The Californian Exodus Continues, with Los Angeles and San Francisco Leading the Way: How Did We Get Here?

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    After living in the Bay Area for almost 7 years, Hari Raghavan and his wife decided to move to the East Coast late last year. They both worked remotely and wanted to leave California because of the high cost of living and urban crime. So they made a list of possible cities to relocate to, before choosing Miami for its sunny weather and perceived greater sense of security.

    Raghavan said his Oakland home had been broken into 4 times and that, before the pandemic, his wife would call him every day on their 7-minute drive home from the BART station because she felt safer with someone on the phone. After moving to Miami, Raghavan said they accidentally left the garage door open one day and froze when they returned home to find nothing stolen.

    We moved to the Bay Area because we had to be there if we wanted to work in tech and start-ups, and now that that’s no longer a tie-in, we took a deep look and said, “Wait. Why are we still here?”,Raghavan said. He also said there was not much appeal in California’s quality of life, local or social politics, or cost of living. “That forced us to question where we really wanted to live”, he added.

    During the first year of the pandemic, an acceleration of the departure of people from the California coast began. But new data shows it continued even after lockdowns and other COVID restrictions were eased.

    California ranks second in the nation for moving, a phenomenon that has snowballed during the pandemic, according to a report from the Federal Reserve Bank of Chicago, which tracked data from moving company United Van Lines. Between 2018 and 2019, California had an outbound move rate of 56%. That rate increased to almost 60% in 2020-2021.

    Citing changes in work-life balance, telecommuting opportunities and the rise of people choosing to leave their jobs, the report found that scores 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 statistics from the California Department of Finance.

    San Francisco and Los Angeles rank first and second in the country, respectively, for moves, as the cost of living and home prices continue to skyrocket and homeowners flee to less expensive cities, according to a Redfin report published this month.

    Angelinos, 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 about 33,000 in the second quarter of 2021 to nearly 41,000 in the same period in 2022, according to the report.

    According to USC economics professor Matthew Kahn, California has faced extremely high home prices compared to other states. Combined with the pandemic and the rise of remote work, privileged households relocated when they had the chance. “People want to live here, but one unintended consequence of the state’s greening is that we’re not building enough housing”, Kahn said. “This drives middle class people out of the suburbs and creates long commutes. We don’t have a staggered system on the roads to help with traffic congestion, and these headaches add up. So when the possibility of working from home is created, many of these people say ‘enough’ and move to a cheaper metropolitan area”.

    Kahn also pointed out that urban crime, an increase in the homeless population, the quality of public education and the overall quality of life are driving residents out. “In New York City, but also in San Francisco, there are all these fights over which kids get into which elite public schools”, he said. “The rich can always hide in their bubble, but if the middle class sees this quality of life decline. That is a push factor to leave”.

    Redfin’s chief economist, Daryl Fairweather, cited a June report that tracked the change in purchasing power of a homebuyer with a US$2,500 monthly budget. While 11.2% of homes in Los Angeles were affordable on that budget, using an interest rate of 3%, that number multiplied to about 72% in Houston and about 50% in Phoenix. “It’s really an affordability issue”,Fairweather said. “California has long prioritized single-family zoning, which causes people to stay in their homes longer because their property taxes don’t reflect real value. California is the epicenter of the housing shortage, so people have no choice but to move elsewhere”.

    Although California experienced a huge population boom in the late 20th century -reaching 37 million people in 2000- it has been losing residents ever since, with new growth lagging behind the rest of the country, according to the Institute of California Public Policy. The state’s population increased 5.8% from 2010 to 2020, below the national growth rate of 6.8%, and leading to the loss of a congressional seat in 2021 for the first time in state history condition.

    Even though California has relied on immigration to offset its population decline over the past two decades, that flow has also slowed, according to UCLA economics professor Lee Ohanian. Delays in processing immigration applications to the United States have worsened during the pandemic, leading to the lowest levels of immigration in decades, according to data from the US Census Bureau. Estimates showed a net increase of 244,000 new immigrants between 2020 and 2021 -about half of the 477,000 new immigrant residents registered between 2019 and 2020- and a drastic reduction of more than one million reported between 2015 and 2016.

    The state is also seeing a shrinking middle class, Ohanian said, citing a report by the National Assn. of Realtors, which outlines that the national median home sales price has reached US$416,000, a record. Meanwhile, the median home price in California has surpassed US$800,000. “[California] is at risk of becoming a state for very, very wealthy people with very, very low incomes who receive state, local and federal aid that allows them to be able to live here”, Ohanian said. “We should be worrying about those in the middle who make that US$78,000 median household income and who are in real trouble at the end of the day, especially if they are interested in buying a home”.

    Los Angeles County, in particular, has suffered from slowing population growth, as have rural parts of the state, while Orange County, Sacramento and parts of the Bay Area have made some gains, according to the California Public Policy Institute.

    Fairweather said that since he last lived in Los Angeles in 2016, he has noticed fewer affordable places to rent. “Santa Monica and Beverly Hills were known to be expensive, but you could find affordable housing on the Eastside”, he said. “But that got expensive and you had to find housing near South Central. Now, there is nowhere within 2 hours of downtown Los Angeles that is still affordable”.

    Bay Area native Kenny Phung, who began the exodus from California last fall when his partner entered nursing school in Portland, Oregon, said high rent prices helped cement the decision to move out of state. Phung lived with 3 roommates in Los Angeles for a total of US$3,600 a month, but he found a 2-bedroom apartment for less than half that price in Portland. He currently works as a project manager at a San Jose company that allows him to work remotely. “It just did not make sense”,Phung said. “Why would I want to live in California when I work from home and pay an outrageous amount for such a small space when I can try things out and save money on rent?”.

    Housing was also a major factor in Raghavan’s decision to leave the Golden State, he said, adding that downtown Miami has multiple skyscrapers, more affordable housing, well-paved roads and better infrastructure and services. “The Bay Area has become a land of minor inconveniences, and some are not so minor anymore”, he said. “Housing and the real estate sector have repercussions on everything. It drives up restaurant rents, which drives up food prices, and drives people to travel longer distances. Then, everything becomes a burden”.
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