Wednesday, December 17, 2008

"More are moving out of California than in" - LA Times

Just in case there are any housing bulls left I'd like to point them to the fact that for the fourth year California has experienced net out migration to other states. This doesn't mean't population has declined, due to births and international migration population has still risen. But it is clear more and more Californians are giving up on California and moving to places they can actually afford.

"The outflow -- last seen during the economic and social struggles of the 1990s -- started when it became too expensive for most people to buy homes in the state, and has kept going throughout the bust with the loss of so many jobs.The trend underscores the state's sour economy as layoffs continue, the fiscal strain on government grows and home values continue to decline.


"I just gave up," said Grace Bryant, a former Glendora resident who fled to Texas after 18 months without consistent employment as a residential appraiser. "California is too much of a struggle."

"This was the epicenter of the housing meltdown," said John Husing of Economics & Politics Inc., a regional economic research firm. "People started leaving California because of housing prices -- particularly younger couples that just couldn't afford to buy a house.""

Economist John Husing remains bullish though:

"The native Californian said the state had always priced out the working class and been an expensive place to do business, yet it continued to reinvent itself through innovation and entrepreneurship."

I think young couples and people wanting to retire on their equity will leave the state, leaving quite a gap between haves and have nots. It isn't clear how we can continue to price out the working class and retain an attractive place to live. It has been working so far and I think the credit bubble was one of the reasons it could work. But with the strains coming to local & state government the entitlement programs will be under seige and I think the working class will find more and more reason to leave.

WSJ has a graphic and article on the coming budget crisis:

1 comment:

Rob Dawg said...

It isn't so much the net outmigration as it is the productive class leaving being replaced by a lower strata consuming class. That and the flurry of state and municipal retirees who will be spending CA money elsewhere for the rest of their long, long lives.