Tight Supply » Low Affordability » Outmigration

By Thomas C. Schultheis
2019 President 
Santa Barbara Association of REALTORS®    

Outmigration continues to be a big concern for the California housing market. Caused by the state’s housing affordability issue, outmigration has resulted in about 800,000 people leaving California since 2010. As of the fourth quarter of 2018, only 28 percent of California households could afford to purchase the median-priced home. While this number is up from 27 percent in the third quarter of 2018, it is down from 29 percent one year ago. The high cost of housing is forcing Californians out of their current county or out of the state entirely.

Those who are leaving California are mostly middle class and almost entirely comprised of people who make less than $100,000. In 2017, the minimum income required to buy a median-priced home in California was $110,890, while the annual mean wage for a variety of professions, including Registered Nurse ($102,700), Police and Sheriff’s Patrol Officer ($93,550), Elementary School Teacher ($77,990), and Firefighter ($73,860) was well below that minimum.

Outmigration is even more problematic in areas that have poor affordability, most notably the Bay Area. In San Francisco the minimum income required to buy a median-priced home reached $290,630 in 2017, while the income of those same professions did not even reach half the income requirement.

Outmigration is a direct consequence of tight inventory in the housing market in California. Home building has not kept pace with housing demand in the last 12 years. Between 2005 and 2016, California only added 270 units for every 1,000 new inhabitants, and the Golden State lagged other states in housing per capita by as much as 40 percent. The more California “under-builds”, the higher prices grow, and the lower homeownership rate becomes. In fact, California is ranked the second lowest in homeownership across all states, out ranked by only New York.

Because of the state’s low housing affordability and its difficulty in achieving home ownership, Californians are leaving for more affordable states such as Texas, Arizona, Nevada, and Oregon. Businesses and jobs follow the California exodus as well, with companies such as Toyota, Jamba Juice, and Comcast leaving the state, resulting in fewer jobs, higher income inequality, and a reduction in the access of less skilled workers to high-wage labor markets.

That said, California is still a place where people want to live. Results from a recent poll of those who live in California show that 63 percent would not be willing to move out of California to achieve home ownership. In addition, 31 percent of home buyers surveyed in the California Association of REALTORS® 2018 Consumer Survey said they did consider purchasing a home in another state that met their needs but ultimately ended up staying in California because they like the city that they live in, or like living in California as a whole (38%), didn’t want to leave their job or friends and family (20%), and California is either their home state or they have deep familiarity with the area (11%).

*The message above was provided by the California Association of Realtors

The Santa Barbara Association of REALTORSⓇ invites you to consult with your REALTOR®. Visit www.sbaor.org to find a Realtor or an affiliate member.

Thomas C. Schultheis is a Santa Barbara native and a Realtor with Berkshire Hathaway HomeServices California Properties. In addition to his work on the Board of Directors of the Santa Barbara Association of Realtors, Thomas holds a Broker’s license and additional designations. Thomas lives in Santa Barbara with his wife and their two-year old son. He can be reached at 729-2802 or SBRealtorTom@gmail.com.