I had a conversation with a neighbor last night which surprised me. This couple have been my neighbors for 20 years so I wasn’t expecting it when she told me last night that she and her husband were planning to leave California, possibly in a few months. I asked why and my neighbor explained she just doesn’t see the appeal of California anymore. She said she was tired of the politics, the high taxes, and then she mentioned the homeless people downtown. I asked if she meant downtown Los Angeles and she said “there too” but she meant downtown here in Huntington Beach, the town where I live. She told me she’d been walking downtown recently and a homeless man bumped into her and then turned around threatening to hit her in the back of the head.
She’s not the only person I know who is packing up. This summer a friend of mine moved to Florida. He took a job making good money, similar to the job he had here in Orange County, but as he told me at length, the money goes a lot farther outside California. By selling his house here, he was able to buy a new home in Florida, plus a new car, and still have some significant savings for his retirement. He showed me pictures of the new place and it looked nice.
Then, a couple of months ago, another friend who had grown up in California and lived in SoCal for most of his life told me he was moving to upstate New York. This friend had lived in a series of nice homes with his family but they had been rentals. The price of California real estate made it difficult to find a home he could afford to buy. But in New York, he found a beautiful house on five acres of land for about what you’d spend on a small condo in Orange County. I was sorry to see him go but happy for him at the same time. He had to leave California to find his American dream.
People have been increasingly moving away from California in recent years. In 2015 the Sacramento Bee looked at tax return data and discovered that nearly 5 million people left the state between 2004-2013:
About 5 million Californians left between 2004 and 2013. Roughly 3.9 million people came here from other states during that period, for a net population loss of more than 1 million people.
The trend resulted in a net loss of about $26 billion in annual income.
Of course that doesn’t include in-state births or migration. Overall, California is still growing, but it’s growing more slowly than any time in state history:
In 2018, the Golden State grew by 186,807 people, according to data released by the state last week. That’s about two Los Angeles Memorial Coliseums, or almost 10 Oracle Arenas full of new Californians.
Sounds like a lot, right?
If you caught this Los Angeles Times headline, you already know the plot twist: That number actually represents the slowest growth in the state’s entire history, a meager 0.47 percent increase over the year before.
To some degree what all of these stories, micro and macro, have in common is rising home prices. People in the middle find they can no longer afford to buy a home here even with two incomes. And people at the bottom struggle to make rent and thousands of them wind up couch-hopping, living in a car, or on the street.
According to Zillow, the average price of a home in the state is now $550,800. And of course the averages get higher the closer you are to the ocean or a major city. In Los Angeles, the average price is $696,900. In San Francisco the average price is and eye-popping $1,355,200. Not many working people can afford that, even with a 30-year mortgage and low interest rates. So many people are moving inland, into the Central Valley where things are still relatively cheap, or in SoCal into the so-called Inland Empire. A home in Riverside, CA is still a relatively modest $411,200.
I was lucky to buy into the market before it went crazy but I wonder if my kids will be able to afford to live anywhere nearby. Maybe if California’s population starts shrinking, despite the births and migration, prices will eventually drop a bit. Don’t get me wrong, it’s still a nice place to live in some ways, but people who shop around will find they can get a lot more for their money somewhere else.
