For the past 10 years, traffic for the post, West Coast Living: Yes It Really Is Better, starts picking up around Thanksgiving. In the past, people landing on this post would come mainly from the East Coast. However, this year, I’m seeing more people coming from the Midwest and the South. Migrating to California is picking up steam now that the end is in sight for the pandemic.
The topic of migrating to California from the Midwest or the South is not a common topic. Usually, it’s people from more expensive California trying to see whether it’s worth migrating to a Midwestern or Southern state to save money.
When the weather gets cold and people are locked inside for longer periods of time, it’s natural to long for warmer places to live. Instead of enjoying the great outdoors for only 7-9 months a year, why not enjoy the outdoors in California for 12 months a year?
When you can go skiing three hours away after a major powder dump and then play tennis in sunny 68-degree weather a couple of days later, perhaps spending more money living in a place like California is worth it.
Here is some feedback I’ve received from readers who are considering migrating to California from a lower-cost state.
Thoughts On Migrating To California
Although I am long-term bullish on the heartland of America, I’m noticing a slight change in sentiment happening due to the pandemic. Here is some feedback from readers living in Austin, Sioux Falls, and Des Moines. I’ve edited the feedback for better flow.
The reasonings revolve around job opportunities, weather, diversity, children, and politics. With Joe Biden and Kamala Haris as President and Vice President for the next four years, more people want to live in states that are politically aligned with their philosophies. The same is happening in reverse.
Why I Want To Leave Austin, Texas
Sam, I’m currently living in Austin, Texas. I’ve been here for 10 years. I think it’s time for me to go. I make $170,000 as a software engineer and my wife works in sales. We can work remotely and we only have a dog. We are considering migrating to California for the following reasons:
There are only two months a year in Austin that are nice: April and October. Every other month is either uncomfortably hot or too cold. The humidity here is a killer!
Back in 2012, we broke a record with more than 69 days with a temperature of 100 degrees or higher. Your one or two-week “heatwave” of 80+ degrees a year in San Francisco would be a dream.
The traffic in Austin has been getting worse. Further, the cost of living is rising a lot due to the number of people moving to Austin from places like San Francisco. And most of the people coming here from The Bay Area are rich, white, men.
I figure, if I’m going to live in a more expensive city with lots of traffic, I might as well move to San Francisco or Los Angeles where I can get paid much more! In San Francisco, I should be able to make $250,000 a year.
Finally, Austin is still Texas. Texas is a conservative state with harsh drug laws and strict views about marriage and abortion. Such views go against our family values.
I Don’t Feel Safe In South Dakota
Although one can buy a really nice house in South Dakota for $350,000, my family and I don’t feel safe. South Dakota Gov. Kristi Noem (R), has vocally opposed mask mandates. She thinks masks are not effective against the spread of the virus and we clearly disagree.
If we can’t feel safe due to deeply ingrained beliefs about personal freedoms, then we feel it’s kind of pointless to live in South Dakota. Wearing a mask when we’re out in public is not a problem for any of us. Even our 4-year-old happily complies.
But when we see so many people out and about mask-less, it’s infuriating. We’re so close to getting a vaccine, I don’t understand why so many people are acting so carelessly.
I think it would be nice to relocate to a state like California where its citizens have a mask mandate and seem more respectful. It just seems like common sense. I make $150,000 a year and can work remotely. My husband is a stay at home dad to our two boys. But he does some handyman work here and there to bring in an extra $20,000 a yar. My boss says I’d get a 20% salary increase if I were to relocate to San Francisco.
Finally, it is not unusual for the summers here to climb above 100 °F several times a year. Winters are the worst with January high temperatures averaging below freezing and low temperatures averaging below 10 °F in most of the state.
The Downsides of Des Moines, Iowa
My family and I have lived in Des Moines, Iowa for 25 years. Go Hawkeyes! We like it here, but we’re thinking about moving to California for our daughter. I make about $120,000 a year and we have an office in Santa Monica, California.
But it’s hard to leave because the education system here is great with a 99% literacy rate. We also have the highest high school graduation rate in the country at about 90%. Bet not many people know this.
However, the winters often get below freezing, especially when you take the wind chill into consideration. You can get a lot of great steaks here, but not much else. It’s kind of a bummer if you are a foodie like Gavin Newsom.
The thing that makes us wonder whether it’s a good idea to stay in Des Moines is the lack of diversity. We are a white family living in a predominantly white city.
The racial makeup of Des Moines is about 82% white, 8% Black, 0.35% American Indian, 3.50% Asian, 3.52% from other races, and 2.23% from two or more races. We feel like we’re in this bubble.
We’re afraid the world will pass my two girls by given how competitive and diverse it has become. America doesn’t look like Des Moines. I wonder if it’s better to relocate to our office in Santa Monica.
Oh, and my wife and I are both Democrats. With Joe Biden winning the Presidential election, we thought it would be nice to move to a city and a state where we can openly celebrate for the next four years.
Des Moines is a quiet and inexpensive place to live. But we’re looking to change things up.
The Good And The Bad Of California
I’ve lived in San Francisco, California since 2001. For the most part, I think the city and state provide for a high quality of life. If it didn’t, California wouldn’t have the largest population in America with ~38 million residents. I would have also voted with me feet and moved long ago.
Before migrating to California from the Midwest or the South, here are some pros and cons about California you should know.
Pros Of California
1) More career opportunities
2) More opportunities to make more money
3) Better weather in coastal cities
5) Sunsets and beaches
6) Well-regarded public universities, e.g. UC Berkeley, UCLA, UCSD
7) Plenty of professional sports teams, e.g. GS Warriors, LA Dodgers
8) Blue state if you are a Democratic who supports Joe Biden
9) Plenty of nature that’s well-protected, e.g. Big Sur, Lake Tahoe, Muir Woods
10) Nice variety of easily-accessed landscapes: deserts, mountains, coasts, farmland, rolling hills, giant misty forests, and volcanoes.
11) Entrepreneurial culture: general embrace of new ideas/tech without a lot of dogma or soul-searching, an openness to experimentation, and a willingness to fail.
12) More immigrant-friendly
13) Closer to Hawaii and Asia
14) Much lower coronavirus positivity rates
15) More networking and investment opportunities
Cons of California
1) High housing costs
2) Higher taxes
3) High energy costs (gas and electricity)
4) Bloated and poorly-run government with frequent examples of corruption and hypocritical politicians
5) Lots of traffic pre-COVID due to bad urban planning and a large population
6) Blue state and identity politics if you are a Republican
7) Poorly funded infrastructure
8) Natural disaster threats like wildfires, droughts, and earthquakes
9) Farther away from Europe
11) Densely populated in the major cities
12) More stress and faster pace of life in the major cities
13) Harder to live a normal middle-class lifestyle and raise a family
14) Stricter lockdown restrictions during a pandemic
15) Less humility and more arrogance
Things To Do Or Know Before Migrating To California
1) Come with a job.
If you are considering migrating to California, I encourage you to first have a job opportunity lined up. Unless you’re single with no debt, don’t just come out here with no job and expect to find something relatively quickly.
Competition is fierce in every California city. Despite the perception of a laid back atmosphere, many type-A people from great universities like to come to cities like San Francisco and Los Angeles for the best jobs. With so much competition, life can become unpleasant.
Without connections or a star-studded resume, it’s very difficult to just land a high-paying job you enjoy. Due to the high cost of living, what savings you come with will quickly be exhausted if you don’t have a job.
If you do have a job opportunity in California and are coming from the Midwest or the South, I recommend you accept. Despite the higher cost of living, you will likely have a greater chance to make more money and build more wealth in California.
Once you’ve made your fortune, then considering leaving if you no longer enjoy the state. Even if you don’t make a fortune in California, you can still go back much sooner if you don’t like it out here.
2) Know the median rent and home price.
The biggest shock for folks coming from the Midwest or the South is the cost to rent or buy in California. San Francisco ($1.6M median home price) is the most expensive city in California followed by San Jose ($1.1M), Los Angeles ($788K), and San Diego ($650K).
Before buying, rent for at least six months to test things out. Renting is often cheaper than buying in the bigger cities, which means renting is also better value in the short-term. Once you’ve rented a place, spend some weekends driving around and visiting open houses in your ideal neighborhoods.
So long as you can spend less than 30% of your gross monthly income on housing costs, you are good to go. Spend any more and you’ve got to really be bullish on your income growth.
People migrating to California from the Midwest or South are the perfect candidates for my favorite real estate investing strategy: BURL. BURL stands for Buy Utility, Rent Luxury. The idea is to rent in an expensive city and buy in a cheaper city to earn higher cap rates. If you know you’d eventually like to move back to your cheaper city, BURL is the best strategy to follow.
3) Know your key state tax rates.
The California sales tax rate is 7.25%. This rate is made up of a 6.00% state sales tax rate and an additional 1.25% local rate. However, the San Francisco sales tax rate is 8.5%. The high sales tax rate is one of the reasons why I hardly ever buy anything in California. Buy things elsewhere and bring them over.
The average effective property tax rate in California is 0.77%, compared to the national rate, which sits at 1.08%. But don’t be fooled. You’ll likely have to pay a property tax between 1.25% – 1.5% a year on a much higher home price than in the Midwest or South. The San Francisco property tax rate is 1.25%.
Below are the latest California state income tax rates. The median Californian income-earner is paying roughly 6% in state income taxes each year. The threshold for paying a 9.3% marginal state income tax rate is quite low at $57,824 for singles and $115,648 for couples.
4) Learn about Hispanic and Asian culture
Roughly 39% of the California population is Hispanic and 15% of the population is Asian. The percentage of Asians is 36% in San Francisco.
To better assimilate, it’s worth learning as much as possible about various Hispanic and Asian cultures. Try to learn some Spanish, Cantonese, and Mandarin. If you do, you will make instant friends and have a better experience.
5) Learn about the history of California.
If you can read this Wikipedia page on California in its entirety, I’m sure you will be more knowledgeable than 90% of the population. Wherever you migrate to, it’s always a great idea to learn as much about the place’s history as possible.
Knowing a state’s history shows you care. You’ll be able to better understand where people are coming from and what drives people to do what they do.
I also encourage you to become familiar with our NBA and NFL teams. Californians are very proud of our championship heritage.
Focus On Income Growth To Get Rich
People have been coming to California since the 1849 gold rush to get rich. I don’t expect this trend to stop, despite the growing work from home trend. The desire to live in a big city will always be around. I fear how bonkers things will get again in places like San Francisco and Los Angeles after there is herd immunity from the coronavirus.
Migrating to Los Angeles or San Francisco is like focusing on growing income to get rich. Staying in a smaller city like Sioux Falls or Des Moines is like focusing on savings to get rich. It’s easier to grow your income to achieve financial freedom.
Of course, you can still significantly grow your income in a smaller city. However, there are simply fewer opportunities to do so.
What people who don’t live in California constantly get wrong is looking at housing costs in a vacuum. The main reason why housing costs so much is because incomes are so high.
If you are a college graduate who is offered a $120,000 a year job in California, take it! You can control your cost of living and save a lot of money if you’re willing. As a San Francisco landlord since 2005, I’ve seen plenty of six-figure income applicants willing to just rent a room for less than 10% of their annual gross income.
Just be careful. Once you make or have enough money to afford living in California, you may never want to leave again.
Migrating To California For More Opportunity And Lifestyle
Before migrating to California for a job opportunity in 2001, I spent 10 years living on the East Coast. Four years were in McLean, Virginia for high school. Four years were in Williamsburg, Virginia at The College of William & Mary. And two years were in New York City for my first job in banking.
Once I got to San Francisco, I realized there was no way I wanted to go back to the East Coast. I even turned down a big two-year guaranteed pay package to relocate to New York City in 2010. I loved San Francisco for all the things I mentioned above.
However, if there was no job opportunity for me in California, I would have grinded things out in New York City, a city I also love. If I remained in NYC, I probably would have gained 50 pounds, lost the majority of my hair, and suffered from intense allergies every year.
In a big way, California saved my health and my sanity because the work life balance culture is better. With less stress and better health, perhaps I may even live longer. Who knows for sure. The one thing I’m sure of is that California gave me a better life.
However, after 20-years of paying California taxes, we plan to relocate to Hawaii in 2022 or 2023 when my son is eligible for kindergarten. We simply long for even warmer weather year-round and a slower pace life. My family is also in Honolulu.
I’m tired of the California hustle. Everywhere I go, even at my weekly softball games, people are telling me about how much they’re making in XYZ stock. Just last week, a fellow softball player told me out of the blue he and his wife are making $700,000 a year, which is why they are buying a $2.6 million house. Cool. I’m trying to focus on fielding, not finances.
If you’re very focused on making money, come to California. California is where dreams are made. However, once you’ve made your fortune, perhaps it’s time to leave.
Real Estate Investing Suggestions
If you’re considering migrating to California from the South or Midwest, you may want to hedge your bets. Come to California for the employment opportunities and lifestyle, but invest in the South and MidWest using my BURL investing methodology. BURL means Buy Utility (cheaper areas with higher rental yields), Rent Luxury (rent in high cost of living areas).
My favorite two real estate crowdfunding platforms to invest in the heartland of America are:
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.
Both platforms are free to sign up and explore.
Any other readers considering migrating to California from the South or Midwest? If so, I’d love to hear your thoughts.