As more Californians head to Texas, how do the states really stack up?

His goal was sharing the wealth, but all the activity also led to a new business opportunity: Dang started buying houses and opened a new investment company in a place that reminds him a lot of his own Silicon Valley hometown.

“I kind of fell in love with Austin,” Dang said of the Texas capital. “It’s a young town. It’s a small town. But it’s growing.”

For years, the debate about California-to-Texas migration has pitted low-cost, anti-regulation Texas against higher-income, socially liberal California. But after a surge in both states’ housing markets during the pandemic, a new report from Stanford University and the University of Texas at Austin compares how the nation’s two most populous states really stack up when it comes to factors influencing daily life — from housing affordability and homelessness to average income, education, health care and air quality.

Californians still make about 30% more money, the report found, though only about 56% of Golden State residents own their homes compared with 66% of Texas residents. The Lone Star state has also pulled ahead in attracting new residents, high school graduation rates and several environmental metrics. For these states that have long taken opposite political approaches, the question is how much familiar affordability issues could hobble each state as residents like Dang deepen the financial and personal connections between them.

“Right now market forces are telling California, ‘Get your s– together,’ ” said report co-author Mark Duggan, director of the Stanford Institute for Economic Policy Research. “This exodus thing — I think it’s a risk.”

From 2015 to 2019, some 367,000 Californians moved to Texas, census estimates show, compared with about 197,000 people who moved from Texas to California. Despite brutal recent crackdowns at its southern border, Texas has also started to outpace California on international migration, which for decades has provided the Bay Area a huge pool of engineers, nannies, restaurant workers and other immigrant residents. With 29.1 million residents spread across 269,000 square miles, Texas is physically bigger but less populated than California and its 39.5 million residents spanning 164,000 square miles.

On the ground in Austin, Dang is seeing increasing interest from immigrant and international home buyers, who in his experience are often looking for places to invest money earned at tech jobs or from fast-growing economies in places like Vietnam and Hong Kong, where it’s often harder to buy property. He’s now taking frequent trips to Texas with Bay Area business partners like Trinh Wong, staying in Airbnbs and going on home scouting trips with local Realtors they met in the Facebook group.

So far this year, Dang said he’s purchased several properties in Austin and recently started a new branch of his business there. Wong is looking to invest in retail space, hotels and Airbnbs near offices for companies like Samsung, Google and Apple.

“Everything is growing that comes with the jobs,” Wong said. “The market here is the same as the Bay Area.”

And like the Bay Area, chasing tech money has also led to complications. Lana Nguyen, one of the Austin Realtors whom Dang and Wong met on Facebook, said the market has calmed down slightly after a peak of around 20 offers on many homes earlier this year. But she said many longtime homeowners are afraid to sell because of fears that they won’t be able to find a new house. Dang said several of his homes in Austin were purchased from seniors looking to sell after property taxes rose sharply in recent years — a far cry from California’s controversial property tax law that locks in rates when a home is purchased.

“There’s no Prop. 13 in Texas,” Dang said. “I feel kind of bad, but it’s something that Texans have to decide for themselves.”

Duggan sees the divide in how Texas and California tax residents as a key way to compare what the states are getting in return for drastically different spending patterns. Where Texas relies on rising property taxes to fund schools and limits spending on other social services, California’s higher income taxes on wealthy earners helps allow the state to generate and spend about 60% more than Texas each year.

Still, he said, California’s homeless rate is four times higher than in Texas, non-white students are less likely to graduate high school in California, and necessities like electricity are half as expensive in Texas. After an unemployment crisis during the pandemic, Duggan notes that California also now has the highest deficit for jobless benefits of any state in the country, thanks to a system that disproportionately taxes employers of low-income workers.

“In California, there is this idea of ‘Oh, we care about the poor,’” Duggan said. “But on this metric we are literally the worst.”

These are the kinds of glaring political differences that Marie Bailey hears about a lot as she cruises around the Dallas suburbs in her bright pink Tesla Model S with the license plate “MOVE2TX.” Bailey is a Realtor who moved four years ago from Orange County to a 2,000-acre housing development in Prosper, Texas, then started running party bus tours for other prospective California transplants.

Now the founder of the 34,000-member, conservative-leaning “Move to Texas from California!” Facebook group does several individual tours a week. Of late, post-pandemic job offers and backlash to COVID-19 health orders are driving the interest.

“A lot of people are moving because of some of the vaccine mandates,” Bailey said, adding, “I’m not an anti-vaxxer.”

In this frenzied environment, California Gov. Gavin Newsom has several opportunities to determine what happens after a failed recall attempt that he cast as a referendum on former President Donald Trump. Newsom has signed several significant housing reform bills in recent weeks, though many in the industry wonder if it will be enough to address the state’s pattern of permitting fewer than half as many new homes as Texas each year.

Rising crime rates are another challenge in both states. While Texas incarcerates people at a 72% higher rate, according to federal data cited in the new Stanford report, California spends significantly more on police at $526 per resident, compared with $302 in Texas. More frequent natural disasters are another common challenge in recent years for each state, knocking out power for extended periods. But so far, Texas has kept electricity prices lower and suffered fewer power outages than California.

Despite the many big questions about both states’ futures, Sailesh Thakker is still spending his weeks responding to frantic calls from investors every time a new tech office is announced in Austin. The former Walmart.com software architect moved to Austin to become a real estate agent last March after buying two houses in the area while he was still living in the South Bay.

Now, about 80% of his business comes from other individual investors looking to buy houses in Austin, many back in California. He’s developed a system of FaceTime tours, electronic document signatures, then dispatching a local notary to finalize the deal remotely — a virtual version of what feels a lot like the housing boom he watched over the last decade in the Bay Area.

“We think, ‘Oh, it cannot go any more than this,’” Thakker said. “But then it again goes up.”

Lauren Hepler is a San Francisco Chronicle staff writer. Email: lauren.hepler@sfchronicle.com Twitter: @LAHepler

Article source: https://www.sfchronicle.com/bayarea/article/As-more-Californians-head-to-Texas-how-do-the-16485798.php

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