Texasmonthly.com:
One sunny morning this spring, a Chevy Suburban pulled up to a sizable Mediterranean-style house in a gated community on the west side of Fort Worth. Inside the SUV, Ernie Tarut was recalling how the warm welcome he’d received at the Wrangler National Finals Rodeo, held in Arlington last December, had influenced his decision to move his Old Gringo Boots company from San Diego to Cowtown. “It was a great feeling that all these people were excited to have Old Gringo maybe coming here,” he said. “I was like, ‘Why do I want to stay in California? Here it seems like I’m already home.’”
So, just a few months after the rodeo, real estate agent Jamie Adams brought Tarut and his wife, Josy, to check out this two-story, 5,376-square-feet home listed for sale at $1.7 million. It was the couple’s second visit to the house in the Montserrat development, roughly a twenty-minute drive southwest of downtown Fort Worth. The Taruts both liked it—maybe even more than the ritzy penthouse condominium that they were also considering at the Montgomery Plaza building in the city’s West 7th district.
Built in 2016, the five-bedroom, five-and-a-half-bath Montserrat home was all pale walls, vaulted ceilings, and highly polished marble, wood, and tile floors. The kitchen was cutting-edge, with a commercial-grade range and an island with granite countertops. There were big walk-in closets in all the bedrooms, plus an office, a mudroom, and a media room.
“We need a gym,” Ernie said. “After COVID, I bought professional equipment, because all our gyms closed down. We need a place to work out.”
Josy admired the home’s big master bathroom, with its dual sinks, freestanding tub, custom closets, and sitting area. “Look at all this space,” she exclaimed. “It’s open and vibrant and light. This house is big, but it’s not overwhelming.”
The living-room windows afforded a generous view of the sprawling backyard, which boasted a saltwater pool, a firepit, and a lighted basketball court. “I played competitive beach basketball in San Diego for twenty years, until I was fifty-five,” Ernie said. “I don’t know if I can get out there again—I’ve got arthritis in my hands—but I love it.”
Meanwhile, over by the kitchen, Adams huddled in conversation with John Zimmerman, the property’s listing agent and one of Adams’s colleagues at Compass Real Estate. Zimmerman remarked that he has “tons” of clients who are relocating to Texas from California, just like the Taruts. “I bet I’m working with fifteen or twenty of them right now,” he said. “They’re from Northern to Southern California. I’ve also got tons from Illinois and New York, but California is number one, for sure.”
Business owners like Ernie Tarut, as well as their top executives and employees, lately have been swarming into Texas, bringing new blood to the state—and further driving up home prices. Fueled by record-low mortgage rates and an acute shortage of properties for sale, the already hot real estate market in North Texas was particularly scorching in the luxury segment during the past year.
Real estate agents who specialize in properties costing $1 million or more say the executive transplants hunting for posh, move-in-ready homes have been a bonanza to their business. Some of the newcomers are expecting to find Texas-size acreage along with their new abodes. Others are put off by the state’s sweltering heat. But all of them, the agents say, are seeking a more hospitable place to live and do business.
Between 2010 and 2019, according to the U.S. Census Bureau, about 13 percent of all people migrating to Texas came from California. The COVID-19 pandemic seems to have accelerated that trend, according to an analysis of government population estimates by the nonprofit Brookings Institution.
Pandemic-induced job losses in some of the nation’s biggest coastal cities, including Los Angeles and San Francisco, combined with so many white-collar professionals newly free to work from home because of office shutdowns, led to many Americans relocating to less-dense areas that were viewed as more affordable, with a better quality of life, Brookings found. The exodus especially benefited Sunbelt metros, including Austin and Dallas–Fort Worth.
And it wasn’t just individuals who were spurred to make a change of address. Texas, already a magnet for corporate relocations, saw an accelerated wave of them in the past year—especially among companies with California roots.
Last year, for example, software maker Oracle said it would move its headquarters from Redwood City, California, to Austin. Palo Alto–based information technology company Hewlett Packard Enterprise announced it was bound for Spring, a suburb of Houston. North Texas recently has attracted its share of high-profile California companies too, including the headquarters of financial services company Charles Schwab, tractor maker Kubota, commercial real estate firm CBRE, and McKesson, a health-care services company.
Austin, which the Census Bureau estimates gained more people between July 2019 and July 2020 than any large U.S. metro, has been experiencing a torrid housing market. Home values in the Austin metro increased by nearly 30 percent over the last year, with the median sales price hitting $482,364 in June, according to the Austin Board of Realtors. Meanwhile, the MetroTex Association of Realtors reports the median price for homes in Dallas–Fort Worth has likewise soared, rising to $302,000 in June, up 19.3 percent from a year ago.
Dallas–Fort Worth outpaced all Texas metros in annual sales of luxury homes through October 2020, with 2,130 sold—a 20 percent increase over the previous twelve months, the Texas Luxury Homes Sales Report said. Faisal Halum, an agent with Dallas-based Briggs Freeman Sotheby’s International Realty, says up to 70 percent of the high-end transactions he brokered last year were for out-of-state buyers, most of them from California.
“I don’t think any of us expected the influx. A lot of us were thinking it was going to be 2009 all over again,” he says, recalling last year’s lockdown caused by the pandemic and comparing it to the Great Recession. “It’s definitely been a windfall for us.”
Halum, who specializes in homes priced between $3 million and $20 million, says the corporate executives he’s worked with have been scouting North Texas “well in advance” of announcing their companies’ plans to move. For that reason, many have insisted that their agents sign nondisclosure agreements promising confidentiality about their relationship.
The executives’ taste runs from contemporary houses to traditional estates, often in the posh Park Cities or the Preston Hollow neighborhood, both of which sit in the heart of Dallas. “They’ve heard about Highland Park, and they like the security and the feel and the close proximity,” Halum says. “In Preston Hollow, we saw big estate properties that had been on the market for over twelve months finally selling in the second half of 2020. Most of that was to Californians.”
Halum believes many of the executives are fleeing the Golden State because of its high taxes. In sharp contrast to Texas, which has no income tax on individuals, the top individual rate in California is 13.3 percent, and state lawmakers have considered raising it even higher. California has also considered a wealth tax on those earning high incomes. (But, it should be noted, the effective property-tax rate in Texas is more than twice California’s.)
With the sky-high cost of homes in California—real estate website Zillow said the typical home value there was $683,996 as of June 30, versus $247,210 in Texas—do the transplants feel like housing is a “bargain” in Texas? “For these buyers, I wouldn’t say it’s a bargain,” Halum says. “But when they factor in the tax savings, I joke about this. I feel like California is paying people to leave.”
Erin Mathews, a high-end residential broker with Dallas’s Allie Beth Allman & Associates, says she’s dealt with “a shocking number” of Californians. “A lot of them don’t like the taxing situation” in California, she says. “Others say they’re fearful for the way of life in California, even though they love it out there.”
Her California clients, many from the Bay Area, are seeking new or newish homes costing upward of $4 million “that don’t need a tremendous amount of work,” Mathews says. Some of the clients run hedge funds, and many are families with school-age children. That’s why there’s a great deal of interest in the Park Cities. The public schools in the district that serves the municipalities of Highland Park and University Park are top-rated, a comforting fallback for these buyers in case they can’t get their children into local private schools.
Working with some of the Californians has been “very hard work,” Mathews says. “The inventory is very low for uber-high-end homes. They want to see thirteen houses, and we’re lucky to have two to show them. So we’re reaching out to people we think might sell. We were working until nine-thirty every night, teeing up enough properties. Then, after setting up all these laborious appointments, they might say, ‘We’re gonna go look at Austin.’
“So I’ve had to get more selective about things,” Mathews says. “Now I only take referrals for somebody I know about—someone who’s really coming to Texas.”
Another leading luxury home broker, Allie Beth Allman & Associates founder Allie Beth Allman, has worked recently with Californians seeking homes in the $5 million to $15 million range. One, Nextdoor cofounder Nirav Tolia, snapped up a more than one-hundred-year-old estate in Highland Park that was listed for $12.5 million. The social-media entrepreneur tore down the house and is building a new one on the lot.
Allman’s California clients, who include private-equity executives, want land more than anything. “They’re moving to Texas, and I guess they think everybody here has a ranch. But they’re really surprised that the houses here don’t have more land than they had in Beverly Hills or Brentwood. So you have to educate ’em,” Allman says. “A half acre is a big lot in Highland Park.”
What else surprises them about Texas? “The heat. They come in August and really are shocked,” she says. “A couple of them did not buy, and you could tell they were miserable. What I say to them is, ‘You know, everybody goes out—nobody stays here in August, except during COVID. So you can go back to California for the summer.’”
While it was the friendly reception inside a suite at AT&T Stadium during the rodeo that sealed the deal for his move to Texas, Ernie Tarut had been considering leaving California for four or five years. “It’s really, really prohibitive to do business,” he said about conditions there. “I could do the same thing all over again if I started from scratch today in Texas. But I could never do today what I did in California twenty years ago. That I’m sure of.”
In addition to its U.S. headquarters office in San Diego’s Otay Mesa neighborhood, where about a dozen people work, the Old Gringo family of companies employs about 1,200 workers at a tannery and multiple buildings it owns or rents in León, in the Mexican state of Guanajuato. Those facilities produce goods for other Western-wear brands as well, pushing Old Gringo’s annual sales to “north of $50 million.” The company also has a showroom at Dallas Market Center.
North Texas should be a better source of Old Gringo employees than Southern California, Tarut said. “In Texas, I can find people who grew up on horses, who are barrel racers, who competed in rodeos, who get what we do. It’s so much easier to work with them than it is what I have to work with in San Diego,” he said. “In Texas, boots are in their DNA.”
To jump-start his move, the 70-year-old entrepreneur ponied up “around $1 million” for a 75-year-old former art gallery on Main Street in Fort Worth’s historic Stockyards district, aiming to turn the site into retail space, a restaurant, and the company’s headquarters office. Because the plans included demolishing the single-story gallery and putting up a three-story building in its place, a process that could take three years, Tarut also needed to secure temporary space for the company’s operations—as well as a permanent residence for him and Josy.
After leaving the Monserrat house, real estate agent Jamie Adams drove the Taruts to meet John Zimmerman in Riverhills, a neighborhood developed on part of what was the historic Edwards Ranch, in southwest Fort Worth. There they entered a two-story, 4,041-square-foot, Santa Barbara–style home built in 2014 around a sort of central courtyard. Priced at $1.5 million, the residence had four bedrooms, four baths, two half-baths, and an unfinished room over a two-car garage.
An outdoor veranda on the second floor offered unobstructed views to the north, where the high-end Shops at Clearfork stood in the distance. “This is probably the best lot in Riverhills, because there’s nothing behind you,” Zimmerman told the couple. “It’s a good area.”
Returning to the property’s first floor, Ernie pulled Josy aside. “It’s a lot darker,” he said softly about the Riverhills home. “It doesn’t have the natural light.”
“There’s no comparison,” she said.
“I know you like the other one,” he said. “Happy wife, happy life, right?”
As the Taruts prepared to climb back into Adams’s Suburban, Ernie remembered seeing a big new home on two acres that he loved in Southlake, one of the most affluent suburbs in North Texas. “She’d-a loved it,” he said. “But it sold in two days. It’s already gone.”
Driving back toward the Stockyards district a little later, Adams mentioned another chic development in the nearby town of Westlake. But “there’s nothing” available there, he said. “Everything’s been gobbled up by other California people.”
“I don’t want to be around California people now, buddy,” Tarut said with a grin. “I want to be around Texans, and you can quote me on that. I want to be around Texas people.”
Once he settles here for good, he added, he’ll probably get himself a Ford F-150.
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