The Real Reason Californians Are Leaving

Over the past few years, migration out of California has received plenty of media attention. From large tech companies relocating to Texas to ordinary people moving to other states, California seems to be facing a possible population issue aheadbut not for the reasons many may think.

In a poll conducted by the University of California, Berkeley, voters from various political backgrounds were asked whether they have considered moving out of California, and if so, why?

“High taxes” and the “state’s political culture” were some common responses amongst conservative voters. This should come as no surprise as Republicans and other conservative organizations conveniently blame California’s liberal policies as the sole reason people have been abandoning the Golden State. 

Conservatives protesting Newsom’s Covid-19 restrictions in Huntington Beach, California.
Source

However, many conservative attacks against California’s policies are largely baseless. Although California does hold the top marginal tax rate that targets its wealthiest residents, poorer and middle-class Californians pay less on average than Texans do. In fact, the non-partisan Institute on Taxation and Economy found that California ranks as the best state for middle-class taxpayers while Texas ranks second to last.

Despite the misleading attacks conservatives have waged against California’s most progressive policies, the most common reason voters have considered leaving was not higher taxes or a toxic political culture, but the high cost of living. Contrary to other criticisms, California’s expensive cost of living is well-recorded and can be directly linked to California’s housing costs, which have been skyrocketing for years.

But what is causing California’s notorious housing crisis?

To put it simply, decades of rapid job growth from all sectors of the economy has created an incredibly high demand for housing that has not been met with an adequate supply of housing. Although the fundamental economic principle of supply and demand is often deceptively and improperly applied in policy discussions, empirical economic research has determined it can be legitimately applied in the instance of California’s housing crisis.

The toll California’s housing crisis has taken on its population and economy is impossible to illustrate with words. The lack of affordable housing remains the leading cause for homelessness and higher housing costs often have to be compensated by employers, which can make the business even harder to conduct in an already expensive state.

The homeless population in San Francisco, California.
Brant Ward / The Chronicle

The reasons for California’s inadequate supply of housing can be linked to various government and market failures, but there are a few main culprits. California’s infamous Proposition 13 amendment, which was passed over four decades ago, created a generous loophole in the state’s property tax system, while harsh zoning laws implemented under the pressure of politically powerful household residents effectively prohibit new housing projects. Restrictive zoning laws are especially a problem in the San Francisco Bay Area, where the same UC Berkeley poll found the highest concentration of those who responded with “high cost of living” as their primary reason for considering to leave.

Does that mean that California’s liberal government is to blame for all of this? Not necessary. Increasing housing costs can occur in any state that experiences high growth that is not accompanied by an adequate supply of housing. In fact, this is already happening in historically red states such as Idaho, where Californians, who have recently been moving in en masse, have already managed to raise home prices by 20 percent in 2020.

So, what can be done to solve the housing crisis?

Both the private and public sectors of our economy can work together to increase the extremely low supply of housing. Harsh real estate regulations should be eased to encourage private investment, while ambitious public investments can be put forward towards affordable housing. Many state lawmakers, such as newly-elected 25-year-old Assemblymember Alex Lee, have already placed California’s housing crisis at the forefront of their agenda by promising to invest in public housing while providing immediate relief to those who have suffered most from the crisis.

While the solution seems simple enough, its implementation will present an incredible challenge our lawmakers and bureaucracy would have to battle with for years to come. However, California’s housing crisis remains the single greatest threat to its social and economic future, and the cost of inaction may be an irreparable dent on the great, Golden State.

Title Image: Jim Wilson / The New York Times

About the author

Damjan Nastic

Hello, and welcome to my blog! I'm Damjan Nastic, an economics major aspiring to encourage democratic participation amongst my fellow students through this page. I hope my page can offer a different perspective on pressing issues throughout the world.

If you have any questions, please feel free to email me at [email protected]!

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8 Comments

  • Thanks for writing this piece, Damjan. I moved to the OC from the San Francisco Bay Area six months ago with hopes of finding housing that was more affordable here. It was a rude awakening when I found that the cost of living is comparable here to Bay Area cities. I really appreciate that you shared the information about where California ranks for middle class tax payers. I’ve always heard that CA’s tax rate is high but never actually looked into this to see if it was true or not. I’m excited to share this information with my partner. He has been trying to convince me to leave California and move to Texas, which I have been against. I’m hoping your piece coupled with the ITEP data is enough to convince him that a move out of state is not the right decision for us.

  • Hi Damjan,
    I love the many characteristics being pulled into the narrow topic of why people are literally fleeing from California. As a native Californian, all of these problems are completely valid and definitely scare the public. I agree that just to simply live in California is becoming impractical due to the raise in housing and taxes. I think even the tax crisis should be looked into. Us in California have a way higher minimum wage than those in Texas but seem to have a way higher housing situation. But putting these margins on a scale the minimum wage prices do not and cannot cover the housing debt Californians are paying. So even protest on the pier relate to people moving out because of an discomfort within the Golden state. Maybe California’s own economy will crash down the line and rebuild itself up, but who knows. I love the blog, keep doing what you’re doing!
    Jacinda Pina

  • Hi Damjan! I really found your article to be interesting considering I am experiencing troubles with the housing market in my own life. My mother is trying to sell the home she has lived in for the last 15 years and even though it is worth so much more that what she bought it for, she still wouldn’t come out on top trying to buy a new home. I just moved back to California a year ago and I wouldn’t be here if it weren’t for my family. I admit that this state is very beautiful, but the cost of living is absolutely outrageous! Also, thank you for sharing about lawmakers trying to fix these problems. That was not something I was aware of before I read your article, and now it is something I plan to stay informed on. I hate seeing the amounts of people without homes on the streets, and I hope that relief can come soon! Keep up the amazing work you are doing with this blog!

  • Hello Damjan! I found your article to be very well organized and thorough. You’ve made it clear for me as the reader to understand the topic. You made some awesome points that I had no idea were true. I didn’t know that the Texas Taxation economy were second to last when it comes to the middle class. I know quite a few people with wanting to move to Texas for those reasons alone. I also wasn’t aware that Idaho’s home prices went up 20 percent. That is insane! I know of a few acquaintances who moved there a few years ago. However, they struck gold by selling a $400k condo in Garden Grove, to buying a $250k 6-bedroom home in Idaho. You’ve done a fantastic job at highlighting the areas that need improvement with our housing crisis. Hopefully those loops holes can be addressed to get more families the shelter they need. Can’t wait to read more of your posts!
    -Coryna

  • Hi Damjan! I really enjoyed your article. I learned a lot of things I thought to be true are in fact, not. For instance, I have always heard that California had the highest tax rate. Majority of my family has moved to Montana or Texas with in the past couple of years. Recently my mom has thought about moving to Texas or Virginia. Personally, I do not think moving out of state is for me but I can see why their going. California’s housing cost is outrageous. It feels almost impossible to buy a house unless you come from a family of money. I hope that one day our housing crisis is solved prior to causing an irreparable dent. Thank you for sharing!

  • Hi Damjan,

    After reading your blog post, I couldn’t agree more with your thoughts on why people are deciding to leave California. You perfectly highlighted the issue of how difficult it is to be able to own a home in this state due to limited supply and outrageous costs. I’m also glad that you acknowledged how the rising costs and the lack of affordable housing is sadly contributing to people becoming homeless. Homelessness has become a growing issue that needs to be addressed. I remember twenty years ago, my parents moved to Huntington Beach, and at the time their house cost around $425,000. That same house today has been appraised for a little over $900,000 with only slight renovations done to it. I can’t fathom owning a home in Huntington Beach at such high costs. I agree with you that the solution to help alleviate the housing crisis in California would require the state to ease up on its restrictive housing laws. That way, more businesses would be encouraged to invest into future housing projects. Great job!

    Robert Herzog

  • Hi Damjan!
    I enjoyed reading your article; it was so interesting to read; for me personally, you mentioned a lot of truly new information to me to hear. I came from a different country, and when we decided to move to the United States, we chose CA because of the weather; we had an idea that it’s a costly state to live in. Still, I never did my research to see why, but now after reading your article, I have a background idea about the answer. It was a great topic to talk about. I am definitely going to share your article with my friends and my family; I see it’s a critical and interesting topic to talk about. Also, your article was so easy and so understandable to read, which I enjoyed; it was so clear to me. You really did a great job transpiring your point to the reader in a clear and small article, Great Job!
    Thank you for sharing this interesting information with the world.

  • Hi Damjan,
    I just finished reading your article about climate genocide, I can’t decide which article I like more! I like your picture from the HB pier, I was down there last July for a bday lunch and could not believe how many protestors were down there. I am shocked that California ranks as the best state for middle-class taxpayers and Texas ranks second to last. I agree, California’s living costs are very expensive and are continuing to go up. Even during the pandemic gas prices were crazy, the rents were still going up, while some people were experiencing pay cuts. People were unable to support their families, pay their bills, and were really struggling. Homelessness is continuing to grow, I saw it really bad down in Lomita a few months ago. I agree that we need more affordable housing options very soon. I look forward to reading more of your articles!
    Thank you!

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