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Texas was the most moved to state in 2020 after Florida — here's what it costs to live there

"The weather is amazing, the food is exceptional, and the people are friendly."

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Of the nearly 9 million Americans who relocated in 2020, a substantial chunk of them moved to Texas. That's according to a new analysis from Move.org, which found the Lone Star State was the No. 2 most moved to in 2020, right below Florida.

Texas has a lot to offer, says Kelsey Morrill, business development director at Amazing Spaces, who has made three out-of-state moves in the last 10 years: "The weather is amazing, the food is exceptional, and the people are friendly. It's easy to feel at home here." Plus, the state is attracting more tech companies and Silicon Valley entrepreneurs.

Move.org's study used internal metrics, U.S. Census Bureau data, and a Pollfish survey of 700 U.S. adults to determine each state's popularity with incoming movers.

Moving company Atlas Van Lines also found that Texas was a hot destination. After studying 65,000 interstate and international moves in 2020, the company determined that Texas was an "inbound" state, with more households moving in (5,117) than out (4,098). In all, about 55% of the moves in Texas were people entering. 

Still, 45% of Texas movers leaving the state means a lot of people headed out. Move.org echoed Atlas' findings, ranking Texas as the No. 3 state for people exiting. The high number of people coming and going is likely due to Texas' large population, and the pandemic encouraged many people who were thinking of relocating to move sooner rather than later. It could also underline that the state is, for some, an acquired taste.

How much money does it cost to live in Texas?

Depending on where you live, moving to Texas could save you money.

A one-bedroom rental in Texas runs an average of $958 a month, compared to the national average rent of $1,400, according to RentCafé's National Rent Report.

Homeownership is also more affordable in Texas. The median home there costs $228,250, according to Zillow, while the national median is $272,450.

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In Houston, a home down payment averages $34,869, compared to the national down payment average of over $62,600. A typical household there saving 20% of its income would only need to save for three years to be able to afford a down payment, according to a study from real estate firm Point2.

Compare that to San Francisco, where the average home down payment runs $218,229. It would take over seven years, on average, for a typical household saving 20% of its income to be able to afford that.

The ability to afford a home appears to be a strong driver of moves to new states like Texas. In Move.org's poll, more than 35% of those surveyed were renters who became new homeowners after their move.

How high are taxes in Texas?

While housing may be cheaper in Texas, there are also taxes to consider. Annual property taxes on the median Texas home run about 1.8% of its total value, landing Texas among the top 10 most expensive states for property tax in a WalletHub analysis. New Jersey has the nation's highest property tax rate, at 2.49%, while Hawaii ranks lowest, at .28%.

On the other hand, Texas residents don't pay state income tax. Groceries, utilities, and transportation all tend to cost less as well, according to Best Places' Cost of Living index. On a scale where the national average cost of living is 100, Texas scores 93.9, while California scores 139.9 and New York scores 120.5.

It's easy to feel at home here.
Kelsey Morrill
Amazing Spaces

"Taxes are big," says Morrill. "I couldn't believe the difference removing state income taxes made."

For the most holistic tax picture, Morrill suggests movers take a look at the sales tax, state income tax, and property tax in their new and prospective states.

"For us, we were surprised to discover that the sales and property tax is the same as where we lived in Illinois," she says. "We were able to come out even further ahead in Texas with the lack of income tax."

How to save money to move somewhere new

If you're saving up for a move to Texas, or anywhere else in the U.S., take a steady approach, especially in a hot housing market. The pandemic has driven down mortgage rates, but home values are rising quickly. They went up almost 10% in the past year, and will likely increase another 11% in the next year, per Zillow.

Those shifts are affecting renters, too: The national rent price is up more than 3% since last year, reports RentCafé.

If your heart is set on a move, don't tap into your retirement money or emergency fund to make it happen more quickly, since that could hurt you down the line if you can't find a new job nearby or need to make expensive repairs to a newly purchased home. Instead, stash away a bit of money at a time until you reach the amount you need.

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It's also a good idea to make a budget for your new home prior to moving, says Autumn Lax, CFP in the Wealth Builder division of Drucker Wealth Management. "Research the place you are looking to move, and start estimating how cost of living might change. Set aside the [amount of] money you anticipate you will be paying each month, so you get a feel for what that's like before the move."

And if you can, have a cash cushion or buffer built in. "There are so many variables when it comes to moving, whether you're going cross-country or down the street," says Lax. "Make the most out of your move by getting your finances in order early and doing adequate research. Then you'll have more confidence heading into this next chapter in life."

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