California is known for many things, including golden sunsets, the bright lights of Hollywood and questionable affordability. A new report on the state’s affordability crisis shows that many fleeing California are searching for cheaper housing and finding it shortly after leaving.
The state has lost over a million people more than it has gained since the COVID-19 pandemic. The new report confirms that much of it is due to the cost of living, especially housing.
The report finds many of those leaving are doing so in search of a lower cost of living.
“In case anyone had any doubts, when people leave, they’re moving to more affordable communities,” Evan White, executive director of the California Policy Lab at the University of California, Berkeley, and one of the authors of the study, told Straight Arrow News.
Data collection
White said he and Brett Fischer put this report together because of a special dataset they use to track people at an individual level.
That gave them a detailed look at individuals’ migration habits and a closer look at their financial situation.
“It’s anonymized, but we’re able to see the same people over time, when they leave the state, when they come to the state, or move around in the state, and we get quarterly updates,” White said. “It’s a very good data set for following migration.”
They tracked that data from 2016 to 2025, including what happened to those individuals’ finances over that time.
Home ownership
The report found that after seven years, people who leave California are 48% more likely to become homeowners than if they had stayed.
California is the most expensive state in the country to buy a home in. Other than Hawaii, it’s not particularly close. The state also has the second-lowest home ownership rate in the nation.
“Just kind of shows that those affordability differences really do add up over time, and that people who want to become a homeowner appear much more likely to do so when they leave the state,” White said.
The report also found that part of the reason home ownership is on the rise for those who leave the state is that they are typically not considered low-income to begin with.
The number of exits from higher-income neighborhoods rose 19% over the last decade.
But many of those in that group were significantly financially weaker than their neighbors, who White said couldn’t “keep up with the Joneses.”
“These are folks who are living in higher-income neighborhoods, but they had lower credit scores than their neighbors, they had twice as much student debt as their neighbors,” White added. “On average, they were much less likely to be a homeowner than their neighbors.”
The report found on average these people are moving to neighborhoods where monthly housing costs are nearly $700 less. Subtracting more than $8,000 on your housing cost every year is sure to increase financial stability.
“Folks who would be rich in most other states, maybe in any other state in the country, can be living in California, and it feels like they are not that well off,” White said.
Impact of departures
California remains the most populous state in the country by a wide margin. But unlike the other states at the top of that list, California’s growth rate has plateaued.
In 2021, following the 2020 census, the state lost a seat in Congress for the first time since it became a state 171 years earlier.
“We might be likely to lose some representation in Congress after the 2030 census,” White said. “And I do think that’s likely to happen. How many seats? Maybe three or four seats.”
Among the states that gained seats after 2020 were Florida and Texas. And while some believe those are popular places for Californians to relocate, the report found that neither of those states ranked in the top ten for destinations of those who’ve left.
With more high-earning individuals leaving, that can also impact California’s finances at a time when the state is already losing some serious dough.
“There could also be some impacts on tax revenues, if higher income folks are leaving the state,” White said. “But in the past, the state has proven pretty well able to replace those folks with newer, higher-income folks. One way of putting that is, we’re pretty good at making new millionaires to replace the old millionaires.”
Arguably, the most fundamental element of economics is supply and demand.
So, if more people are leaving, does that leave more supply of housing, which would lessen demand and, in theory, prices?
“It actually is going to lessen demand on housing, and could help somewhat with some of the cost of living, right?” White said. “People don’t focus on that, because they sort of see it as a bad thing that people are leaving. And from some perspectives, it is. But I think that there are upsides as well to having less population pressure in the state.”
Where is everyone going?
The oldest saying in real estate is location, location, location. And for most people leaving the Golden State, they want a location that’s not too far away.
Nevada receives the most former Californians, followed by other nearby states Idaho, Oregon and Arizona.
When expensive new neighbors move in, it’s called gentrification and is not typically popular with those who already live there. But this is nothing new.
“You can go back and find Oregon bumper stickers that say, ‘Don’t Californicate Oregon’ from 20 years ago, 30 years ago,” White said.
That’s a sentiment that hasn’t gone away decades later in other states.
While those are the most popular states, there were some interesting fads during the pandemic. The state that received the biggest increase in Californians was Wyoming, while other states like Alaska and Utah also saw major increases.
However, those fads have mostly subsided.
What can be done?
“The number of things that need to be done to lower the cost of living are too great to list out,” White said.
Gov. Gavin Newsom has called it a statewide priority, and it’s one of the main issues in the unpredictable race to succeed Newsom later this year.
This isn’t a new issue either.
In 1993, Governor Pete Wilson spoke about housing supply issues. Twelve years later, Governor Arnold Schwarzenegger expressed concerns about the exact same thing.
“Building more housing is clearly top of mind for policymakers, and it’s one of the things that’s going to help,” White said.
But White added that, when it comes to cost of living, there are a lot of other factors.
“Gas prices have surged recently, and that’s probably for reasons related to the war in Iran,” he said. “Utility costs in the state are really high and has to do with wildfire mitigation. Grocery prices are also much higher in the state of California, even though we produce so much of the food, right? So, there’s just, there’s a lot to tackle.”
Despite all that focus from policymakers, it’s clearly been tough to direct a state that anchors more Americans than any other into calmer waters.
“It’s really hard to turn this ship around,” White said.