Even as housing costs have risen over the last several years, Austin has managed to maintain a relatively affordable cost of living.
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You might have heard Californians are moving to Texas. Austin, in particular, has become a magnet for Bay Area techies and others seeking a lower cost of living and slower pace of life, among other Texan perks.
The surge of people moving to Austin caused a long stretch of home price and rent growth, but the city has managed to build lots of new housing over the last few years, helping bring costs down significantly. While Austin housing costs are still elevated, home prices fell by 8.4% and rents by 7% over the past year — even as homes grew more expensive in all other major US cities. And even as the city has ballooned in size, it's stayed relatively affordable compared to similar American cities.
While Austin's housing costs are slightly higher than the national average, the city's overall cost of living was about 2% below average in the last quarter of 2023, according to the Council for Community and Economic Research's cost-of-living index. The index is calculated using six categories: housing, utilities, groceries, transportation, healthcare, and miscellaneous goods and services, and is based on the spending habits of "professional and managerial households in the top income quintile."
Goods and services and transportation in Austin are cheaper than the national average, according to data collected by the Council and shared with Business Insider. The cost of living in the Texas capital, overall, is comparable to living in Atlanta, Georgia; Albuquerque, New Mexico; or Pittsburgh, Pennsylvania.
Austin is a particularly hospitable place for new college grads: the Austin metro area has the highest cost-of-living adjusted starting salary in the country, Business Insider recently reported. New grads — defined as full-time salaried employees between 20 and 24 years old — earned an average of over $58,000 in cost-of-living-adjusted dollars, compared to less than $28,500 in New York City and just over $49,000 in San Francisco. In Atlanta, new grads earned an adjusted $57,500.
This is likely in part because Austin has become a hub of high-paying tech jobs. Giant companies like Apple, Amazon, and Tesla have expanded their presence in the city in recent years, attracting a slew of well-compensated workers. Austin was among the top cities in the country attracting tech talent between 2022 and 2023, behind New York City.
But homes are still pricey. Despite building housing at the fastest rate in the country, Austin has struggled to build the kind of medium-density, middle-income housing it's in desperate need of. Instead, the city's sprawl is growing as people leave the city proper for the suburbs and surrounding cities. The city has lots of relatively small apartments and expensive single-family homes, but not a lot in between. And as profit margins trend downward for Austin developers, there's even less incentive for them to build more affordable infill housing.
But after years of efforts by pro-housing activists and lawmakers, the policy environment might finally be starting to change. City leaders are poised to approve a series of fixes to encourage the construction of smaller single-family homes and promote density.
"It's just been an amazing sea change when it comes to the conversations happening in City Hall," Greg Anderson, the director of community affairs at Austin Habitat for Humanity, recently told Business Insider.
If local leaders manage to push their pro-housing agenda forward, Austin could become even more affordable — and not just for its young tech workers.
Did you move to Austin for a lower cost of living? Reach out to this reporter at erelman@businessinsider.com.
