California exodus continues: L.A., San Francisco lead the way

After living in the Bay Area for nearly seven years, Hari Raghavan and his wife decided to head 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 potential relocation cities before settling on Miami because of its sunny weather and perceived greater sense of security.

Raghavan said their Oakland home had been broken into four times and that prior to the pandemic, his wife called him every day during their seven-minute walk home from the BART station because she felt safer with someone on the phone. After moving to Miami, Raghavan said they accidentally left their garage door open one day and were devastated when they returned home to find nothing had been stolen.

“We moved to the Bay Area because if you wanted to work in tech and in startups, that’s where we had to be, and now that that’s no longer a bond, we took a long look around and said, ‘Wait, why are we here again?’ ‘ said Raghavan.

He said California’s quality of life, local or social policies, or the cost of living are not very attractive. “It forced us to ask ourselves where we actually wanted to live,” he said.

In the first year of the pandemic, an acceleration in people leaving the California coast began. However, new data shows it has continued even after relaxation and other COVID restrictions.

California ranks second nationally for international moves — a phenomenon that has increased during the pandemic, according to a report by the Federal Reserve Bank of Chicago, which tracked data from moving company United Van Lines. Between 2018 and 2019, California had a 56% churn rate. That rate rose to almost 60% in 2020-21.

Citing changes in work-life balance, opportunities for remote work and more people choosing to quit their jobs, the report found droves of Californians are migrating to 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 Treasury.

According to a report by Redfin released this month, San Francisco and Los Angeles rank first and second in the country when it comes to moving abroad as the cost of living and home prices continue to rise and homeowners flee to cheaper cities.

Angelenos in particular flock to places like Phoenix, Las Vegas, San Diego, San Antonio and Dallas. The number of Los Angeles residents leaving the city rose to nearly 41,000 in the same period of 2022 from around 33,000 in the second quarter of 2021, according to the report.

According to USC economics professor Matthew Kahn, California is struggling with extremely high real estate prices compared to other states. Combined with the pandemic and the rise of remote work, privileged households have been relocating when given the opportunity.

“People want to live here, but an unintended consequence of the state’s environmental protection is that we’re not building enough homes in desirable downtown areas,” Kahn said. “It’s pushing the middle class to the suburbs [and creates] long commutes. We don’t have tolls to help with traffic congestion, and those headaches add up. So when you create the ability to work from home, a lot of those people say “enough” and move to a cheaper metro area.”

Kahn also pointed out that urban crime, a growing homeless population, the quality of public schools, and the overall quality of life are driving residents away.

“In New York City, but also in San Francisco, there’s all this fighting about which kids go into which elite public schools,” he said. “The rich can always hide in their bubble, but when the middle class sees that quality of life dropping, that’s a push factor to leave.”

Redfin chief economist Daryl Fairweather cited a June report that tracked the change in purchasing power of a homebuyer with a $2,500 monthly budget. While 11.2% of homes in Los Angeles were affordable on that budget at a 3% interest rate, that amount rose to about 72% in Houston and about 50% in Phoenix.

“It’s really an affordability issue,” Fairweather said. “California has longest prioritized zoning for single-family homes, leading people to stay in their homes longer because their property taxes don’t reflect true value. California is the epicenter of the housing crisis, leaving people with no choice but to move elsewhere.”

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

Though California has relied on immigration to offset its declining population over the past two decades, that influx has also declined, according to UCLA economics professor Lee Ohanian.

Delays in processing migration applications to the United States have been exacerbated during the pandemic, leading to the lowest immigration rates in decades, according to data from the US Census Bureau.

Estimates show a net increase of 244,000 new immigrants between 2020 and 2021 – about half of the 477,000 new immigrants registered between 2019 and 2020, and a sharp drop of more than 1 million reported from 2015 to 2016.

The state also sees a dwindling middle class, said Ohanian, citing a report by the National Assn. of Realtors, which shows the national median home selling price has hit $416,000, a record high. Meanwhile, the average home price in California has surpassed $800,000.

“[California is] It is in danger of becoming a state for very, very wealthy people and very, very low earners who receive state, local and federal aids that enable them to live here,” Ohanian said. “We should be concerned about those in the middle who make that $78,000 median household income and who are really struggling at the end of the day, especially if they’re 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 some parts of the Bay Area have seen some gains, the Public Policy Institute of California found.

Fairweather said she’s noticed less affordable rental housing since she was last in Los Angeles in 2016.

“Santa Monica and Beverly Hills used to be expensive, but you could find affordable housing on the Eastside,” she said. “But that got expensive and you had to find somewhere to stay near South Central. Now there isn’t anywhere within a two-hour drive of downtown Los Angeles that’s affordable.”

Bay Area native Kenny Phung, who made the exodus from California last fall when his partner attended nursing school in Portland, Oregon, said high rents helped solidify the decision to move out of the state. Phung lived in Los Angeles with three roommates for a total of $3,600 a month but found a two-bedroom apartment in Portland for less than half that price. He currently works as a project manager at a San Jose-based company that allows him to work remotely.

“It just didn’t make sense,” Phung said. “Why would I want to live in California when I work from home and pay outrageously for such a small space when I can experiment 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 country of small inconveniences, and some are no longer so small,” he said. “Apartments and real estate have waves about everything. It makes restaurant rents more expensive, which increases food prices, and it causes people to commute longer distances. Everything becomes a burden.” California exodus continues: L.A., San Francisco lead the way

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