With more than a thousand people moving to Texas every day  along with some big tech names from Silicon Valley  whats behind the draw to the Lone Star State? Well, a vibrant housing market offering more space at lower cost is one compelling reason, as is the robust employment market. But is it as affordable to live in Texas as it is to move there? We break down the key metrics to establish the real cost of living in Texas. 

The big picture on prices

One of the reasons that Californians in particular are heading to Texas is that money goes further in Texas. Because of high real estate prices and taxes, Californians have to make 27.2 percent more to earn a living wage than Texans, according to one MIT study. Prospects are attractive for those arriving from other states, too. Texas ranks as the 19th least expensive state in a study by Insure.com that took into account housing, groceries, transport, health and insurance. Only home insurance and utilities were slightly higher than the national average, although patterns vary across the state. 

Of the top 20 U.S. metros, only Dallas featured as more expensive (+5.4 percent) than the national average, while Houston came out 3.8 percent below. 

Real estate is relatively affordable

Although the image of moving to a sprawling ranch is a popular one, the most competitive race is to secure square footage in one of Texass metropolitan hubs, even more so with the rise of remote working, thanks in part to the pandemic. The good news is that the median house price in Dallas-Fort Worth, Houston and San Antonio remains refreshingly low at just over $200,000, with an average of $129 per square foot. Houston, for example, has the sixth-lowest cost of living among the top 20 metropolitan areas in the United States, and housing costs are 36.3 percent below the national average. 

A potential storm cloud on the horizon, however, concerns the fast-rising house-price-to-household-income ratio, which has passed 4:1 in the major metropolitan areas. Added to that is the decline of low-cost rental housing. The median monthly rent is $956 across the state, but could soon outstrip income in Houston, Dallas and Austin in particular, where the median house price is a much higher $350,000. Two factors are fuelling the price increase. One is simple market forces, as a steady influx of highly qualified talent competing for real estate pushes up prices. The other is the high cost of land, which already accounts for 20.4 percent of Texas home prices. 

Utility costs vary

Texas is the largest producer of crude oil and natural gas in the U.S., but also leads the nation in wind-powered electricity generation. In fact, Texas produces more electricity than any other state. For the most part, the benefits of energy independence trickle down to the consumer, with the average Texas resident paying $133 for their monthly energy bill. It does depend on the region, however. Whereas El Paso and San Antonio maintain affordable energy monopolies, more than 400 cities in the state have a deregulated market, where competition does not necessarily translate into savings. Overall, Texas is 8.61 percent less costly than the national average for electricity, but beware of natural gas: Rising gas prices make Texas 27.55 percent more expensive for residential natural gas than the national average. 

A word on Texas taxes

New arrivals to Texas can savor the benefits of living in one of only four states without corporate or personal income taxes. However, that doesnt mean Texas is tax-free. There is a heavy reliance on sales and property taxes, which could be considered high by national standards. Homeowners should budget for the monthly property tax rate of 1.81%, which can certainly impact the overall cost of living. 

Food and groceries

It turns out that not everything is bigger in Texas. In most cases, the average cost of dining out and groceries is quite modest. Try the signature steaks or barbecue  the portions are every bit as impressive as you may have heard without having to break the bank when the bill arrives. According to the Living Wage Calculator, a family of two working adults with two children in Texas can expect to budget $9,305 for food per year. 

Transportation costs

Sperlings Cost of Living Index found that Texas was more expensive than the national average for transportation, although it was less so in San Antonio and Austin. The Living Wage Calculator estimates that the family mentioned above should set aside $13,896 for transport, making it the single biggest cost to budget for, even more than housing. Much has been written about the high costs of transport in Texas and how median travel costs of $1,152 in Houston make it only marginally more affordable than New York. These costs typically apply to car travel, with public transport very much an afterthought beyond the big cities. 

State variations in cost of living

Theres a risk of treating these figures as representative of Texas as a whole. Thats partly because 18 million of the states 29 million residents live in the Texas Triangle covered by Houston, Dallas-Fort Worth, San Antonio and Austin. The area is also responsible for 80 percent of the states economy. So although two of the most affordable towns in the US, Harlingen and McAllen, are both in Texas, it is the trends and fluctuations in the Texas Triangle economy that arguably matter most. Nevertheless, the overall picture is positive and Texas ranks as an affordable place to live on most counts. 

The months ahead will reveal a fuller picture on how the pandemic has affected the cost of living in Texas. For now, as long as the job market remains resilient and real estate prices competitive, the state is an affordable place to live  regardless of how long its been your home.