Rich millennials are on the move: Wealthy young professionals earning over $100K are leaving California and New York — here's where they are headed and why
Young professionals who make more than $100,000 are fleeing California and New York — and the prices you pay to live in them.
The cost of living remains stubbornly high, and even wealthy adults under 35 who fled the nest have returned home to roost, according to a September study of 2019-2020 tax returns by SmartAsset.
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These moves are emblematic of two broader trends. First, millennials across the U.S. are realizing there's no place like home, as a 2022 analysis by the Census Bureau and Harvard University found 80% of young adults live less than 100 miles from where they grew up.
Plus, wealthy millennials aren't the only ones fleeing expensive states: California and New York had the largest net migration losses last year, coming in at -343,230 and -299,557 people respectively, according to data from the National Association of Realtors (NAR) published in January.
But where did all these rich young professionals actually go? It’s time to pull up the map app and take a closer look.
In 2019-2020, Texas ranked the most popular destination. Roughly 15,000 wealthy young adults came into the state and only about 11,200 left for a net inflow of about 3,800, according to the SmartAsset study.
Fast forward to 2022, and Texas also saw one of the largest overall net migration gains — a measurement of the total number of people moving both in and out of the state — with an influx of 230,961 making the state their new home, according to data from the NAR. Even when compared with the rest of the country, Houston was one of the cities that saw the largest number of inbound moves last year.
The Lone Star State benefits from the lack of income tax. Instead, Texas relies on high sales and use taxes, and property taxes, to pick up the revenue slack. In fiscal 2019, 26.6% of the state’s net revenue came from the $34 billion collected from sales taxes alone.
Which means high earners definitely have good reason to weigh the income tax advantages and tradeoffs in this state.
Coming in second was Florida, which also boasts no income tax. The state experienced a 3,400 net inflow of wealthy young professionals, according to SmartAsset.
And just like Texas, Florida has a moderate sales tax of 6%. California’s is 7.25%, while New York’s is 4% (but in combination with city taxes comes out to 4.5%).
True, counties in Florida can levy a discretionary sales surtax of between 0.5% and 1.5%. However, for many years now, Florida has maintained one of the lowest tax burdens in the country.
At 318,855 people, Florida had the highest net migration gain in 2022, according to the NAR. Florida was the fastest-growing state over the last year, with an annual population increase of 1.9%.
According to the NAR, it's the first time since 1957 that Florida’s population grew faster than anywhere else across the country. Some of the cities that saw the biggest influx of people are Ocala, Tallahassee and Deltona, where inbound exceeded outbound moves by more than six percentage points. Like Houston, the NAR attributes this in part to the area's strong job market recovery after the pandemic.
According to the Smart Asset study, Colorado saw a net inflow of 2,641, with relatively few wealthy young professionals leaving the state — just shy of 4,700 at that time. Millennials make up the largest proportion of the population as of 2022. Again, this revolves around overall quality of life, with affordability also a factor.
In terms of overall population, the state saw a modest net migration gain of 5,376 in 2022.
The Centennial State beckons with promising job opportunities (especially in Boulder, a high-tech hotbed), pleasant weather and plentiful options for outdoor activities. These points came into sharp focus during the pandemic as millennials searched for a better quality of life.
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While the next two states saw net migration losses in 2022, they were still some of the most popular destinations for rich young professionals in SmartAsset's review of 2019-2020 data.
Washington state’s net inflow of 3,400 young professionals met a mixed economic reality: no income taxes, high sales taxes (6.5% plus local levies); overall affordability but sky-high housing costs in hot metro areas like Seattle.
As the influx continues, Washington now hosts the fourth highest percentage of millennials of any state, according to WalletHub. The state also finished tops in the United States on a composite score that factored in affordability, quality of life, education and economic health.
While more Americans came to New Jersey than Colorado, more left as well, which explains why it placed fifth. About 2,500 wealthy young professionals moved to New Jersey during the time period covered by the study.
In this case the answer as to why New Jersey seems clear: If you want a glitzy Manhattan job, great wages and plentiful opportunities without the Big Apple prices, New Jersey is your place.
Many South Jersey communities also boast much shorter commutes to Philadelphia than Chicago suburbs do to the Loop. And it’s an easy commute across the Hudson or Delaware River to find affordable housing.
Planning to relocate? Consider this
If you are looking to relocate and buy a home in any state, it's important to get a good idea of what all of your housing costs might look like before you make a move — and that includes your home insurance.
Across the country the average price of a home insurance policy in 2023 is $1,516 — nearly 40% higher than it was 12 years ago. But that doesn't mean it's impossible to find afforable coverage.
Local homeowners in Washington state, for example, often save close to $1,000 or more per year by shopping around for their insurance — that's according to the nonprofit consumer group Puget Sound Consumers’ Checkbook.
Whether you are thinking about switching policies or you are getting one for the first time, you’ll need to comparison shop multiple home insurance companies — which you can do quickly and easily online.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.