Comparing the Cost of Living California vs. Texas

With the rise of remote work opportunities, the US is experiencing a major relocation trend, especially on the west coast. The year 2022 alone has seen around 102k Californians moving to Texas while only 42k Texans relocated to California.

While several factors contribute to this shift, the cost of living is probably the most compelling one to encourage people to trade beaches for deserts and mountains. If you are contemplating whether to relocate to the Golden State or the Lone Star State, here is a comparative analysis.

Overall Cost Comparison

California has always been known for its notoriously high living cost. According to the Council for Community and Economic Research (C2ER), California’s cost of living index is 142.2%, about 50% higher than the national average. But just 1200 miles away from Southern California the living cost drops significantly.

In Texas, the cost of living index is 91.5%, about 8% lower than the national average. Just comparing the C2ER cost of living index, you may say living in California is about 50% more expensive than in Texas. However, larger cities in both states may reveal some variation of this trend.

Housing

Comparing Cost of Living California vs. Texas

Texas and California both have dynamic and competitive housing markets. However, housing costs in California have been consistently high, almost 88% higher than the national average. The high property prices can be attributed to the dense population. Because of its unique geography, California has limited the number of available land that can be developed for housing. When you add strict zoning and building regulations due to the coastal proximity, the housing inventory further becomes limited. The vibrant economic sector and foreign investment also keep the demand for rentals and real estate high, ultimately increasing the market price.

In contrast, With low population density Texas provides more vacant plots for building new residential units. Texas also does not have stringent zoning regulations like the coastal areas in California.

The median sale price in Texas is $343,800 while in California it is $754,900, making it almost twice as expensive. Even luxury homes in Fort Worth, the fifth largest city in Texas, are way cheaper compared to moderate single-family homes in Beverly Hills or Malibu. A similar trend is evident in the rental market. As of 2024, the average residential rental rate in Texas sits at $1308, while in California the rent cost is $2345.

Groceries

Cost of Living CA vs. TX

While grocery costs vary widely depending on individual diet and living style, the location you are living in also plays a part. The higher housing cost also affects the average grocery cost in California. Californians have to spend roughly $620 per month for groceries, that’s almost $100 more than the average grocery cost in Texas. Even basic pantry items such as milk, eggs, or bread can be slightly pricier in California. The higher sales tax and the demand for organic, and specialty products are also responsible for driving up the price of daily necessities.

The Texan grocery market is dominated by traditional grocery chains, allowing customers to grab what they need at a competitive price. While the average grocery cost is lower than the national average, you may find places like Austin, or Dallas boast a higher price for essential needs. However, living in California offers residents a wide variety of options ranging from local to international items. Texas on the other hand offers a more traditional selection on that front.

Utilities

Cost of Living CA versus TX

While some may think Texans will have higher electricity bills as Texas has hotter summers, in reality, the higher consumption doesn’t result in increased utility bills. Despite the amplified use of electricity during summer and peak time Texans still pay less in terms of utility.

Texas has a competitive market where many electricity providers offer various plans and rates offering residents the flexibility to choose what they need. This ultimately results in efficient use of electricity and well within budget. The availability of various sources and cheaper natural gas further reduce utility bills.

In California on the other hand the electricity market is regulated by the state, enacting a higher base rate (14.58 cents per Kilowatt-hour for residential use) and raising the cost of utility. While natural gas is also available in California, the limited use of this resource works little to reduce the overall utility cost.

Transportation

Cost of Living

The availability of natural gas also impacts the transportation cost. Texas, having cheaper gas, boasts a lower transportation cost. In Texas, the average gas price is $3.62/gallon while in California it is $4.64/gallon.

When it comes to public transportation, California has a more comprehensive and developed transport system. You can’t expect the same in smaller cities in Texas. The impressive transport system also comes with a higher price in California. When you factor in the higher tax, parking fees, and tolls, owning a car also becomes expensive in California.

Education

Cost of Living CA vs TX

When it comes to education Texas is undoubtedly a popular choice for affordable quality education, be it K-12 education or university education. For K-12 education, yearly tuition cost at private schools in California ranges from $11000-$30000, whereas in Texas it only costs between $5,000-$15000. While the cost may seem exorbitant, in California students from disadvantaged backgrounds can have the opportunity to attend public preschool for free. In-state tuition in Texas universities is also significantly lower than that of California, costing on average $8500 per year.

With in-state tuition hovering around $14000, California boasts some of the high-ranking universities and research institutions in the world including UCLA, Stanford, Caltech, and UC Berkeley. Even though California universities are costlier, compared with Texas they offer more scholarships and research grants to students.

Healthcare

Similar to its Tech industry, California is also a major hub for medical innovation and healthcare. California boasts some of the renowned healthcare facilities and medical research centers in the US including UCSF, UCLA, and Stanford Health Care. This ultimately results in the availability of experts for almost every specialized health issue. Along with this, the strict state regulations result in higher healthcare costs in California. This also stretches to health insurance, requiring you to pay a higher average annual premium of about $5800 per person.

Texas on the other hand lacks the comprehensive and advanced healthcare system compared to California. The state has a cheaper healthcare cost with the average annual health insurance premium being about $5200 per person. However, unlike California, Texas doesn’t have Medicaid expansion, requiring you to pay more for emergency treatment if you are uninsured.

Average Income

Cost of Living California vs. Texas

Californians earn about 25% more than Texans in a year on average. The average hourly wage in California is $35.20 while it is $27.55 for Texas. Some may argue that Texas provides less in terms of average income, however, it has a far-reaching positive impact on liveability. The low wages limit peoples’ purchasing power, ultimately keeping housing prices and other expenses in check. This allows people to comfortably access basic needs despite having less income.

If a room isn’t a legal bedroom in California, it doesn’t affect the price much because of the high demand. Even if it doesn’t have a closet, homebuyers will likely still make offers on the property. Homeowners can quickly sell a house even if there are illegal bedrooms because of the high demand from people in CA. That drives the housing prices in California compared to other states.

In summary, considering all aspects, living in Texas is significantly cheaper than in California. The trend is likely to continue throughout 2024. However, the cost dynamic may be nuanced if you factor in specific locations or your personal preference. Along with the cost analysis, consider your priorities before you make the move.