Homebuyers are heading out of California’s major metros towards areas with bigger homes, at lower prices.

California tops the nation’s list for most outbound moves, ranking third place after Illinois and New York. 64% of California’s recorded moves were outbound for other states, according to the 2020 North American Van Lines study on migration. These outbound moves are directly linked to the population decline in California, which is steepest in the state’s expensive regions.

Outbound moves have generally increased over the past decade in California. From 2011-2015, the average share of California outbound moves was 52.4%. Since then, the average share of outbound moves from 2016-2020 has increased to 62.4%

Steady population growth is essential for the long-term health of the housing market, including new household formations and demand for residential rentals and sales. Without a healthy level of construction, there isn’t enough housing to fulfill demand, which causes home prices to increase rapidly. If construction doesn’t rise to meet demand any time soon, we will continue to see homebuyers migrate elsewhere.

It’s not just homebuyers leaving the Golden State, businesses are, too.

Companies that traditionally make their home in California are establishing headquarters and relocating to the South, taking the current and future workforce with them, according to the California Policy Center’s tracking data. Despite the pandemic, southern states have been able to maintain sufficient employment opportunities by providing a greater number of resilient jobs that were less impacted by COVID-19 and re-opening businesses quickly. Combined with fewer restrictions, these factors may have led to the South’s higher pace of job additions in 2020 and new growth in residents, according to the Wall Street Journal.


Why are homebuyers leaving California?

On top of California’s high cost of living, homebuyer preference for larger homes has increased. The typical long-destination mover in 2020 relocated into a home with more space than their original home, according to Zillow. Compared to the small homes and tiny lots in expensive regions like Los Angeles, the larger homes and lots in less expensive regions like the South are more attractive to homebuyers looking for more space, or bang for their buck. The top destination cities homebuyers are moving to include:

  • Phoenix, Arizona;
  • Dallas, Texas;
  • Houston, Texas;
  • Atlanta, Georgia and
  • Denver, Colorado, according to the North American Van Lines study.

California’s high cost of land has pushed home prices up faster than incomes. In order to profit, builders choose to construct homes only accessible to high-income earners. Low- to moderate-income households are left competing for a small and pricey inventory of homes. Consequently, homebuyers are moving to states that are more affordable. This dilemma can be easily alleviated by more construction, but strict zoning and not-in-my-backyard (NIMBY) advocates make that difficult to impossible.

Residents want security and financial opportunities. A home is the first step in establishing that security. Thus, as long as the state keeps ignoring its growing housing shortage, Californians will continue to migrate elsewhere.

Once the pandemic is behind us, people will want to return to our state’s busy metro areas, where there is not only access to jobs, but amenities. California’s metros are indeed pricey, but the state’s high quality of life continues to remain desirable. Legislators just need to make sure there is enough housing available to meet demand.