While California is still far and away the most populated state in the country – accounting for more than one-tenth of the U.S. population at 38 million, based on the most recent Census – people are leaving the Golden State in droves, according to newly released data.
The cause of the mass exodus stems from the cost of living, where despite mortgages rates being in record-low territory, steadily climbing asking prices in the residential real estate market are making buying a home cost prohibitive.
625K depart Cali in last seven years
Over a seven-year stretch – from 2007 to 2014 – California lost approximately 625,000 more people than it gained, based on a collection of statistics from three reports. In other words, there was a larger outbound flow of people than there was inbound. Additionally, of the more than half-million people who left the Golden State, more than 50 percent moved to one of five states, those being, neighboring Nevada, Arizona, Washington, Oregon or Texas. Furthermore, the majority of outbound former Californians earned less than $30,000 – more than $20,000 under the national median income rate.
Noel Perry, founder of Next 10, a nonprofit, nonpartisan organization that conducted the study, indicated that people are leaving the state in as large of numbers as they are because of the affordability crisis and an insufficient supply of properties people can buy without breaking the bank.
"While California innovation and entrepreneurship are driving business creation and job growth across the board, we don't have enough housing," Perry explained. "Left unchecked, housing costs could severely hamper the state's ability to retain the low- and middle-income workers that help to power our economy."
For purposes of the study, "middle-income households" were defined as those whose primary wage earners make between $50,000 and $100,000 per year. Just over 1 in 5 – 22 percent – of Californians fall into this income bracket.
Christopher Thornberg, who co-authored the reports produced by Next 10, indicated that while job openings are on the rise, what Californians are earning is often insufficient. Adding insult to injury is the dearth of real estate inventory, affordable and otherwise.
"The state continues to offer great employment opportunities for all kinds of workers," Thornberg explained. "But housing affordability and supply represent a major problem. If we want to attract and keep low- and middle-income families in California, we need to address it."
Mortgages remain in highly affordable territory
What people have been able to secure with relative ease are mortgages, particularly among those with stellar credit. For the week of March 3, average 30-year fixed-rate mortgages held at 3.6 percent, according to Freddie Mac's latest Primary Mortgage Market Survey. FRMs have been south of the 4 percent threshold for all of 2016.
Dwindling inventory and weak wages aren't issues confined to California, but felt nationwide. Housing starts in January fell to only 1 million units in January on a seasonally adjusted annual basis, down 4 percent year-over-year, the Commerce Department recently reported. The Labor Department, meanwhile, revealed that wages slipped in February, as did hours worked in the typical week.
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