High housing costs are driving out lower-income Californians, reports say
California lost lower-income residents to other states over a recent 11-year period, while gaining wealthier households from elsewhere in the U.S. The disparity reflects the state’s sky-high rents and home prices, according to several reports released Thursday.
The studies, produced by Beacon Economics for public policy nonprofit Next 10, mirror findings from the groups two years ago, as well as a flurry of other research that’s documented California’s persistent housing crisis.
The organizations say the numbers underscore the depth of the affordability problem. They called for policy changes that would increase housing supply so “low-wage residents are able to remain in California.”
“In order to maintain a robust economy, California will need to ensure that residents across all income and employment levels are able to afford a basic cost of living in the state,” the authors wrote.
For now that’s not the case. From 2006 to 2016, 1.09 million more people left California for other states than moved here from other places in the U.S., with most decamping for Texas, Arizona, Nevada, Oregon and Washington, where housing costs are lower.
The level of so-called negative domestic migration was far greater in 2006 amid the housing bubble but declined as the economy and home prices cratered.
After bottoming out in 2012, the rate of out-migration has picked up in recent years as housing costs once again surged.
The state’s median home price is now $537,315, reflecting a compounded annual growth rate of nearly 10% since 2012, according to real estate website Zillow. The median rent for a vacant apartment jumped an annual rate of nearly 5.5% to $2,428.
As a result, more people are leaving, according to Beacon and Next 10.
In 2016, 41,000 more households left the state than moved in. That’s far more than the roughly 23,000 in each of the prior two years, and the only 3,400 in 2012, though it’s less than the 46,300 that left in 2015.
Over the 11-year period, the state’s population has continued to grow, reflecting births and immigration.
Those who leave tend to have lower incomes, indicating migration is driven by high housing costs rather than high taxes, the reports said. From 2006 to 2016, the state lost a net 516,800 households earning less than $50,000. For households earning $50,000 or more, migration actually turned positive — a gain of 62,400.
There are also differences by region. The San Francisco Bay Area, which has the highest median home prices in the state, had more people arriving from out of state than leaving each year from 2014 to 2016.
That’s the opposite of what was happening in Southern California — which, like the state as a whole, lost residents.
The reports didn’t break down regional migration trends by income. But the authors theorized the positive figures up north reflected that the region’s technology boom attracted many people from out of state who could afford to live there on high-tech salaries.
Even so, the Bay Area isn’t immune to its high housing costs. Job growth has recently slowed in the tech sector, as has the rate of people moving to the Bay Area.
Earlier this year, a group of tech executives signed a letter saying it’s become difficult to “recruit and retain employees when they could accept jobs in other states and pay a fraction of California’s housing costs.”
And on Thursday, San Francisco online payment company Stripe announced it was giving $1 million to a political organization that advocates for dramatically expanding housing supply, saying the lack of affordable housing “is a significant barrier to the Bay Area’s economic progress.”
Southern California employers also say they’ve had to forgo growth opportunities because high costs are making it hard to recruit workers.
“Economies are living, breathing, dynamic organisms, and to the extent our housing supply stays virtually stagnant, that impacts our potential GDP growth,” said Adam Fowler, research director at Beacon Economics.