Tag Archives: Leaving California

California Become 3rd Largest State with More People leaving than Migrating to the State

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California has beaten Illinois for net out-migration from the state. California has become one state that there are more people trying to get out than moving into it. So while California wants to protect illegal aliens and fight with the Federal government over sanctuary cities contrary to the Constitutional Supremacy Clause, according to a November report from the U.S Census Bureau, the Golden State has had 142,932 residents exit the state. This domestic out-migration has been the second largest outflow in the USA behind only New York and New Jersey. The net out-migration from California jumped up 11% compared to 2015.

Source: Armstrong Economics

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California Residents Flee, Chased Away By Soaring Home Prices And Cost Of Living

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Last month, a Wall Street Journal op-ed posited that the new tax bill could create a mass exodus of roughly 800,000 residents from the state of California who will flee the state for low-tax red states. 

In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states. This migration has been happening for years. But the Trump tax bill’s cap on the deduction for state and local taxes, or SALT, will accelerate the pace. The losers will be most of the Northeast, along with California. The winners are likely to be states like Arizona, Nevada, Tennessee, Texas and Utah.” –WSJ

Taxes aside, a new report by Next 10 and Beacon Economics suggests the California exodus may get a lot worse, as new housing construction since the Great Recession has been tepid at best, and as a result, California faces a housing backlog of 3.4 million units by 2025 if the trend continues – and 2.8 million units at the current rate of construction. 

From 2007 to 2017, only 24.7 housing permits were filed for every 100 new residents in California – much lower than the U.S. average of 43.1 permits.

By 2025, California would have a housing backlog of 3.4 million units if the trend continues. At the current pace of construction, California would add just a minimal amount of new housing – about 600,000 new housing units (net of housing unit losses due to demolition and other causes) – leaving the state with a housing gap of 2.8 million units by 2025. –Next10

California’s current housing supply is not able to support its growing population,” the report concludes, and as such “the low levels of construction will likely result in further increases in home prices, such that fewer and fewer California residents will be able to afford homes.

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According to the report, California lost over a million residents in the decade between 2006 and 2016, due primarily to the high cost of housing disproportionately hurting lower income households. Over 20% of those who moved over that decade did so in 2006 – at the height of the housing bubble.

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And since American consumers are genetically predisposed to never learning from their mistakes, median home prices in California are once again gapping well above the national average in a very similar pattern, making housing once again prohibitively expensive:

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Meanwhile, migration out of California is mostly tied to income, as most of those leaving the state earn less than $30,000 per year.

Those migration patterns are shaped by socioeconomics. Most people leaving the state earn less than $30,000 per year, even as those who can afford higher housing costs are still arriving. As the report noted, California was also a net importer of highly skilled professionals from the information, professional and technical services, and arts and entertainment industries. On the other hand, California saw the largest exodus of workers in accommodation, construction, manufacturing and retail trade industries.MarketWatch

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Crunched California homeowners spent an average of 21.9% of their income on housing expenses in 2016, while home ownership rates are terrible at just 53.6% of homes owner-occupied; the 49th worst in the nation on both counts. California renters meanwhile come in 48th in the nation when it comes to percentage of income spent on housing at 32.8%.

And how are Californians coping with the skyrocketing costs of housing? One strategy is doubling up – as nearly 14% of renters have more than one person per bedroom, making it the state with the highest percentage of overcroweded renter households

Another solution? 

Leaving

In a separate analysis noted by MarketWatchs Andrea Riquier, “Realtor.com found that the number of people searching real estate listings in the 16 top California markets compared to people living there and searching elsewhere was more than double that of other areas — and growing.”

Searches for homes in pricey California towns – primarily Santa Clara, San Mateo and Los Angeles – experienced virtually no increase over the past year, while views of listings in other parts of the country were up 15%. 

So where do most broke Californians move? Texas, Arizona, Nevada, Oregon and Washington . 

Read the report below: 

Source: ZeroHedge

“We Don’t Belong Here Anymore” – Even Landlords Are Fleeing The Bay Area

Peter Thiel and his band of libertarian-leaning Silicon Valley-types aren’t the only ones scrambling to leave the Bay Area: As we’ve noted time and time again, staggering economic inequality is a daily fact of life in the area surrounding San Francisco – largely because rapidly growing home valuations have left couples earning as much as $500,00 a year feeling like they’re being steadily priced out.

And while we’ve previously covered the exodus of renters to low-cost states like Texas, in a report published Saturday, the East Bay Times explores an even more troubling trend: Landlords are increasingly taking the cue from their tenants and joining in the exodus.

After all, with one in four US homes sold during 2017 going for more than $500,000 above their asking – particularly in hot real-estate markets like San Francisco, where buyers battling for the highest bid have begun relying on clauses that will automatically – and incrementally  – raise their bids until they either emerge victorious, or reach a predetermined ceiling.

For at least the last nine months, the Bay Area has led the country in the number of departing residents, as everybody who isn’t a tech worker – including essential civil servants like police and fire fighters – begins to feel like a secondary servile class. One landlord said several of his tenants asked if they could move with him when he announced he was selling the building and departing for Colorado

Tony Hicks moved to San Jose in 1981, but he’s had enough.

Hicks told his 11 tenants he would soon place the three homes he owns on the market. He expected disappointment. Instead, most wanted to move with him to Colorado.

“It didn’t take them long,” Hicks said. “I was surprised.”

Hicks first bonded with many of his tenants over their shared appreciation for conservative politics in an environment that is openly hostile to views that don’t conform to the dominant neoliberal ideology.

“I’ve been thinking about this for a long time,” said Dan Harvey, 60, a retiree in one of Hicks’ rentals who is concerned about the traffic he fights on his Harley Davidson and the high cost of living. “A fresh start.”

Rising prices, high taxes and his suspicion that the next big earthquake is just a few tremors away convinced the retired engineer to put his South San Jose properties up for sale.

The groundswell to leave Silicon Valley — the place of fortunes, world-changing tech and $2,500 a-month-garage apartments — has been building. For at least the last nine months, the San Francisco metro area has led the nation in the number of residents moving out, according to a survey by online brokerage Redfin.

San Jose real estate agent Sandy Jamison has seen many long-time residents and natives leave the state recently. The lack of available housing, leading to some of the priciest real estate in the country, is driving many from the region, she said.

The landlord and tenants came together through Hick’s rental ads on Craigslist and in the newspaper over the last two decades. They grew close with common bonds of conservative politics, religious faith and motorcycles.

It’s an unlikely collection of 10 men and one woman — a retired engineer, a few military veterans, blue collar workers and others on fixed incomes. Few say they could afford to go it alone in the sky-high housing market in San Jose, where a typical two bedroom rents for about $2,500 a month, far more than what they pay Hicks.

Most of the men are divorced, widowed or never married, and many suffer from health ailments and a crankiness exacerbated by Bay Area traffic, crowding and the state’s liberal policies on crime and immigration.

Hicks, 58, was an engineer and marketing executive at IBM, Xerox and other companies before retiring in his early 40s to raise his daughter from his first marriage.

He bought a few investment properties in South San Jose, and looked for long-term returns when he sold them. He kept rents low — between $500 to $1,200 a month for one bedroom — and never raised prices once a tenant signed a lease.

Many of his tenants have been with him for more than a decade.

“We became brothers,” said Mike Leyva. The 64-year-old Army veteran and retiree signed a lease in 2004 and never left.

And Hicks and his compatriots aren’t alone – not by a long shot: A five-county poll conducted for the Silicon Valley Leadership Group and the East Bay Times found that more than one-third of Bay Area apartment renters and one-quarter of residents in their 20s and 30s say they are struggling to afford their housing.

Many longtime residents also describe a feeling of alienation that seemed to accompany the tech boom.

According to one real estate agent, the top reasons people leave the Bay Area are as follows: high taxes, cost of living, quality of life from traffic to homelessness, politics and high housing prices. For many long-time residents, she said, “they feel like they don’t belong here any more.”

For Hicks, lofty real estate valuations were the last incentive he needed.

In recent years, Hicks began to believe there was a better life outside the valley.

Vaulting real estate prices added incentive. He kept up on tax laws that could maximize the returns on his property. Selling his San Jose rental houses and buying new properties with the proceeds would allow him to defer taxes. “It’s a great financial move,” he said.

Hicks was also moved by discussions with his pastor and sermons at his church, the Vietnamese Living Word Community Church, about Biblical journeys.  His spiritual beliefs guided him to his decision to move with his new wife, Fidessa, 31, and her 8-year-old daughter.  

Cautiously, he broke the news to his friends.

“I was totally shocked,” Leyva said. “I thought he was joking me. I had a lot of questions about it.”

The tenants who are accompanying Hicks expect to save hundreds of dollars a month in rent when they relocated to Colorado…

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Levya spent two days researching the move and became convinced. He expects to slash his rent from $1,200 to about $800 a month, with more room in a newer home bought by Hicks. “I’m excited,” Leyva said. “It’s going to be a new journey in my life.”

Ed Blomgren, 70, pays $495 a month for one bedroom and a shared bathroom. The retired machinist, a Navy veteran, lives on a fixed income and couldn’t afford market-rate rent.

Blomgren grew up in Colorado, and he welcomes a chance to return to his home state, where he still has family. “At my age,” he said, “I think it might be a good thing.”

After he finishes selling off his portfolio of Bay Area propterties, Hicks expects to get a much bigger bang for his buck when he buys a new home in Colorado. The median home value in Colorado Springs is $263,000, compared with $1 million for a single family home in San Jose, according to real estate website Zillow.

Hicks’ plan, as it stands, is to sell all three homes and buy a half-dozen newer, bigger and cheaper homes in the smaller, mountain town that’s home to the US Air Force Academy.

Within a day of listing his Raposa Court home, Hicks had two offers in hand that – like most sales in the area – were well above his $1 million asking price…

California Residents Increasingly Ditching Their Massive Tax Bills And Unaffordable Housing For Las Vegas

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Newport Beach looking north toward Los Angeles. Photo by Ramey Logan via Wikimedia Commons

Los Angeles residents have apparently had just about enough of their city’s excessive home prices, un-affordable rents, crushing personal and corporate tax rates, overly burdensome regulations, polluted air, etc. and are increasingly leaving for a better life in Sin City.  As Los Angeles Times columnist Steve Lopez puts it, “the rent steals so much of your paycheck, you might have to move back in with your parents, and half your life is spent staring at the rear end of the car in front of you.”

As Jonas Peterson points out, his family made the move from LA to Las Vegas in 2013 and were able to double the size of their house while lowering their mortgage payment all while enjoying the added benefits of moving from one of the most over-taxed states in America to one of the lowest taxed.

Las Vegas is one of the most popular destinations for those who leave California. It’s close, it’s a job center, and the cost of living is much cheaper, with plenty of brand-new houses going for between $200,000 and $300,000.

Jonas Peterson enjoyed the California lifestyle and trips to the beach while living in Valencia with his wife, a nurse, and their two young kids. But in 2013, he answered a call to head the Las Vegas Global Economic Alliance, and the family moved to Henderson, Nev.

“We doubled the size of our house and lowered our mortgage payment,” said Peterson, whose wife is focusing on the kids now instead of her career.

Part of Peterson’s job is to lure companies to Nevada, a state that runs on gaming money rather than tax dollars.

“There’s no corporate income tax, no personal income tax…and the regulatory environment is much easier to work with,” said Peterson.

Of course, while many residents of metropolitan areas like Los Angeles get addicted to the ‘large’ salaries they can earn in big cities, others, like Michael Van Essen who recently made a move from LA to Mason City, Iowa, realize that the purchasing power of your income is far more important that the nominal dollars printed on the front of your paycheck.

You’d like to think it will get better, but when? All around you, young and old alike are saying goodbye to California.

“Best thing I could have done,” said retiree Michael J. Van Essen, who was paying $1,160 for a one-bedroom apartment in Silver Lake until a year and a half ago. Then he bought a house with a creek behind it for $165,000 in Mason City, Iowa, and now pays $500 a month less on his mortgage than he did on his rent in Los Angeles.

“If housing costs continue to rise, we should expect to see more people leaving high-cost areas,” said Jed Kolko, an economist with UC Berkeley’s Terner Center for Housing Innovation.

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Of course, Los Angeles isn’t the only place where residents are increasingly fleeing in search of greener pastures.  As we’ve pointed out before, there is a growing wave of domestic migrants that are abandoning over-taxed and generally unaffordable metropolitan areas like San Francisco, New York, Chicago and Miami in search of better lifestyles in the Southeast and Texas.

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Not surprisingly, the dark areas on the map above seem to match perfectly with the dark areas on this map which indicate those with the highest state income tax rates.

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Tack on a rising violent crime rate and things in Illinois have grown so unbearable that the state is losing 1 resident every 4.6 minutes.

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Of course, while liberal politicians often bemoan the existence of the Electoral College, these domestic migration trends could spell disaster for their opponents in national elections over the long-term as pretty much every major migratory pattern involves a mass exodus from blue states, like New York and California, into Red or Purple states like Texas, Florida, Arizona and Nevada.

Source: ZeroHedge