On July 3, 2025, a modest three-bedroom, two-bath house tucked into San Jose’s Cambrian neighborhood sold for $1,730,000. At just 1,127 square feet, the home sits on a standard suburban lot barely larger than 6,000 square feet. From the street, it looks like thousands of other mid-century ranch houses scattered across Santa Clara County. Nothing about it screams “luxury.” Yet its selling price works out to an astonishing $1,535 per square foot—a number that would make almost any family outside the Bay Area gasp.
The buyers put down $500,000 and financed the rest with a 30-year adjustable-rate mortgage at 5.5%. On paper, it’s a success story: a married couple able to land a coveted address in one of Silicon Valley’s most competitive markets. But when you run the numbers, the reality is sobering. This single transaction illustrates why so many Californians are saying enough is enough—and heading for states like Texas.
The True Monthly Cost
Mortgage
A $1,230,000 mortgage at 5.5% costs $6,983.80 per month in principal and interest alone. That’s the starting point.
Property Taxes
California’s property tax system caps rates, but “low” is a relative term. Santa Clara County property owners pay a 1% base levy plus voter-approved debt for schools and other local measures. A realistic estimate is 1.20% of assessed value. For this home, that’s $20,760 annually—about $1,730 per month.
Homeowners Insurance
California’s insurance market is in turmoil, with major carriers pulling back. Even so, averages in San Jose hover around $1,090 annually, or about $91 per month.
Add it up
Together, these costs produce a PITI (principal, interest, tax, and insurance) of $8,804.64 per month. That’s before utilities, groceries, gas, childcare, health insurance, or saving for retirement. And because the loan is adjustable, there’s the looming risk that payments climb to $10,000 or more if rates reset higher.
How Much Income Does It Take?
Mortgage lenders use debt-to-income ratios (DTI) to qualify buyers. Using a conservative 28% front-end ratio, this home requires a household income of at least $377,342 per year. Even if a lender stretched to 36%, the family would still need nearly $293,500 annually.
For context, the median household income in San Jose is $141,565. That means the average family would have to spend nearly 75% of their pre-tax income just to cover housing costs on a home like this. Put simply: the math doesn’t work for most people.
The Bigger Picture
This is not an isolated case. As of July 2025, the median home price in San Jose is $1.5 million. Even with lower loan amounts, most families simply can’t qualify, and many who can are forced into financial contortions—taking on adjustable loans, co-borrowers, or giant down payments from family wealth.
Meanwhile, Texas offers a starkly different proposition. Comparable suburban homes near San Antonio, Austin, or Dallas often sell for a third of the price—or less. While Texas has higher property tax rates, the overall monthly cost of ownership, combined with zero state income tax, makes the equation far more manageable for middle-class households.
Why Californians Keep Leaving
Housing affordability is the loudest alarm bell, but it’s not the only reason people are leaving California for Texas. Ten other factors fuel the exodus:
- State Income Tax – California’s top rate of 13.3% is the highest in the nation. Texas has none.
- Insurance Market Crisis – Carriers retreating from California make homeowners coverage harder to get and more expensive.
- Electricity Costs – California ranks second only to Hawaii in residential electricity rates. Texas is closer to the national average.
- Gasoline Prices – In August 2025, Californians pay around $4.55 per gallon, while Texans pay about $2.76.
- Regulation & Business Climate – Surveys rank Texas among the best states for business; California among the worst.
- Corporate Relocations – Firms like Tesla, Oracle, and Charles Schwab have already moved major operations to Texas. Jobs follow.
- Homelessness & Public Safety – California has by far the nation’s largest homeless population, affecting quality of life.
- Overall Cost of Living – Groceries, utilities, and taxes combine to make California among the most expensive states.
- Regulatory Bottlenecks – Everything from building permits to business approvals is slower and costlier in California.
- Family Economics – Simply put, Texas still allows families to buy a house, raise kids, and save for the future on a middle-class income.
The Crossroads: Texas Sellers and California Buyers
California’s affordability crisis is driving families out. But Texas’s housing market has its own tension: high mortgage rates. Many Texans with 3% mortgages are reluctant to sell, because trading their current loan for one at 6–7% means doubling their interest expense. The result is a “lock-in effect”—fewer willing sellers, but a growing backlog of homes that do hit the market sitting longer.
Across Texas, inventory is rising, and days on market are climbing month by month. Buyers have more leverage than they did two years ago. For Texas homeowners looking to sell, this means one thing: success depends on reaching the right buyers. And the most reliable pool of buyers today isn’t local—it’s out-of-state cash buyers from California.
These are families who just sold million-dollar properties and arrive in Texas with the ability to purchase outright. They don’t care about today’s mortgage rates because they don’t need a mortgage. For a seller in Texas, targeting California buyers can mean the difference between sitting on the market for months or walking away with a closed sale at asking price.
