A lot of people are relocating out of the Golden State due to expensive housing.
“There is clearly a relationship between the migration patterns and home prices,” said Sam Khater, deputy chief economist at CoreLogic. “The middle and lower middle can no longer afford to live in California.”
California’s housing market is one of the most expensive in the nation, with a median home price of $428,000 across the state. Not only are California’s home prices extremely high, they’re growing at a furious pace. In fact, California home prices have shot up 71% in just the last five years.
In addition, a number of California’s local markets are prohibitively expensive. Of the five priciest housing markets in the country, four are in California, according to the latest data from the National Association of Realtors (NAR). San Jose tops the list with a median home price of $1 million.
Unfortunately, incomes have not kept up with the rising home prices – particularly for the working and middle class.
Even with strong job growth and better wages, California has been losing its residents for years and may be facing a shortage of middle-wage workers, according to a report from Beacon Economics released in March.
For instance, California’s tech industry has thrived and attracted many industry professionals; however, the benefits have been somewhat concentrated.
“All the gains aren’t coming in support of the rest of the economy, they’re coming at the expense of the rest of the economy,” said Christopher Thornberg, founding partner of Beacon Economics.
“It makes it harder for the average person to make a living there,” said Khater. “So that means less teachers, fire fighters, retailer workers. It’s causing the entire state to become more expensive.”
According to Khater, Californians are opting for homes in states with more affordable housing and lower costs of living such as Arizona, Texas and Nevada.
Plus, when it comes to buying homes, they’re getting more for their money in other states. In 2015, people leaving California sold their homes for an average of $495,500 and only spent $315,000 on their new – and often bigger – homes.
“They are saving money and moving up market,” said Khater. “You can increase your standard of living.”
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