“Go West!” That was the mantra of millions who flocked to California seeking sunshine and the good life. For decades after World War II the population of the state was continually increasing, some 137 percent between 1960 and 2010. But in the last 20 years, the migration has reversed, and more people are now deciding to leave California than to enter. What is happening, where are they going, and why?
First, some statistics. A rush to leave California reached a peak in 2005 when 160 people left for every 100 who moved in. This exodus coincided with the housing bubble; as California homes got pricier, folks sought more affordable alternatives. As the recession hit and prices fell, out-migration eased, and in 2011, only 120 people left for every 100 new residents.
Where did these Californians go? Texas, Nevada and Arizona, in that order, followed by Oregon, Washington, Colorado, Idaho, Utah, Georgia and South Carolina. And who is coming in? New York, Illinois and Massachusetts lead that list.
Who is leading the charge out? The poor and the middle class. Though more well-heeled individuals may balk at California’s high tax rates and challenging business environment, it is clearly the less fortunate who are finding the state too expensive: 165 out for every 100 in of those earning $20-$40,000 and only 103 out for every 100 in for earners between $100,000 and $200,000. (Trulia) The over $200,000 crowd is not moving for the most part; ins and outs are about even.
So it is apparent that a major reason for the exodus is economic. Just as people flocked to California for a chance at a good life in the ‘50s and ‘60s, they are now finding those opportunities elsewhere. Texas has four of the qualities these new residents are seeking: low unemployment rates, a favorable business climate and lower taxes, as well as lower housing prices.
When a state favors business, like Texas, businesses relocate. There are then job openings in those states, and job seekers move in. When young families move in, their parents, seeking to be close, settle in nearby retirement communities. By making business regulations more conducive to profit-making, states are able to attract new residents in all brackets.
Other factors contributing to the exit strategy are choking environmental factors. Los Angeles and Orange County now have a population density of almost 7,000 individuals per square mile; it’s just simply getting too crowded and areas with more room to breathe are looking appealing to many.
Has the California dream become just too big for its britches? Long perceived as a land of milk and honey, verdant, blessed with superb weather and opportunities galore, California is now looking like an overpopulated, overregulated and overpriced state, and perhaps an impossible place to call home. Greener pastures seem to await in neighboring states, with more lenient policies and, most importantly, economic opportunity.
A correction may be in order. If California continues to lose population, home prices will begin to come down by necessity. If businesses leave town, the state may have to look at new incentives to bring them back. If those incentives lure businesses, the job market will improve, and perhaps, migration patterns will shift back. With its magnificent climate and splendid attractions, California’s natural resources will still call many to the state; that is, if they can afford to live and work here.
Del Phillips is a California Licensed Real Estate agent. He is a member of the National, California and San Diego Association of Realtors. You can reach Del at Ascent Real Estate at 619-298-6666 or at Del@DelPhillips.com DRE LIC #01267333.
