Why Are People Moving Out of California?

A report from the Federal Reserve Bank of Chicago analyzed data from a moving company, concluding that 59.4% of the moves in California were out of the state - the second-highest percentage for any state in America (behind only Illinois). And that percentage is growing, reports the Los Angeles Times, since between 2018 and 2019, California had a lower outbound move rate of just 56%.Citing changes in work-life balance, opportunities for remote work and more people deciding to quit their jobs, the report found that droves of Californians are leaving for states like Texas, Virginia, Washington and Florida. California lost more than 352,000 residents between April 2020 and January 2022, according to California Department of Finance statistics [about 15,476 per month]. San Francisco and Los Angeles rank first and second in the country, respectively, for outbound moves as the cost of living and housing prices continue to balloon and homeowners flee to less expensive cities, according to a report from Redfin released this month. [Los Angeles residents] in particular, are flocking to places like Phoenix, Las Vegas, San Diego, San Antonio and Dallas. The number of Los Angeles residents leaving the city jumped from around 33,000 in the second quarter of 2021 to nearly 41,000 in the same span of 2022, according to the report. California has grappled with extremely high housing prices compared with other states, according to USC economics professor Matthew Kahn. Combined with the pandemic and the rise in remote work, privileged households relocated when they had the opportunity. "People want to live here, but an unintended consequence of the state's environmentalism is we're not building enough housing in desirable downtown areas," Kahn said. "That prices out middle-class people to the suburbs [and creates] long commutes. We don't have road pricing to help the traffic congestion, and these headaches add up. So when you create the possibility of work from home, many of these people ... they say 'enough' and they move to a cheaper metropolitan area." Kahn also pointed out that urban crime, a growing unhoused population, public school quality and overall quality of life are driving out residents. "In New York City, but also in San Francisco, there are all these fights about which kids get into which elite public schools," he said. "The rich are always able to hide in their bubble, but if the middle class looks at this quality of life declining, that's a push factor to leave." Redfin chief economist Daryl Fairweather cited a June report that tracked the change in spending power of a homebuyer on a $2,500 monthly budget. While 11.2% of homes in Los Angeles were affordable on that budget, using a 3% interest rate, that amount swelled to about 72% in Houston and about 50% in Phoenix. "It's really an affordability problem," Fairweather said. "California for the longest time has prioritized single-family zoning, which makes it so people stay in their homes longer because their property taxes don't reflect the true value. California is the epicenter of where the housing shortage is so people have no choice but to move elsewhere." The Times also notes figures from the Public Policy Institute of California showing that the state's population did increase between 2010 and 2020 - but by just 5.8%, "below the national growth rate of 6.8%, and resulting in the loss of a congressional seat in 2021 for the first time in the state's history." At least part of this seems tied to a sudden curtailing of immigration into California. UCLA economics professor Lee Ohanian points out that immigration had offset California's population outflow over the past two decades, but "Delays in processing migration requests to the U.S. were compounded during the pandemic, resulting in the lowest levels of immigration in decades, according to U.S. Census Bureau data. Estimates showed a net increase of 244,000 new immigrants between 2020 and 2021 - roughly half the 477,000 new immigrant residents recorded between 2019 and 2020 and a drastic reduction from more than 1 million reported from 2015 to 2016."The state is also seeing a dwindling middle class, said Ohanian, who cited a report from the National Association of Realtors, outlining that the national median home sales price has reached $416,000, a record high. Meanwhile, California's median home price has topped $800,000. "(California is) at a risk for becoming a state for very, very wealthy people and very, very low earners who receive state and local and federal aid that allows them to be able to live here," Ohanian said. "We should worry about those in the middle who are earning that $78,000 household median income and is, at the end of the day, really struggling, especially if they have interest in buying a home."

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