Why Austin Attracts Millionaires & High-Tech Companies

The city of Austin has become a magnet for high-net worth individuals, witnessing a surge in migration from various parts of the country. Why? Because the city is beautiful, fun, interesting, booming.

Austin's allure extends beyond its reputation as the 'Live Music Capital of the World' and embraces a dynamic economy, affordable housing, and a high quality of life. In this post, we explore recent migration patterns, factors contributing to Austin's appeal to young families, high earners, high-tech companies, and billionaires, and why Austin was chosen as the 2024 Best-Performing Large City in America. We'll also debunk some common misconceptions about the Greater Austin Metropolitan Area and share some statistics that may surprise you.

Migration Patterns - Texas Takes the Lead

The United States is experiencing a notable shift in migration patterns, with Texas and Florida emerging as the primary beneficiaries of an influx of high earners. According to recent U.S. Census Bureau data, California, New York, New Jersey, Pennsylvania, and Massachusetts have witnessed a net outflow of households earning over $200,000 per year. Notably, California's net loss surpasses New York's by nearly 8,000 households. Notice the dark green population change in the infographic below. That's where people want to relocate.

Population Change Graphic

Texas has seen unprecedented population growth, solidifying its status as the fastest-growing state. As of July 1, 2023, Texas is home to over 30 million residents, marking an increase of 473,000 people since July 2022. The population growth rate from July 2022 to July 2023 stands at 1.6%, positioning Texas as a leader in demographic expansion.

"Evidence continues to mount that the Lone Star State is quickly becoming a superstar economy." Texas' real GDP is now 12% above the level registered in 4Q19. In the third quarter of 2023, the state enjoyed a 7.7% GDP growth, while the nation was at 4.9% according to a WFBNA.

U-Haul reports, "Texas netted the largest number of movers in one-way U-Haul^® equipment in 2023" for the third consecutive year. In contrast, for the fourth year in a row, California had the largest net loss of one-way movers. Other departure states included Illinois (#49), New York (#46), and New Jersey (#45). In a post on X, the Texas Governor said, "People are flocking to Texas because of our low taxes, reasonable regulations, and world-class workforce. The Lone Star State is a beacon of freedom & opportunity where ALL Texans can thrive." -updated 1/7/24

Texas Population Chart

Austin's Meteoric Rise

Within Texas, Austin stands out as a key player in this demographic surge. City demographers project a remarkable growth trajectory, with the metro area expected to expand approximately 23% between 2020 and 2030. This staggering growth follows a historical trend that has seen the metro's population soar by 290% over the past 40 years, from less than 600,000 in 1980 to over 2.2 million in 2020.

Population Projections - Austin Metro

Austin’s Appeal to High Net-Worth Individuals

Several factors contribute to Austin's appeal to high-net worth individuals: outdoor activities, 300 sunny days per year, the art scene, museums, the symphony, ballet, live music, Formula 1 racing, luxury shopping and fine dining.

For example, at The Domain, a high-end outdoor mall, shoppers enjoy luxury stores like Neiman Marcus, Tom Ford, Cartier, Sakes Fifth Avenue, Gucci, Tiffany’s, and Nordstrom. After shopping, fine dining options at The Domain include Fleming’s, Perry’s Steakhouse, CRÚ Food & Wine Bar, North Italia, True Food Kitchen, and more. There are a myriad more locally-owned food options that are known worldwide. Can you say BBQ or ribs?

Relatively Affordable Housing

Another huge draw to Greater Austin is the area's relatively affordable housing market. Relatively affordable means when compared to high-cost, high-tax cities, Austin offers housing options at a much more reasonable cost. This makes it an attractive destination for those seeking a balance between quality of life and financial considerations. It is difficult to build wealth when housing consumes a disproportionate amount of monthly cash flow.

When compared to high-cost, high-tax cities, Austin offers the chance to live a lifestyle people only dream about in Coastal California, Chicago, New York, Seattle, and Portland. It is not uncommon for people to buy a house that costs 50% less than a comparable home in the city they’re leaving. And energy costs are significantly less.

The table below breaks down median house price per square foot by county in Coastal California, Chicago, New York, and Greater Austin. The two most populated counties in Greater Austin (Travis and Williamson) are shown at the bottom. Notice how the Austin area median house price is half or less of those other counties. It has probably been decades since people thinking about relocating from CA, IL, or NY could buy a house for under $300/sf.

Median House Price per SF by Region and County - Nov 2023

This is not to say that Austin doesn’t have luxury homes, which obviously cost more per square foot than the median prices shown above. For fun, check out this Lake Austin waterfront estate priced at $50,000,000. For a list of Austin's wealthiest zip codes, click here.

What matters to all of our clients is having choices and options. Many want to buy a dream house and be near their kids or grandkids. That can only happen if their kids can afford to buy a nice, much less expensive, home within an hour's drive. And the kids have to be able to get decent jobs so they can not only make their house payment, but enjoy their lives and spend time with people they love. Forty-five minutes from the spectacular $50 million mansion (see link above) are new builder homes priced in the $300s. Austin and its suburbs offer the best of both worlds - luxury or affordability.

High-Paying Job Growth

The on-going tech boom in Austin continues to play a pivotal role in attracting major corporations and fostering significant high-paying job growth across so many sectors.

Technology

Apple established a second headquarters in Austin in 2022, at a cost of over $1 billion. They aim to hire 5,000 employees across various tech roles like software engineering, machine learning, and artificial intelligence. This is in addition to their campus right down the road.
Oracle moved it’s headquarters from Silicon Valley to Austin.
Samsung recently announced a $17 billion investment in Taylor, Texas, near Austin, with a focus on semiconductor manufacturing and R&D.
Tesla opened a $1 billion Gigafactory in Austin in April, 2022. This January they announced plans to invest an additional $776 million in five new facilities. Tesla employs over 20,000 people in production, engineering, and other roles. When production of the Cybertruck fully ramps up, they are expected to employ 60,000 according to an article in the Austin Business Journal.

In 2021, Elon Musk said, “In my opinion, Austin is going to be the Silicon Valley of the future.” As a technology pioneer and (sometimes) richest man in the world, he might know what he's talking about. Nobody forced him to move here.

Aerospace and Defense

Firefly Aerospace, in Cedar Park, develops and manufactures rockets and launch vehicles, creating opportunities for engineers, technicians, and other specialists.
SpaceX - Elon Musk's aerospace company - has a growing presence in Texas, with potential for future job openings in Austin as its Starlink satellite internet project expands.

Other High-Growth Sectors

Healthcare - Austin boasts a thriving medical scene with major hospitals and research institutions. Jobs in healthcare IT, pharmaceuticals, and biotechnology offer high salaries and promising career paths.
Austin's burgeoning financial sector and growing startup ecosystem generating demand for skilled professionals in investment banking, consulting, and legal services.

For every multi-billion-dollar new headquarters in Austin, dozens or hundreds of smaller companies will locate near them to provide materials and services. And think of all the new businesses that will serve all the people who work these high-paying jobs at these companies.

No Personal State Income Tax

Austin's tax-friendly environment is a key factor in its appeal. Texas does not impose a personal state income tax or a corporate state income tax. This advantage, coupled with other tax incentives like property tax abatements and sales tax exemptions, adds to the city's overall attractiveness for large corporations and small employers.

It is impossible to overstate how important this is to high-earning individuals. As they say, "It's not how much you make, it's how much you keep." One of the benefits of relocating here, for us personally, has been our state income tax savings, which has more than offset our entire cost for housing - principal, interest, taxes, insurance, and HOA.

2024 Trends and Outlook

The National Association of Realtors (NAR) evaluated 100 of the largest U.S. metro areas to identify the markets with the largest pool of potential home buyers, the greatest likelihood for home price appreciation, and more. With all the growth and in-migration to Texas, and Austin, it is not surprising that NAR identified Austin-Round Rock-Georgetown, TX as the #1 market with the most pent-up housing demand for 2024. Other large metros in the top seven spots include: Dallas-Fort Worth, Durham-Chapel Hill, Houston, and Nashville.

Understanding Austin's Growth Projections

To comprehend Austin's rapid growth, let's take a closer look at the city's population projections. City demographers anticipate a 23% growth between 2020 and 2030, followed by an additional 18.5% increase by 2040. The momentum doesn't stop there, with an extra 15.6% growth projected by 2050 and an additional 13.5% surge by 2060. In simple terms, Austin's metro population is slated to grow by 90% over the next four decades, according to city projections.

This growth trajectory is a testament to Austin's attractiveness, not only to the average person seeking new opportunities but also to those who could live anywhere they desire. The city's transformation into a bustling metropolis has captivated the interest of high-net worth individuals, contributing significantly to its economic prosperity.

Understanding the Appeal: A Global Perspective

To further emphasize Austin's status as a global hub for high-net worth individuals, let's explore data on millionaires and cities worldwide. Austin is punching above its weight in this class.

Visual Capitalist's depiction below highlights the concentration of millionaires in major cities across the globe. Austin's presence on this list (scroll down) is a testament to its growing stature and appeal among the world's elite.

When looking at the whole world, which cities have the fastest growing millionaire populations?

Austin is number two in the world in terms of % growth of high-net-worth individuals.

Next, looking at the number of millionaire households by city, and narrowing the focus to the United States, notice that Austin is in the top 10, with over twice as many millionaires as San Diego. I'll bet a lot of financial advisors don't realize that.

HNWI by US Cities revised

Summary

Austin is a vibrant and cosmopolitan city that offers many luxuries and amenities. It attracts people from all walks of life and companies too. The city's cultural scene is diverse, with a thriving arts community, music festivals, and culinary experiences that rival those of more established cultural hubs. Additionally, Austin's commitment to sustainability, green spaces, and outdoor activities provides residents with a high quality of life that goes beyond stereotypes.

While the slogan, ‘Keep Austin Weird’ survives, the city's transformation into a diversified economy, coupled with its population growth and appeal to high-net-worth individuals, marks Austin as a dynamic and attractive relocation destination. The city's diverse cultural scene, commitment to sustainability, and vibrant lifestyle contribute to its reputation as more than just a tech hub. Sorry, but it's no longer a cow-town.

Austin is a place where individuals can thrive both professionally and personally, enjoying the best of what a dynamic urban or suburban, or even rural environment have to offer. If you would like to learn more, please subscribe to our newsletter or if you want to discuss relocation strategies and/or buying a new home in Austin, please feel free to call (512) 981-8279.

Why Austin Attracts Millionaires & High-Tech Companies