Elon Musk is doing it. Carl Icahn has already done it, so has Joe Rogan. And many who float in Manhattan’s upper echelons want to do it.
They’re being drawn to Texas and Florida, where lower taxes and other financial perks wait to welcome them from California and New York.
But what about the Americans who aren’t managing billions of dollars, sending astronauts to space in their rockets, or interviewing Kanye West on their podcast? Some of them are relocating across state lines too, hunting cheaper living costs, a bigger home, or a new adventure.
Austin — where podcast host Rogan moved to from California — gained the most people between April and October this year, followed by Phoenix, Nashville and Tampa, according to data on 47 metropolitan areas analyzed by LinkedIn. At the same time, the San Francisco Bay Area and New York City lost people.
“Moving from a highly dense area to a less dense area allows people to potentially really enjoy some of their hobbies,” said Josh Mungavin, a wealth manager at Evensky & Katz. “Now people can chase their passions.”
Independent filmmaker Hanna Miller, 30, lived in Oakland, California, for five years, but says Covid-19 changed the city so much that the high cost of living was no longer worth it. Her favorite restaurants closed. The cost of ordering in became too expensive and spending time outdoors turned stressful.
She and her husband had originally planned to buy a home in New Orleans by 2022, and had been setting aside 5% to 10% of their monthly income since 2017 to save up for a 20% down payment. In October, the couple did something they hadn’t expected to do so soon: they put down a 10% deposit and bought a home in the city.
“We actually bid quite a bit over what the asking price was for our house because it became so valuable to us to live in a place that had space that was our own, where the cost of living is lower and your quality of life is so much higher,” Miller said. “That became just so quickly so important to us, and Oakland lost all of its value.”
The couple — who lived in a small apartment in California — now spend $2,600 a month for a 1,500 square foot two-bedroom, two-bathroom house in the Irish Channel neighborhood in New Orleans. Miller says her expenses have substantially decreased since relocating. Weekly grocery costs, for example, went down from $200 to $100.
Cost of living played a major role in shaping peoples’ decisions on which city to move to during the pandemic, with some of the most expensive urban areas seeing the biggest population loss versus previous years. Outbound moves in the Bay Area rose 8% in May-September, compared with the same period in 2019, while Seattle and New York both experienced a 7% increase, according to data from Webster Pacific, an analytics firm, and United Van Lines, a moving company.
Meanwhile, Jacksonville, Raleigh, Charlotte, Nashville and Phoenix were among cities with the most inbound moves, according to the Webster Pacific and United Van Lines data.
Miller is happy to be out of Oakland — the city with the seventh-highest cost of living in the U.S., according to the Council for Community and Economic Research. New Orleans is 49th.
Her experience illustrates how Covid-19 is accelerating a decision that was being made by scores of others even before the pandemic. While cost of living, lifestyle, property prices and jobs influence the moves, the cities that are attracting the most people are in states with lower or zero local income tax rates.
Florida and Texas, for instance, don’t levy state income tax. But the newcomers will have to contend with California’s and New York’s strict residency rules before enjoying those perks. Additionally, Texas — for example — can impose high property taxes.
But a new beginning may not be as easy at it sounds, especially in the middle of a pandemic. Nikos Bountas, 31, had lived in the Bay Area for six years, but in October he moved to Scottsdale, Arizona, to work for a company that invests in clean energy. The weather, lower income taxes and cost of living were major factors driving his decision, he says.
However, even if the warm weather allowed for socializing outdoors and the surrounding national parks presented options for hikes and day trips, meeting new people and enjoying the city has been difficult, Bountas said. “I happened to be in Scottsdale same time last year and restaurants and bars downtown were full. Now I walk in the same areas and they are barely at 20% capacity,” he said. “Everyone already has their own circle and bubble of people that they interact with.”
Bountas rented a two-bedroom, two-bathroom apartment for less than what he was paying for a room in the Bay Area so that he could host friends from out of town. “Something that really helped me make this decision is that I knew many of my friends would work remotely,” he said. “Even if I don’t know anyone in the area, I will still have friends who can come visit and in some ways make it a smoother transition.”
Evensky & Katz wealth manager Mungavin says there are a lot of considerations to take into account before deciding to relocate. Moving to a larger apartment may come with additional costs that hadn’t been necessary before, like upkeep, renovations, homeowner’s insurance or hurricane insurance. Cell phone or internet services might not be as easily accessible.
Prepare for more limited food options and delivery services like Instacart, as well as fewer grocery stores in a smaller city or rural location. Warmer or colder climates might be ideal for you, but working remotely can get more difficult on a different time zone. And lack of public transportation or Uber can add other reoccurring expenses, like a car, according to Mungavin.
