Long-term Outlook For California

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Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

Originally posted by @Jackson Andrews:

Howdy Bigger Pockets Peeps, As an agent in Austin TX, I have felt the inundation of California Natives to the Hill Country of Texas. This exodus has only just started but it has had a fairly significant impact on our market giving us a large amount of demand for both rental and luxury properties and a lack of supply (30% less supply than Q3 2019). Have my people inlaces like Nevada,Tennessee, Florida experienced this as well ? I am just curious about the current state of home demand in California and if the home prices will somewhat plateau or if they will depreciate. I feel that it is important to point out how geographically amazing California is, meaning that there will always be some demand to live there even if you are overpaying and taxed out the wazoo. Lastly, I have a question for all of my Californians, are as many people truly considering leaving the state as the internet is making it sound ?

Thanks , Jackson Andrews

Jackson,

Home prices in California are high and growing higher. I don't understand how that's possible in this environment, but there is absolutely no lack of demand for housing in CA. What we have a severe lack of supply.

Not as many people are leaving California as the internet or even your personal experience makes it seem. The biggest thing that you need to appreciate is the scale of California. 39.5M Americans live in California right now. The population of Austin is under 1M. So even if Austin feels inundates by Californians, it actually only takes a tiny fraction of Californians to create this impression.

When you look at Calfornia's net out-migration per capita, it's nothing crazy. In fact, per capital, more people are moving out of Alaska, Hawaii, New York, Illinois, Connecticut, Louisiana, and New Jersey than are moving out of California. Here's the full list:

So this isn't to to say that people *aren't* moving out of California. They are. It's just not the epidemic that the internet makes it out to be.

Plus, the places that are "plagued" by Californians are also close to California. East of Texas, what cities are griping about too many Californians? None?

So in conclusion: California is a huuuuuuge state, some people are moving out, and those that are moving out aren't moving too far. But the "exodus" is a lie.

Best,

Jon

21 Reply

Kenneth Burdick

Rental Property Investor · Rancho Cucamonga, CA · Member since 2020 · 58 posts · 23 votes

5y

My experience tells me otherwise, as well as my local realtor. I can't tell you the last time I met someone in our area who moved here from out of state, but almost not a day goes by that I don't hear from someone I know that they're leaving the state. I wouldn't necessarily shrug off the "California Exodus" story - it's not made up.

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

@Kenneth Burdick, that’s just my point! The actual Census numbers don’t support the idea of an exodus.

And the problem with your anecdotal evidence (and your realtor’s) is that it doesn’t consider the scale of the issue. It’s akin to saying, “Well, I’ve never seen evolution, so it can’t be true.”

Yes, in raw numbers, more people move out of (and into!) California than any other state. And yes, per capita, more people move out of California than out of 40 or so other states. But California isn’t even experiencing the most net out-migration of the 50 states! How in the world can that be an exodus?

Best,

Jon

9 Reply

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

@Kenneth Burdick, where are you? What’s your area?

Best,

Jon

3 Reply

Ana Marie B.

Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes

5y

@Jackson Andrews - I personally don’t see people moving out in my community. I live in the suburb outside of San Francisco called the Peninsula.

I check listings regularly and still see low supply and high demand. Prices remain high in my area. 3/1 SFRs in the South San Francisco area are still selling for between $900k - $1M+, comparable to pre-COVID values.

6 Reply

Bryan Noth

Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes

5y

Words such as 'exodus' catch the eye and are a bit vague. @Jon Schwartz makes a good point that with comparative data other states areas are seeing relatively high migration rates. However, I do feel the data points you chose Jon are worth adding perspective to. California has a population of 39.5M, and Austin's population is 960k. But the Austin MSA is 2.2M, and Texas, if we are comparing state to state is 29M. Comparing MSA regions, San Fransisco's population is 880k, and the entire Bay Area is 7.7M.

Again to Jon's point and to deflate the 'exodus' mentality, 8% of the incoming population to the Austin MSA from 2014 to 2018 was from California. 51% was from other Texas cities over that same period. Furthermore, from 2010 to 2018 an estimated 605k Californians relocated to Texas, or 1.5% of California's total current population. This is of course not extrapolated over time, which would be closer to 0.2% per year of the total population.

However, I do think it is a pattern worth watching. A pattern that has shown a trending increase over time for the last 15 years.

Statistic Source: US Census Bureau

Kevin G.

Investor · Bay Area, CA · Member since 2020 · 72 posts · 43 votes

5y

To answer your question as someone living in the Bay Area: I am definitely considering leaving California, and I know a lot of people who want too also. My reasons are not only due to insane taxes and HCOL , but also for political reasons that I just can't wrap my mind around anymore. One reason I am staying for now is I can make way more money here with my current job , to help with starting REI.

2 Reply

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

Originally posted by @Kevin G.:

To answer your question as someone living in the Bay Area: I am definitely considering leaving California, and I know a lot of people who want too also. My reasons are not only due to insane taxes and HCOL , but also for political reasons that I just can't wrap my mind around anymore. One reason I am staying for now is I can make way more money here with my current job , to help with starting REI.

"I want to leave California because it's too expensive, but I want to stay because I make so much money." Classic!

21 Reply

Lee Bell

Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes

5y

I don't want to leave California, and don't see an Exodus. That sounds rather biblical. They are building like crazy here in the San Fernando Valley.

I would like to leave the big city, but for now that is where the work and money is, so I stay.

3 Reply

Kenneth Burdick

Rental Property Investor · Rancho Cucamonga, CA · Member since 2020 · 58 posts · 23 votes

5y

@Jon Schwartz Inland Empire and work in LA. And I know a lot of people who tell me they are anxious to leave, just lining up their ducks to do so. This is all anecdotal, and I'm all for relying on data. I just wouldn't balk at the thing entirely.

1 Reply

Justin Thorpe

Member since 2020 · 437 posts · 675 votes

5y

@Jackson Andrews

So yet another CA bashing thread! I know of 9 families who tried to live in Texas and have since returned because of the weather and lack of career opportunities in tech.

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

Originally posted by @Kenneth Burdick:

@Jon Schwartz Inland Empire and work in LA. And I know a lot of people who tell me they are anxious to leave, just lining up their ducks to do so. This is all anecdotal, and I'm all for relying on data. I just wouldn't balk at the thing entirely.

Kenneth, I'm sorry, I misread your post. I thought you were somewhere outside of CA and saying that people are moving there all the time.

I mean, you have a point in that the data is a year old, and maybe the trend is skyrocketing upward. I just doubt it.

I live and work in LA, and I meet people from out-of-state. Shortly after the COVID shutdown started, I met a woman has had just moved from New York two days prior. I remember thinking, "Stay away from me!"

And I'm on my college's website for finding a mentor, so I talk to several kids a year who plan to move to Los Angeles after graduating to work in entertainment.

Kenneth Burdick

Rental Property Investor · Rancho Cucamonga, CA · Member since 2020 · 58 posts · 23 votes

5y

It could be the area I'm in and my peer group (who tend to be more conservative, religious). My opinion is that there are emotional (obviously) and extreme opinions on both ends, and the truth is probably somewhere in the middle.

Andrew Shelton

Rental Property Investor · Los Angeles, CA · Member since 2016 · 26 posts · 24 votes

5y

@Jackson Andrews

I live in California currently and my wife and I talk about leaving regularly. I work in the medical field and I’ve spoken with several members of the medical community who are considering leaving for various reasons. What I anticipate happening, especially after the eviction moratorium is lifted, is that our homeless population will further increase, and as our laws become more and more lax, the homeless population will overrun more and more suburbs making it less desirable to live in any part of LA. The tent cities are already completely out of control in the central part of LA and they grow wider every day. Couple that with the fact that wildfires and earthquakes are becoming more frequent and the fact that the cost of housing has not responded at all to all of those issues and you can see why so many are eager to leave. It will be a very interesting year next year. I’m not buying anything in CA for the short term.

Layne T.

Investor · Ft. Lauderdale, FL · Member since 2019 · 71 posts · 50 votes

5y

Pros -
-Coastal real estate will always be in solid demand, both from local/national/international buyers so prices won't go down much even during recessions
-Perfect weather by the coasts
-With inflation expensive properties appreciate more - there will be long term inflation - properties will appreciate

Cons -
-Yes, in larger cities, most always talk to their peers about leaving
-In larger cities, homelessness/crime/poor roads/schools etc. do make people wonder why they live here
-In smaller cities, there are a lack of work opportunities making one wonder why they live here
-State income taxes are out of control
-The state is poorly run so it will degrade over time not do better (i.e. Illinois)
-As a landlord, the laws are not friendly

Where does it go? Middle class will be squeezed out, it will be a split between high-income and low-income over time unless there's drastic policy change (which many don't see happening).

10 Reply

Justin Thorpe

Member since 2020 · 437 posts · 675 votes

5y

Leaving CA is not a crime and if people don’t like living in CA they should move vs saying they want to move.

Trust me there are few here like that office colleague who has been telling you every year for the last 5 years that he is looking to leave but then also lobbying with the boss for his next promotion!!!!!!

For states/cities/counties that are looking to welcome CA migrants, just make sure your geo has great jobs and careers for these folks, otherwise they won’t stick around too long.

1 Reply

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

5y

Hey guys, how about we work on rebranding the "California Exodus" as the "California Takeover!"

The way I see it, with housing supply being so tight, the current net out-migration is a welcomed relief valve!

Plus, everywhere Californians are moving are turning more and more blue. If you Texans don't like our politics, you shouldn't make it so welcoming for us to move to your state! We're turning you purple....

11 Reply

Adam E.

Investor · Member since 2019 · 25 posts · 24 votes

5y

Here's my personal experience as an investor in the Bay Area. SF specifically has more inventory on the market than it has in the last 10 years and we're seeing more multi-unit buildings on the market in areas that never had listings than I can recall. Condos in strong, low inventory areas are doing well but in areas that were heavily developed they are sitting on the market and prices dropping. Def. see people moving out of the city, state, or trading up to better spaces or SFH but there is movement in the market still.

Google just announced they're expanding their office space SF. This is interesting for two reasons 1.) There is about 12M sq foot of commercial sublease space on the market right now, that's more than during the dotcom bust. 2.) residential prices on condos and rentals are way down, showing that there is vacancy and people aren't around but Google is expanding.

Like each of y'all, I can't predict the future but here are my thoughts: Some people were near the point of leaving the city or CA in general, they accelerated those plans and moved. Some people are temporarily living away for a year since the cities don't have anything to offer right now. Much like we saw with dotcom bust and the financial crisis the cities will get less expensive then they will build back up over some time period (SF typically recovers from recessions faster than the national average) because there is already a critical mass of education, business, capital, and people there to go with the social aspects of what a city has to offer. With companies like Google expanding in the city due to low commercial prices combined with the fact that people like to naturally be together and be social I believe it'll continue to bring business and people back to the cities. The question is, how bad does it get and how long till there is an uptick.

[email protected]910-745-6972

Dan DiFilippoBusiness Member

Real Estate Broker · Fayetteville, NC · Member since 2020 · 251 posts · 244 votes

5y

@Jackson Andrews generally speaking, how can it be good? Nowhere to go but down.

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