Hundreds of thousands of people have left California for more affordable places in the last several years. More and more of them are the less prosperous residents of wealthy neighborhoods.
Getting out of the Golden State can leave them much better off.
That's according to a new report from the California Policy Lab, a research institute based out of UC Berkeley and UCLA. Those researchers found that people leaving California have more student debt, more auto loans and lower credit scores than those who stay - but end up being much likelier to own a home within a few years of moving to another state.
"The affordability gap has really widened over the last decade," said Evan White, the executive director of the lab at UC Berkeley and a co-author of the report. "That's making it really difficult for people even making good money to get by."
To make these determinations, the report, one of the most detailed looks yet at California's ongoing outmigration, relied on anonymized data from credit bureaus. That allowed the researchers to follow the same individual over time and see what became of their financial situation, explained Evan White, the executive director of the lab at UC Berkeley and a co-author of the report.
What it revealed is that after leaving California, people land in more affordable places - and their financial position improves.
For the last two decades, more people have left California for other states than have moved to the Golden State from other parts of the country. That trend reached a height during the pandemic, but has ebbed slightly in recent years. Historically, international migration has kept California's population afloat despite the net losses to other states. But declining entrances to California, from both international and domestic movers, has meant California's population growth has ground to a halt.
"If trends continue, the implications for California's tax base and national political clout could be severe," the report said. "For example, after losing one congressional seat in 2021, California is on track to lose three to four seats in Congress after the 2030 Census."
The report does not reveal the personal reasons why someone might have moved, White noted, but it is clear that people move to more affordable locations, often in neighboring states like Nevada and, in recent years, Idaho. In addition to finding that leavers are likely to be financially worse off than their neighbors, the researchers found that people who move to another state landed in a place where monthly housing costs are $672 lower than the neighborhood they left.
White said that the financial gap between people who choose to leave the state and their neighbors indicates that people have a difficult time attaining the quality of life they want in California, which the researchers called a "keeping up with the Joneses" effect.
Seven years after leaving California, movers were also 11 percentage points more likely to be a homeowner than those who stayed, after controlling for age, the report said.
Hans Johnson, a senior fellow at the Public Policy Institute of California who also researches population trends, said that the homeownership differential was one of the most striking findings in the report.
Johnson, who was not involved in the California Policy Lab research, has also found that affordability is a main driver of the exodus from California. The stark divergence in how much more likely leavers are to afford a home, he said, underscores just how central housing is to people's decisions. .
Housing costs in California have always been high, White noted, in part due to the state's desirability. But the housing crisis is a problem "decades in the making, across multiple administrations and parties," he said.
What that means, both researchers said, is that California is increasingly becoming an option only for the well-heeled. Both said that recent state policies aimed at increasing housing production are a step in the right direction, but that the problem isn't solved yet.
Johnson, the PPIC researcher, recently found that new housing units built in the last five years have "not yet translated into meaningful relief for households struggling with high costs." At the same time, the state's vacancy rate has not increased, despite the new housing, suggesting that the increase in supply has yet to improve the state's housing shortage.
But there are promising signs, he said: After years of decline, the rate of adults between 20 and 34 forming their own households - that is, by moving their parents' house or a home with roommates into their own place - has increased in the last five years. That could mean that the increase in housing units is providing some options to young adults who may otherwise have had to leave the state.
"I think that's good news," Johnson said. "We still lag behind the rest of the nation, but it's the first time we have seen a change in direction."
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