Is California going to secede from the U.S., becoming its own independent nation?

Definitely not. At least, no path forward for secession exists in 2018, and it’s not likely a path toward secession will ever open for California.

But California’s biggest secessionist groups are gaining popularity in 2018, causing us to wonder — what would an independent California look like for the economy and housing?

Why secession could be great for housing

Advocates for California secession come from various backgrounds and political affiliations. Therefore, their policy priorities aren’t completely aligned. But the top reasons secessionists want to break away from the U.S. are:

  • the state’s unbalanced contribution to the federal government;
  • California’s larger commitment to environmental issues;
  • divergence with U.S. immigration policies; and
  • divergence with U.S. trade policies.

Presumably then, an independent California would have:

  • more tax dollars that stay in California;
  • stricter environmental policies;
  • policies more welcoming to immigrants; and
  • a more open trade policy.

These policies would impact housing mostly in positive ways. The exception: stricter environmental regulations have the potential to slow new construction — which California desperately needs — with longer environmental impact review times.

But loosening the borders allowing more immigration would benefit the housing market by making homeownership more attainable for the state’s currently undocumented immigrants. Further, looser trade policies would reduce construction costs by eliminating the recently established lumber tariffs.

Related article:

What happens when the 31,000 Dreamers who own homes in California leave?

Why secession will never happen

A few California independence and separatist organizations currently exist, including:

YesCalifornia recently came close to getting on the 2018 state ballot, but ultimately failed to get the appropriate number of signatures needed. Even if it had succeeded in making it on the ballot, it would have needed more than 50% of registered voters to participate in the vote, with at least 55% voting to secede. Then, the U.S. Congress needs to vote to allow secession, with at least two-thirds of Congress agreeing to let California go. Finally, three-quarters of all U.S. states would need to agree for California to become its own independent country.

But the rest of the U.S. is unlikely to let California secede without a fight. That’s because California qualifies as a donor state, meaning it sends more money to the federal government than it receives. It’s also the sixth-largest economy in the world, making up about 14% of total U.S. gross domestic product (GDP), according to the Bureau of Economic Analysis.

California’s successful economy will keep it attached to the U.S. for the foreseeable future. But that won’t stop the state from making reforms to protect its economy from some of the negative effects of U.S. trade and immigration policies.

Related article:

California’s independence from the federal government — and housing