04 Apr CALIFORNIA REAL ESTATE INVESTORS – READ THIS DEMOGRAPHICS ARTICLE
Given its iconic hold on the American imagination, the idea that more Americans are leaving California than coming breaches our own sense of uniqueness and promise. Yet, even as the economy has recovered, notably in the Bay Area and in pockets along the coast, the latest U.S. Census Bureau estimates show that domestic migrants continue to leave the state more rapidly than they enter it.
In costly Bay Area, even six-figure salaries are considered ‘low income’
Why more Bay Area residents are saying they want to flee
First, the good news. People may be leaving California, but, overall, the rate of leaving is about three-quarters less than that experienced in the first decade of the millennium. In the core, booming San Francisco metropolitan area, there was even a shift toward net domestic migration after 2010, something rarely seen since the 1980s.
Outmigration dropped with the initial economic slowdown of the last recession, particularly as housing prices in some areas, notably the Inland Empire and the Sacramento area, drifted toward the national norm of three times incomes by 2010, having been twice that high or more in the boom times. The initial recovery after 2010 may also have encouraged people to stay as well.
BACK TO MOUNTING OUTMIGRATION
The San Francisco Bay Area lost more than 600,000 net domestic migrants between 2000 and 2009 before experiencing a five-year respite. Now, sadly, the story seems to be changing again. Housing prices, first in the Bay Area and later in other metropolitan areas, have surged mightily, and are now as high as over nine times household incomes. In 2016, some 26,000 more people left the Bay Area than arrived. San Francisco net migration went from a high of 16,000 positive in 2013 to 12,000 negative three years later.
Similar patterns have occurred across the state. Between 2010 and 2015, California had cut its average annual migration losses annually from 160,000 to 50,000, but that number surged last year to nearly 110,000. Losses in the Los Angeles-Orange County area have gone from 42,000 in 2011 to 88,000 this year. San Diego, where domestic migration turned positive in 2011 and 2012, is now losing around 8,000 net migrants annually.
The major exceptions to this trend can be found in the somewhat more affordable interior regions. Sacramento has gained net migration from barely 1,800 in 2011 to 12,000 last year. Even some still-struggling areas, like Modesto and Stockton, have seen some demographic resurgence as people move farther from the high-priced Bay Area.
CALIFORNIA AND THE NEW DEMOGRAPHIC REALITY
The movement away from expensive core regions reflects the basic preference among people for affordable, less dense housing. The new Census estimates have confirmed this national trend. Migration to both suburbs and smaller cities — and away from dense core counties — is now at the highest rate in a decade.
Article By Joel Kotkin and R.C. Hobbs (Bio at bottom of Post)
Population growth in big urban core cities, including New York, is now about half of what it was back in 2010. Last year, all 10 of the top gainers in domestic migration were sprawling, more affordable Sun Belt metropolitan areas in states like Texas, North Carolina, Florida and Tennessee.
These dispersive trends are clear in Southern California, where net migration out of Los Angeles County runs about four times the rate of neighboring, more suburban Orange County, as migration to places like Riverside County mounts. Despite all the national hype surrounding L.A.’s drive for densification, it’s not a model that most people, and particularly families, seem to be embracing.
The apparent growing appetite for suburban living presents a unique challenge to California. The state policy is aggressively anti-suburban, placing ever-higher hurdles on any development on the periphery. This, over time, is slowing construction in the interior and forcing housing prices unnaturally up, even in these areas.
Some so-called progressives hail these trends, as forcing what they seem to see as less desirable elements — that is, working- and middle-class people — out of the state. They allege that this is balanced out by a surge of highly educated workers coming to California. Essentially, the model is that of a gated community, with a convenient servant base nearby.
Yet, in reality, this may prove to be wishful thinking. A dive into Internal Revenue Service data shows distinctly that, while poor people are, indeed, leaving, the largest group of outmigrants tends to be middle-aged people making between $100,000 and $200,000 annually. They may not be ideal algorithm creators for Facebook, but they do constitute the solid middle ranks critical to any healthy economy.
Indeed, since 2010, the Golden State has seen an overall net outflow of $36 billion from these migrants (and that counts only the first year of income). The biggest gainers from this exchange are where Californians are moving, to such places as Texas, Arizona and Nevada. That some California employers are joining them in the same places should be something of a two-minute warning for state officials.
But California leaders have other things on their minds that do not include accommodating the aspirations of residents who refuse to abandon suburban homes, or who are unwilling to desert their cars for the pleasures of mass transit. Until Californians demand a government that reflects their aspirations, too many people will continue to have to seek their futures elsewhere, to the detriment to those who remain behind.
Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism (www.opportunityurbanism.org). Wendell Cox is principal of Demographia, a St. Louis-based public policy firm, and was appointed to three terms on the Los Angeles County Transportation Commission.