- Many tech workers in California moved to Austin during the pandemic in search of a new lifestyle.
- Austin has also been portrayed as a growing tech hub, with companies like Tesla moving to the city.
- Some tech workers say they regret moving there, given its middling tech scene and "fake" atmosphere.
During the pandemic, Mike Chang, a 30-year-old founder and angel investor, moved with his wife from downtown Los Angeles to Austin. Like many others fleeing California, they grew weary of the state's high cost of living and the increasing crime and homelessness. They were excited to live in what they saw as a dynamic, fast-growing tech hub where they could afford a big house in a safe neighborhood.
But now, three years later, they are regretting their move.
"Austin is where ambition goes to die," Chang said. "We'd love to be in California."
Chang, who lived in the Bay Area prior to Los Angeles, is one of several tech transplants Insider spoke to who are having second thoughts about living in Austin.
During the pandemic, Austin became a hot spot for remote workers and coastal tech employees who were in search of more space, favorable tax laws, and a lower cost of living. At the same time, tech companies like Oracle and Tesla relocated to the Austin area, and other tech giants like Facebook and Google expanded their real-estate presence in the city.
Danielle Fountain, an Austin real-estate agent, saw a flood of tech workers arriving over the past few years, mainly because of remote-work opportunities — so much that The Hills suburb of Austin was nicknamed "Silicon Hills," she said. But as quickly as they came, many are leaving.
"I'm seeing a wave of people going back that could work from wherever when they came out here," Fountain said. "But now they're going back into the office."
Insider spoke to six workers in tech who recently left Austin or are trying to relocate (two of these workers spoke to Insider on the condition of anonymity because they didn't want to upset their employer). They cited several contributing factors, including extreme temperatures, traffic, overcrowding, and — perhaps most surprising — a middling tech scene that fails to live up to the hype.
From Silicon Valley to the Silicon Hills
Not long ago, Austin's tech scene was ascendant, with national headlines suggesting it could take on Silicon Valley.
In 2019, Apple broke ground on a new $1 billion, 3-million-square-foot Austin campus, and Facebook opened a gleaming 256,500-square-foot office. In 2021, Tesla announced with great fanfare it was moving its headquarters to Austin. Elon Musk said he was moving to Austin, joining other big names in tech such as Jim Breyer of Breyer Capital; Joe Lonsdale, the cofounder of Palantir; and Bill Gurley, a general partner at Benchmark.
According to the Austin Chamber, a nonprofit that advocates for the interests of businesses in Austin, the city netted 94,764 new residents between 2020 and 2022 — ranking it first among the 50 largest metros for movers as a percentage of its 2020 total population, at 4.1%.
That injection of new residents made its mark on the city's housing market. In May 2020, the median sale price for a home in Austin was $425,000, according to Redfin. By May 2022, it had peaked at $670,000, a nearly 58% increase.
Talent density
Once you peel back the boldface names who moved to the city and the corporate announcements about flashy new headquarters, the reality of day-to-day living and working in Austin's tech scene leaves a lot to be desired, according to those Insider spoke with.
For one thing, Musk, and even those without private jets, seem to spend very little time in the city and have shown little loyalty or civic pride, multiple people said. This year, Musk announced Tesla's "engineering headquarters" would be in Palo Alto in what was widely seen as a rapprochement with California officials.
And even though jobs in Austin are classified as tech because they are tech companies, the job functions tend to skew toward lower-skilled jobs, like customer service and sales.
Of the 8,311 Apple employees in Austin, roughly a quarter are engineers, according to an analysis of LinkedIn data. By comparison, about half of Apple's 52,610 employees in the Bay Area are engineers.
"I would encourage people to look at these companies like Apple, Oracle, and Tesla to look at what types of jobs are actually being created at these companies," said Chang, who said he rarely runs into the caliber of engineers or investors in Austin that are crucial for building an early-stage startup. "The talent density is still a lot stronger in the Bay because there's a network effect of all successful large companies that continue to get funded."
Despite his high-profile move to Austin, Gurley said recently in an interview with Bloomberg's Emily Chang that he doesn't think young founders should follow in his footsteps.
"If I was a 22-year-old founder starting something I'd go to Silicon Valley because it's going to increase your odds of success," Gurley said, adding that it is easy for people to get distracted in Austin because they might be having too much fun and not focusing on building their businesses. "I think there's a question whether you attract the most determined founders."
John Andrew Entwistle moved to Austin from Westchester County, New York, after graduating high school in 2017 to start his first company, Coder. The 25-year-old, who's now the CEO and founder of the vacation-rental company Wander, still lives there.
Entwistle agreed that Austin has a younger and more social crowd than Silicon Valley, but he's optimistic that the city's tech scene will mature over time.
"You don't have that many multi-unit, big unicorns like you do in Silicon Valley yet — it's still an early-stage tech scene," Entwistle told Insider. "As those companies grow and stay in the area, that dynamic obviously starts to shift a little bit."
Austin was oversold
While Entwistle is OK with being patient, others, including Nicholas Falldine, the head of product at a software company, didn't want to wait for Austin to bloom and lasted only a year.
He listed off a few of his displeasures with Austin, including a bad public-transportation system that led to awful traffic, subpar museums, and general overcrowding that makes it hard for any spontaneous activities — they must be booked far in advance, he said.
For the year he lived in Austin, he said there was never any payoff.
Falldine, 35, has since moved to Fayetteville, Arkansas. He acknowledged there's not much of a tech scene there but will take that over what he perceived as Austin's smoke and mirrors.
"It's a bit fake of a scene," he said. "Maybe it's because everyone that lives there has moved there within the past couple of years."
Nick Thomas, who works on the sales side, agreed that Austin doesn't live up to the hype.
"People say it's a tech scene just because that's what they were told, but when you get to it, there's no evidence for it," Thomas told Insider. "I think it was just oversold."
Thomas, 30, moved to Austin from downtown Los Angeles in January 2021 and is hoping to return to California soon. He said Austin is a "watered-down" version of other places he's lived like Los Angeles and San Francisco.
"It was supposed to have good food, weather, and good live music," he said. "That's what drew me there. Then I came to find out it didn't really fit any of those things."
Fountain, the real-estate agent, noted that Californians, especially, were unprepared for the weather. July was the hottest-ever month in Austin, with temperatures soaring to above 105 degrees for 11 straight days.
"When we started hitting 2022, what we started seeing was people had a whole year here in Austin and they realized they don't like the weather," Fountain said. "It doesn't have what they wanted in California."
When he lived in Los Angeles and the Bay Area, Chang said he took for granted being able to go for jogs outside or go hiking year-round. In Austin, he's been forced to spend much of the year inside to avoid extreme temperatures and had to buy a treadmill to go running in the air conditioning.
"Literally, I can't leave my house during the summers," Chang said. "During the winter, it's freezing relative to California."
"The heat is something else," Sam Parr, a founder and podcast host who is spending his first summer in Austin, recently tweeted. "I'm shocked how much it bums everyone out (myself included)."
Real-estate whiplash
Sheharyar Bokhari, a senior economist with Redfin, previously told Insider that Austin is experiencing whiplash after several years of robust buyer demand and price growth. Starter-home prices in the Lone Star state capital rose among the quickest in the country when interest rates were low, "but when interest rates went up really high and quickly, those prices were not completely sustainable," Bokhari said.
Austin ranks No. 5 in net outward migration from big US cities from January to May of this year, according to an Insider analysis of US Postal Service data. It's also one of only three metros in the country that's seen a decrease in the price of starter homes — defined by Redfin as homes in the fifth to 35th percentile by sales price — since this time last year.
Since 2022, the median home price across all categories has fallen as low as $525,000 in January, signaling a possible withdrawal as some remote employees have been called back to the office and others have fled in search of affordability.
As much as Chang wants to get out of Austin, the rise in interest rates means he may have missed his chance.
"If we sell, we would give up our 3% interest rate loan and would need to buy at 7%-plus, significantly reducing our buying power," Chang said. "With housing prices being much higher in coastal cities, this makes buying nearly impossible."
Stuck in Austin until interest rates or coastal housing prices fall, Chang has spent the summer scrolling through Instagram, envying the friends he left behind in California.
"Social media has certainly made being trapped in Austin much worse," he said. "It's tough watching friends frolic on the beach, go on hikes, and walk their dogs while we are stuck inside because it's over 100 degrees."
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