Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Freedom • Global Citizen

Why Are People Moving Out of California and Going to Mexico?

Today California has nothing but its brand name. Increasing housing prices, insane state taxes, and lack of safety. How can all that fit into the brand of the Golden State?

Exactly, it can’t.

The Californian dream is over. And California residents understand it better than anyone else. In 2021 alone, 360,000 people left the state, and it seems that Calexodus is gaining steam.

If you’re thinking about doing the same, our honest advice is to do it immediately. We’re pretty sure that for high-net-worth individuals, nothing will change for the better. It can only get worse.

So, why pay almost half of your income in taxes when you can pay less? And why should you stay in California when you can move overseas and have a better quality of life with the same budget?

Go where you’re treated best. That should be your primary goal. And if you ask us where you should go, we have one place in mind.

At Nomad Capitalist, we believe that Mexico is the best place to move from California. And if you want to know why, this article is for you.

Why Are People Leaving California?

Why Are People Leaving California
California is experiencing a serious population decline.

In the 80s, California was a promised land full of opportunities where everybody wanted to try their luck. From Hollywood to Silicon Valley, people believed that a better life was waiting for them in California.

But today, California residents are running away from this state like it’s a sinking ship. So, what has changed?

Rising State Taxes

High taxes are one of the main reasons why people are leaving California. California’s income tax rate is 13.3%, the country’s highest. If you take a look at the sales tax ranging from 7.25% to 10.75%, it’s not much better.The proposed wealth tax makes the situation especially daunting for ultra-high-net-worth individuals whose annual income exceeds $50 million.

High Cost of Living

Another reason why people leave California is the high cost of living. California is one of the most expensive states, and California residents just can’t keep up.

People want to live a stress-free life in a place where they can actually make money. And California can’t guarantee it anymore. Not to sound baseless, just look at the data.

You spend 276% more on rent in California than in Mexico City. Isn’t that insane? Even if you have money, why should you overpay?

Increasing Housing Prices

This news won’t surprise you, but California has been in a serious housing crisis in the past years. The situation worsened during COVID-19 when many people switched to remote work and left major cities like San Francisco. As a result, prices for apartments in suburban areas skyrocketed.

If renting an apartment in California is difficult, then buying real estate that costs less than $1 million is almost impossible. Especially in the Orange County or San Clemente. To be precise, the median home value in California is $898,980, which is 10% more than in 2021. And we believe that it will keep growing.

Low Quality of Life

California still has a reputation as a promised land but is it really that great to live there? 

In one recent study California was ranked only 48th best state to live in the US. 

California also has the worst infrastructure and education system, and its crime rate is higher than the national average.

Inflation

Sky-high inflation in the US hit hard, and Southern California residents feel it like nobody else.

The Southern California region has the highest prices for food and accommodation in the whole country, which is why business owners, entrepreneurs, and wealthy people are looking for alternatives. And that’s the right approach.

Why be a victim of inflation if you can just leave?

Many people got the idea, and now thousands of Californians are moving out. Some are relocating to Texas, Arizona, Nevada, or New York. Some are even taking one step forward and are heading to the southern border instead.

Why Are Californians Moving to Mexico?

Why Are Californians Moving to Mexico
Why are California residents moving to Mexico?

In 2015, our CEO Mr. Henderson called Mexico a soft-landing country for Americans. And the latest news about the California exodus only proves Mr. Henderson was right.

Located just three hours away from California, Mexico has been one of our favorite destinations at Nomad Capitalist. And we’re not alone. One million expats live in Mexico, most of whom are American citizens.

Considering the multiple advantages that Mexico offers, no wonder why people leave California to build a better life in Mexico. Ironically, Mexico has been right in front of them all the time, but they just needed a little push to see how great this country is.

But what exactly is so appealing about Mexico? Why, instead of moving to other states, are Californians going there? So, here are the main reasons.

Lower Cost of Living

Lower Cost of Living
Mexico has a lower cost of living than California.

The primary reason is that people seek a more affordable life in Mexico for themselves and their families.

As of now, consumer prices in Mexico are roughly 100% lower than in California, while rent is three times cheaper. In Mexico, you can afford a luxury villa with a sea view that you were only dreaming of in California. And we’re not talking about renting but purchasing it.

Considering minimal limitations on foreign ownership and an abundance of fantastic locations, purchasing real estate in Mexico will be a piece of cake.

Besides premium-class housing, you can expect more conveniences in Mexico. For instance, you can hire a housekeeper or a private chef and dedicate more time to your business.

The trick is that moving to Mexico will allow you to have a higher quality of life with the same budget. Entertainment, housing, and food – everything costs less.

Proximity

Proximity
Fewer people want to stay in California.

Another important factor that speaks in favor of moving to Mexico is its geographic location.

Moving to another country is always a life-changing decision. But it’s less frightening when you know that you can visit your family or friends any time you want. Mexico is only three hours away from California, and you can fly back and forth as much as you want.

In addition to the US proximity, you will have freedom of movement in Mexico. Mexico City has multiple direct flights to other countries. You can travel the world without obstacles and diversify your spare time.

Spend one weekend on the Caribbean island, next weekend in Europe. Who said that you can’t?

Weather

Weather in Mexico
All Mexican cities have a warm climate and plenty of activities to do.

Mexico has something that people leaving California are used to – gorgeous nature and perfect Southern California weather. No matter where you decide to reside in Mexico, it’s always warm and sunny everywhere.

Mexico also has many cities where you can enjoy a comfortable life. If you prefer a dynamic and eventful lifestyle, consider moving to Mexico City.

Sipping wine in the world’s largest revolving restaurant, having a hot air balloon ride, and trying delicious Mexican delicacies. Honestly, there are so many things you may love about Mexico City.

But if you’re tired of rushing all the time and looking for a peaceful place to stay, we would suggest Playa Del Carmen with its charming streets and white-sand beaches.

Mexican Citizenship

Mexican Citizenship
Fewer people stay in California.

At Nomad Capitalist, we have always said that a Mexican passport would be a valuable asset to your passport portfolio.

Mexico has high-quality citizenship that ranks 25th in global freedom. You can travel to 159 countries with a Mexican passport, including Schengen countries. And it’s relatively easy to obtain one. 

How Can I Get a Mexican Passport?

There are various options to get a Mexican passport.

The first option is to obtain a temporary residency first. To get qualified, you can make an investment or buy a property in Mexico. With a temporary residency, you can stay in Mexico for four years. And once you feel that you want to stay for a longer time, apply for permanent residency and later for Mexican citizenship.

The second option is to become a Mexican citizen through citizenship by descent. You will get a permanent residency if you can prove that you have relatives in Mexico or other Latin American countries. Later you can apply for citizenship.

The last option is for retirees. If you prove you have enough savings, you can get a temporary residence and get citizenship in the future.

To get a Mexican passport, in all cases, you must have stayed 180 days in Mexico in the past five years. If you want to learn more, we have a detailed article about how to get Mexican citizenship.

What About Taxes?

What About Taxes
How many taxes would I pay in Mexico?

And now it’s time to talk about taxes.

How much money you’ll pay in taxes in Mexico will solely depend on your particular case. The good news is that Mexico doesn’t have a wealth tax, and Mexican real estate taxes are low.

If you want to buy real estate in Mexico, you’ll have to pay 2% of an acquisition tax and up to $300 of annual property taxes. As you already know, real estate prices in Mexico are way lower than in California.

As the average housing price in Mexico is $65,000, we can confidently say that now is a great time to make an investment in Mexican real estate. But hurry.. According to experts, the prices will increase.

When it comes to income tax, you have to be creative. Yes, Mexico’s income tax ranges from 1.92% to 35%. But, Mexico also allows dual citizenship. If you don’t have a Mexican-sourced income and you own a tax residency and property in another country, you can be exempted from paying taxes in Mexico.

At Nomad Capitalist, we always said that you could protect your assets with multiple citizenships. And Mexican citizenship can be a great plan B for Americans.

To Sum Up

To Sum Up
Californian residents are leaving, and what about you?

When you’ve been told all your life that the US is the best place to live, it may be difficult to make a grand move and leave.

However, people’s patience tends to run out sooner or later, and we can see it pretty clearly with a California exodus gaining momentum. People moving out of California are looking for countries where they can be treated best. And Mexico is definitely one of their favorite destinations.

Many years ago, our CEO Mr. Henderson left the US for good. And if you’re thinking about doing the same but don’t know where to start, our Nomad Capitalist team is here for you.

We have helped hundreds of people move their business overseas, legally reduce their taxes, and become dual citizens. If that’s what you’re looking for, feel free to reach out to us. We’ll create a holistic plan that will serve your purpose.

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