Calif: Home Prices Drive Migration TrendsDaniel Dobbs2023-05-25T12:37:29-07:00
BY Phillip Reese SacBee.com
California has had a demographic shift during the last two years: “California’s population declining”. But the overall population decline does not tell the whole story.
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Also true: Cities where homes remain relatively affordable – mostly in the inland parts of the state – saw, on the whole, population increases, according to a SacBee.com review of real estate and state government data.
Housing Prices Correlate with the Overall Cost of Living.
The fact that many affordable places in California continue to grow is the latest illustration that people are fleeing the most expensive parts of the state – or choosing not to move there or start families there.
It’s also a warning: As inland California becomes more expensive, it sits on the cusp of a shrinking population, much like the coast.
“I think it’s the biggest driver for business (moves)also because it affects their ability to attract and retain employees and the pay rate.
The trends have large economic implications.
A growing population can have its drawbacks, such as more traffic or long lines. But a shrinking population can mean labor shortages due to lack of workers, layoffs due to lack of customers, and cuts to public services”
When your population is growing, your healthcare industry is growing, your education industry is growing, services are growing,” Michael said. “When you have a declining population, you have pressure on all those associated industries as well.”
The Big Picture
More than 12 million people live in California cities where typical SFR values exceeded $1 million at the Ca; Department of Finance.
Those cities lost about 223,000 people, or 1.8% of their population, between April 1, 2020 and Jan. 1, 2022. About 9.5 million Californians live in cities where typical SFR values fell between $700,000 and $999,999
Those cities lost about 64,000 people or 0.7% of their population. By contrast, about 11 million Californians live in cities where typical SFR values fell below $700,000.
Those cities, which include nearly all communities in the Sacramento region, gained about 10,000 people, or 0.1% of their population – not a boom, but also not a free fall.
A similar pattern appears comparing population trends in counties along the coast – where homes typically cost eight figures – to inland counties.
Every county bordering the Pacific Ocean or in the San Francisco Bay area lost residents from April 1, 2020 to Jan. 1, 2022. The losses were substantial: a decline of about 369,000 people.
By contrast, inland California counties gained about 16,000 people – a far cry from past years but not the nose dive seen on the coast.— an eye-catching price the realtor said was the outcome of overbidding at auction.
“This, along with the pandemic work from home or remote work options for a number of larger employers in these areas, has generated a movement of individuals to potentially more affordable environments.
Big Silicon Valley companies such as Facebook, Salesforce and many others remain flexible about working from home – and often pay salaries that make for a lux lifestyle in much of inland California, which motivates some employees to move.
Several inland counties in far northern California – Lassen, Plumas, Shasta, Butte – are still losing residents. Sacramento County and, to a lesser extent, El Dorado County, also saw population declines.
However, neighboring Yolo and Placer counties saw large population increases, meaning the entire, four-county metro saw population remained unchanged.
The population shifts are intertwined.
A SacBee review of census data from 2020 found that most new residents in inland California came from the coast. Many of them moved inland looking for cheaper housing and lower prices. At the same time, movers from other states also played a role in the trends.
While the number of people coming to California from other states declined during the pandemic, it fell significantly faster along the coast than it did inland, said Evan White, executive director of the California Policy Lab .
Twenty-three of the 25 fastest-growing California cities during the last two years were where the typical SFR was valued at less than $700,000 at the end of 2021, according to a Bee analysis of data from Zillow and the state.
These cities are largely attracting upper-middle class families fleeing higher prices elsewhere.
New residents who earned more than five times the poverty rate – about $105k for a family of 4 – saw relatively large net population gains in inland Calif. during 2020, according to census data showing domestic migration.
In other words, significantly higher-income people came into those places that left them. Net gains were more modest for residents earning 2.5 to five times the poverty rate – between $65,000 and $105,000 for a family of four.
New residents earning less than 2.5 times the poverty rate – less than $65,000 – for a family of four – made up the biggest number of newcomers, but with a big caveat.
About as many people earning less than that left inland California for other parts of America, many searching for even cheaper communities. That meant little net population change among lower-income households in inland California.
A Change in Births
Other factors also explain why cheaper, inland California counties have not yet seen large population declines.
First, the number of births fell faster in coastal California than in inland counties during the pandemic. Coastal Calif. saw about 48k fewer births in 2020 -2021 than during 2018 -2019, a decline of about 8%, according to the Cal. Dept. of Public Health.
Lower birth rates are another reason coastal communities have seen population declines. Inland California saw births drop by about 12,000 over the same period, a decline of about 4%.
Birth rates overall were about 20% higher in inland California than in Coastal California during 2021. The trend also ties back into affordability.
Many coastal California residents likely moved inland for economic reasons before expanding their families. Seventeen of the 25 fastest-growing cities in California from April 2020 to January 2022 are located in the Central or Imperial Valleys, state data show.
Other Factors
California has long relied on international migration – people moving to the state from abroad – for population gains. International migration into California had already declined from levels seen in the 1990s and 2000s.
Covid brought huge declines, at least temporarily.
The State Dept. suspended visa services worldwide at the start of the pandemic. Those services remained hampered for many months, leaving hopeful immigrants out of luck.
The situation has improved for immigrants in recent months. But there is still a large backlog. The largest group of immigrants comes to California from Asia, Schwarm said.
Many stay, at least initially, in coastal California, where there are multiple established immigrant communities. Disruptions to international migration hit coastal areas a little harder.
Net population gains from international migration fell about 62% in coastal California from July 2019 to July 2021 when compared to July 2017 to July 2019, state data show. Gains fell by about 54% in inland California.
Deaths also play a role in population change.
COVID, combined with the fentanyl crisis and rises in homicides and driving fatalities, brought many more deaths to the state.
Coastal California saw 65,000 more deaths in 2020 and 2021 than it did in 2018 and 2019, an increase of 19%, according to data from the California Department of Public Health.
Inland California saw 46,000 more deaths in 2020 and 2021 than it did in 2018 and 2019, an increase of 24%.
Looking Forward
Many of the same economic factors causing population declines in coastal California are weighing on residents of inland California.
Home prices are ballooning out of reach for many middle-class families.
The cost of living overall is increasing at a quick pace. However, experts and city leaders said they expect inland California to continue to add people, only at a slower pace than in years past.
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