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The California Exodus and the Housing Market

The real estate market across California has always been highly demanding. According to recent estimates, California may already be more than 3 million homes short of what is needed to support its population. A combination of the lack of housing and high home prices reflect that the median price for a home in California was around $507,000 in December 2017 which is rapidly driving people out of the state of California and into other areas. Unfortunately, this exodus has served only to decrease the shortage of homes, rather than solving a significant problem that has the potential to have a heavy impact on California’s economy.

California’s Mass Exodus

Over the past couple of years, California has undergone a mass exodus as increasing numbers of Golden State residents choose to leave for greener pastures. This exodus is particularly common among California’s poorer residents, but it’s not limited to just the lower classes; even the middle class is feeling the pinch, choosing to move to states with lower income taxes and lower cost of living. There are several reasons behind the number of individuals leaving the state.

  • California has extremely high tax rates, which lead many individuals to seek states where lower amounts of their income are siphoned away with each paycheck
  • California offers few housing options for those with tight budgets, especially those in the lower economic class. Rent in California eats up a large portion of most families’ budgets. Home ownership, with the high price of owning a house, is an even more serious consideration.
  • The housing shortage makes it difficult for even those who have the funds to afford homes in California.  

People are expected to continue to leave the state of California in the coming months and years. Construction in the state has not yet risen to a level that can support California’s population growth, while the cost of living within the state is unlikely to drop to a level that will make it comfortable for lower-income residents.

How the Exodus Impacts Housing

California’s housing crisis isn’t made worse by the exodus from the state. Unfortunately, it isn’t substantially alleviated by those who have chosen to leave either. Rental housing throughout California is known to be more overcrowded than any other area of the United States and California residents have lower rates of home ownership than residents of other states. California also remains 48th of the 50 states with regard to the percentage of income spent on housing each month. The exodus from California remains inadequate to meeting the goals the government has set concerning housing throughout the state.

Ultimately, what this means is that there is high demand for income for poor and middle class families across the state of California. By fulfilling those housing needs, it’s possible to create immense change in a state whose economy is increasingly uncertain. Increased construction can help decrease overcrowding, make it easier for families to find homes and ultimately lead to more affordable housing for California residents.


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