle for cramped spaces in exchange for location and lifestyle. But as Americans started spending more time at home, their priorities started shifting towards additional space and more peaceful communities.
As a result, Manhattan’s new listings for April 2020 went down by 87% compared to 2019. Properties also stayed on the market by an additional 16 days compared to the year prior.
LinkedIn data from April 2020 to October 2020 also found that Austin, TX gained the most number of new residents during that time period followed by Hartford, CT based on zip code changes and inflow-outflow ratio. NYC and the Bay Area lost the most residents.
North Texas offers a combination of dynamic metro areas and less densely populated suburban and rural areas with large houses situated on spacious lots. Outdoor space is no issue, with ranch properties scattered throughout Lone Star State. Buyers can also get more value for their money, with generally lower home prices compared to NY and CA.
Even before the pandemic, major companies have already been opening offices in Dallas and other Texas cities, with Wall Street executives moving thousands of jobs outside NY to cut costs and circumvent the state’s lack of business-friendly policies.
Financial institutions like UBS, Barclays, Goldman Sachs, Credit Suisse, Morgan Stanley, Citigroup, and AllianceBernstein established fully-staffed hubs in less expensive locations.
NBC News has also noted an exodus of tech companies from CA to Lone Star State. Oracle moved its headquarters to Austin, TX while Hewlett Packard Enterprise decamped to a Houston suburb.
Tesla announced plans to open a factory in Austin, TX, generating an estimated 5,000 new jobs in the area, while SpaceX will expand its Starlink satellite operation to the city with plans to establish a state-of-the-art facility. The company also has a launch site in Boca Chica, just off the coast of South Texas, where they are currently testing Starship prototypes.
Experts predict that this trend will only accelerate further in 2021 and that more Fortune 200 companies will consider moving their HQ to less expensive locations.
Although Silicon Valley is still attracting new employees, the rate of increase in new hires has dropped by 35% according to tech migration data from LinkedIn.
Major corporations are drawn to Texas for favorable business tax incentives and the opportunity to pay employees less, since the cost of living is lower compared to NY and the Bay Area. Some companies are expected to phase out employees in NY and CA, or at least slow the rate of salary increases, as they move the bulk of operations to TX, translating to long-term cost savings.
Cost of Living
Texans spend less and live more compared to their NY and CA counterparts. According to data from the Massachusetts Institute of Technology (MIT) Living Wage Calculator, housing costs in California were almost 60% higher compared to Texas in 2019 with Texans spending nearly 5% less than Californians on living essentials like groceries and utilities.
Why settle in North Texas?
North Texas is home to the Dallas-Fort Worth (DFW) Metroplex and its surrounding suburbs, making up one of the most dynamic and fastest-growing metro areas in the United States. It’s also home to Texas’ horse country, with massive ranch properties in secluded areas.
It encompasses roughly 9,000 square miles spread across 13 counties with 150 cities and an estimated total population of 7.5 million.
The region boasts of having the most diverse economy in the state and has the 5th highest concentration of tech workers in the nation, though North Texas is slowly inching its way higher up the rankings as more tech workers and major companies migrate from the Bay Area to the state.
Accessible via the DFW International Airport and a massive network of interstate highways, North Texas is ideal for residents who travel frequently for business and leisure.
Located in North Central Texas, Hill Country spans roughly 1,012 square miles of level plains and rolling hills across the Grand Prairie, Blackland Prairie, and Eastern Cross Timbers regions. Here you’ll find some of the most coveted equestrian communities and ranch properties in the U.S.
Hillsboro, TX serves as the county seat and is the largest city in Hill Country with a population of 8,342 based on 2019 census estimates. The city is located about 55 miles south of Fort Worth and 35 miles north of Waco, at the junction of Interstate Highway 35 (I-135) East and West.
Why buy a ranch in Hill Country, North Texas?
If you’ve been feeling stressed out, hyper-connected, or trapped in highly urbanized areas in NY or CA, ranch living in North Texas has the following benefits:
- Recreation – If you’ve always had a passion for horses, cattle, nature, and the great outdoors, ranch living lets you pursue hobbies that might be otherwise difficult to indulge in the big city. Ride horses, raise cattle, grow your own produce, and more when you purchase your very own ranch property.
- Space – As mentioned earlier, the COVID-19 outbreak and stay-at-home orders have forced homeowners to reassess their housing priorities and preferences. If you’ve always wanted more indoor and outdoor space, you’ll get more value for your money buying ranch property in North Texas compared to NY or CA.Having more space lets you enjoy more activities while staying at home, including exercise, horseback riding, entertaining friends and family, and more. You’re also less likely to suffer from cabin fever when you have more space to roam.
- Peace and Privacy – Some of North Texas’ most coveted ranch properties are located within exclusive communities and secluded areas where you can enjoy some peace and privacy. If you need a change in scenery, ranch living can help you relax and recover from the stresses of city life.
- Cleaner Surroundings – Living in horse country means living in cleaner surroundings. Because there’s less traffic, you can expect cleaner air and less trash. You can also look forward to less light and noise pollution, which can get in the way of a good night’s sleep.
Some of the most in-demand communities and areas in North Texas:
– Known as the “Cowboy Capital of the World”, the county seats, Banderas, TX, is all about rodeo culture, horseback riding, and ranch living. The city is also sought for its vibrant nightlife, live music, dining scene, wineries, and breweries.
Here you’ll find an excellent selection of single-family homes with plenty of outdoor space, ranch properties, and vacant lots with water, electricity, and phone connections available.
– Located in the southwestern portion of Hill Country, this area is known for its rivers, streams, and creeks, which lend themselves well to fishing, swimming, boating, and other relaxing activities. Frio and its county seat offer an array of single-family homes and vacant lots with essential utilities.
– Situated on the Edwards Plateau and Llano River Basin, Gillespie County is known for its ranching culture, with cattle, sheep, and goats being raised across the county. Most farms and ranch tanks are regularly stocked with sunfish, black bass, and channel catfish.
Fredericksburg, TX and other cities in Gillespie County offer a wide range of vacant lots and single-family homes with Ranch, Contemporary, and Mediterranean-style architecture, just to name a few.
– Also located on the Edwards Plateau, Kendall County lies approximately 30 miles northwest of San Antonio, TX, and is accessible via IH-10. The county seat, Boerne, offers upscale shopping, dining, and entertainment via Hill Country Mile in addition to horseback riding, walking tours, and other activities.
Your real estate options include spacious vacant lots and single-family homes with Ranch, Spanish, and Contemporary-style architecture.
– Named for the Medina River, Medina County is known for its beautiful parks, orchards, and nurseries, including the Love Creek Orchards and Nursery, which are famed for their apple trees and Bigtooth maples, respectively. The county seat, Hondo, offers a range of housing options, including single-family homes with Mediterranean, Ranch, and Bungalow-style architecture.
Why choose Texas real estate?
Texas’ housing market had a great start in early 2020, when mortgage interest rates declined. Although sales activity dropped in March and April due to COVID-19 and the ensuing economic shutdown across Texas, demand for housing grew as interest rates fell and more first-time homebuyers entered the market.
Sellers for their part held off on listing their homes and offering home viewings, contributing to a decline in housing inventory, particularly for properties priced $300,000 and less.
With strong demand and low inventory leading to substantial price growth, over 393,200 Texas homes were sold through the MLS (Multiple Listing Services), a near double-digit percentage increase compared to 2019.
These trends are expected to play out in 2021, with the Texas Real Estate Research Center projecting an 8.4% increase in single-family home sales. Here’s why you should invest in Texas real estate this year:
- Supply – Construction activity slowed in 2020 due to sluggish industry hiring during the pandemic. But low interest rates, housing starts, and more construction permits being issued indicate that construction activity will regain momentum in 2021. That means if you didn’t find your dream home last year, you might find it this year as the construction industry adds new housing stock.
- Space – With relatively lower home prices compared to NY and CA, North Texas gives you more space for the same amount of money or less. Here you’ll find massive ranch properties to help you pursue your hobbies and interests.
- Employment – With major employers moving their headquarters, offices, and manufacturing plants to Texas, new residents can gain access to career opportunities in tech, media, healthcare, finance, and other industries.
- Quality of Life – More space, a lower cost of living, natural beauty, and employment opportunities make it possible to lead a better, happier, and fuller life. When you’re not so overwhelmed by home prices and cramped living spaces, you can start focusing on your health, wellness, and sense of fulfillment.
What makes Texas real estate unique?
Texas is as diverse as it is large, and this extends to its housing market. Buyers will simply have more options, especially if they’re on a tighter budget, compared to major urban areas in NY and CA. And it’s not just pricing, the amount of buildable land, and sheer inventory spread across a large state – it also has to do with housing type, land size, location, lifestyle, neighborhood, and more.
North Texas is known for prestigious equestrian communities and sprawling ranch and farm properties. But you’ll also find a wide selection of condos, townhomes, waterfront homes, estate-style homes, and everything in between. The eclectic mix of architectural styles in the region, which includes Spanish, Mediterranean, Ranch, and Contemporary, just to name a few, reflects Lone Star State’s rich heritage.
The process of buying and selling Texas real estate is pretty straightforward – as with all transactions, you need to come to the negotiation table prepared. Working with an experienced agent will help you get the best terms and prices.
Work With an Agent
Whether you’re looking for a vacation home or a permanent residence, let me, Matthew Franek, help you find the perfect property in North Texas.
Message me here. You can also reach me at 512.709.3424 and firstname.lastname@example.org. As an experienced agent and member of the Texas Alliance of Land Brokers (TALB), I’ll help you secure the best deals possible.
I’m currently based in Boerne, TX, but my connections are spread across North Texas, helping clients get a foot through the door of some of the region’s most exclusive equine communities. This is especially helpful for out-of-state and international buyers who’ve never lived in the area – I can be your eyes and ears on the ground when buying and selling real estate.
Here’s what my clients have to say:
- “After contacting 3 other agents, Matthew showed he truly cared about my purchase. I know I wasn’t his biggest sale this year, but he treated me as if I was. I appreciated his honesty and negotiating skills. He is my go-to agent for now on. I highly recommend him.” – Martino Joseph
- “Matthew worked hard to understand what I was looking for and made it happen. I appreciate him looking at properties prior to our outing so we could focus on what my needs were instead of looking at properties that would not work. Found my perfect place on our first viewing on the third property. I look forward to working with him in the future when it is time to buy more land!!” – Tricia Harrod
Contact me today to find your dream ranch property!