Cabo vs Austin: A Side-by-Side Real Estate Comparison for Texas Buyers

Austin's property tax rate runs roughly 2% of assessed value — on a $750,000 home, that is $15,000 a year before you pay the mortgage. A comparable property in Los Cabos carries a predial tax under $500. Add a 3.25-hour direct flight from Austin-Bergstrom, lower cost per square foot in most communities, and stronger short-term rental yields, and Texas buyers have very good reasons to look south.

The Property Tax Gap: This Is the Headline Number

Let me put this bluntly because it is the single biggest financial difference between these two markets.

Travis County's effective property tax rate for 2025 was approximately 1.82%, according to the Travis County Tax Office. Williamson County, where many Austin-area buyers live, is slightly higher. Round Rock, Cedar Park, and Pflugerville all exceed 2% when you stack city, county, school district, and special district taxes.

On a $750,000 home in Austin — which is a nice three-bedroom in a good school district, not a mansion — you are paying $13,000-$15,000 per year in property taxes. On a $1.5 million home, that climbs to $27,000-$30,000.

Now compare Los Cabos. The predial (property tax) is based on the catastral value, which is the government-assessed value. In Mexico, catastral values are typically 30-60% of market value, and the tax rate itself is a fraction of a percent. A $750,000 Cabo condo or villa pays $300-$600 per year in predial. A $1.5 million villa pays $600-$1,500.

Even when you add the fideicomiso annual trust fee ($500-$700), the total government-imposed carrying cost for a $750,000 Cabo property is $800-$1,300 per year. Compared to Austin's $13,000-$15,000 for the same price point, that is a 90% reduction in tax burden.

What Your Money Buys: A Direct Comparison

Let me compare three price points across both markets, using real asking prices from late 2026.

$500,000 Budget

Factor	Austin	Los Cabos
What you get	2BR/2BA condo, 900-1,100 sqft, downtown or East Austin	2BR/2BA condo, 1,200-1,500 sqft, gated community with pool, Fonatur or SJD
Annual property tax	$9,000-$10,000	$200-$400 (predial)
Monthly HOA	$300-$600	$200-$400
Insurance	$2,000-$3,500/yr	$800-$1,500/yr

$1 Million Budget

Factor	Austin	Los Cabos
What you get	3BR/2BA single-family, 1,800-2,200 sqft, Zilker or Barton Hills	3BR/3BA villa, 2,500-3,500 sqft, Cabo del Sol or SJD corridor
Annual property tax	$18,000-$20,000	$400-$800 (predial)
Cost per sqft	$450-$550	$285-$400
Rental potential	$3,000-$4,000/mo long-term	$300-$600/night vacation rental

$2 Million Budget

At $2 million in Austin, you are in Westlake, Tarrytown, or a downtown penthouse — a 3,000-4,000 sqft home in a top school district with $36,000-$40,000 in annual property taxes. In Los Cabos, $2 million buys a 4-bedroom ocean-view villa in Chileno Bay, Diamante, or a beachfront condo at Palmilla with predial under $1,000 and resort amenities included in the HOA.

Rental Income: Different Models, Different Numbers

Austin and Cabo have fundamentally different rental markets, and understanding the distinction matters for investment decisions.

Austin is primarily a long-term rental market. The city has progressively restricted short-term rentals in residential zones — Type 2 (non-owner-occupied) STR licenses are capped and not transferable with property sales in many areas. Long-term rental yields in Austin typically run 5-8% gross on a well-located property, according to Zillow rental data.

Los Cabos is a vacation rental market. Short-term rental regulation is light — a municipal license is required but there are no license caps, no primary residence requirements, and enforcement is minimal. Vacation rental yields in Los Cabos typically run 8-14% gross during peak season (November-April) for well-managed properties in strong locations. Annual net yields, accounting for the off-season (May-October), typically settle at 5-8% for properties with professional management.

The key difference is that Cabo rental income is concentrated and seasonal, while Austin rental income is steady and monthly. A Cabo condo that generates $40,000 in rental income might earn $30,000 of that between November and April. An Austin property generating the same total spreads it evenly across 12 months.

The Lifestyle Case: What Numbers Cannot Measure

Numbers drive decisions, but lifestyle justifies them. Here is where the comparison gets personal.

Climate: Austin's summers are brutal — 100°F+ days from June through September, with humidity that makes outdoor living genuinely unpleasant for months. Cabo averages 340 sunny days per year. Summer is warm (90s) but dry heat with ocean breezes. Winter is perfect — 75-85°F, zero humidity, no need for heat or heavy AC.

Outdoor lifestyle: Both markets offer exceptional outdoor living, but in different ways. Austin has Barton Springs, Lady Bird Lake, Hill Country hiking, and live music culture. Cabo has the Pacific Ocean, the Sea of Cortez, world-class fishing, water sports, and golf courses that Austin cannot match. If your outdoor life revolves around water, Cabo wins decisively.

Dining and culture: Austin punches above its weight in food and live music. Cabo has transformed from a spring break town into a genuine culinary destination — the marina dining scene, San Jose del Cabo's art district, and resort restaurants rival anything in the US Southwest. But Austin's depth and variety are still ahead.

Community: Austin has a massive, established community. Cabo's expat community is smaller but growing rapidly, with a high concentration of entrepreneurs, tech executives, and retirees who are exactly the people Austin tech workers relate to.

The 3.25-Hour Advantage

Austin to SJD is a 3-hour-15-minute direct flight. Multiple airlines offer nonstop service, particularly during peak season. Year-round nonstop availability depends on the carrier, but one-stop options through Dallas or Houston add only 2-3 hours.

That makes Cabo closer in flight time than many domestic vacation markets Austin residents consider:

• Austin → SJD: 3h 15m nonstop
• Austin → Miami: 2h 45m nonstop
• Austin → Aspen: 4h+ (connection required)
• Austin → Hawaii: 7h+ nonstop to Honolulu
• Austin → Turks & Caicos: 4h+ (connection required)

Cabo is essentially the same travel time as Miami from Austin, with lower property costs, lower taxes, and a completely different landscape. For Texas-based buyers who want a vacation property within a long-weekend travel radius, Cabo is one of the most accessible luxury resort markets on the map.

Appreciation: Two Different Growth Stories

Austin experienced one of the most dramatic real estate booms and corrections in the US. Median home prices surged from approximately $350,000 in early 2020 to $550,000+ by mid-2022, then corrected 15-20% through 2023-2024 before stabilizing. As of late 2026, Austin prices are roughly 5-8% above their 2023 trough but still below the 2022 peak in many neighborhoods.

Los Cabos has a different growth trajectory. The market saw steady 5-8% annual appreciation from 2020 through mid-2025, driven by infrastructure investment, limited beachfront supply, and increasing demand from remote workers and retirees. According to BCS MLS data, Q1 2026 showed $293.8 million in closed volume with a 93% list-to-sale ratio — a healthy market without the volatility Austin experienced.

The key difference: Austin is a tech-employment-driven market that rises and falls with the sector. Los Cabos is a lifestyle and retirement market where demand is driven by demographics (baby boomer retirement, remote work adoption) rather than a single industry.

Which One Is Right for You?

This is not an either-or decision for most Texas buyers. The smart play is often both — Austin for your primary residence and long-term equity growth, Cabo for a second home that doubles as a rental property with dramatically lower carrying costs.

If you are choosing one, here is the framework:

• Choose Austin if: You need proximity to your job, want school-district-driven appreciation, prefer domestic real estate simplicity, or are uncomfortable with cross-border ownership
• Choose Cabo if: You want lower carrying costs, stronger vacation rental yields, lifestyle-driven appreciation, and the ability to live or vacation in a world-class resort environment for 3.25 hours of flight time from Texas

Many of our Texas clients start with a pre-sale condo in the $400,000-$600,000 range to test the market, then upgrade to a villa after a year or two when they realize how much time they want to spend here. The property tax savings alone — $10,000-$20,000 per year versus a comparable Austin property — often cover the flights.