The number of migrants into California continued to decline in 2018, with more migrants leaving the state than entering. While more individuals relocated to California from other countries (international migrants), a greater number of former residents left California for other states (domestic migrants), resulting in the total net loss.
Domestic migration has been negative for the last two decades, bottoming in 2006 at the height of the Millennium Boom. On the other hand, international migration continues a long positive trend. Still, the positive number of international migrants was not enough to outweigh the deepening decline in domestic migration in 2018.
Updated August 22, 2019. Original copy posted November 2013.
Chart update 08/07/18
Bye-bye, California. Hello, Texas!
California! A pleasant climate, giant sequoias, mountains, beaches, wind and solar farms, a thriving technology industry in the north and money-producing entertainment industry in the south all make the Golden State a great place to live.
So why are so many people leaving California for other states?
In 2018, 156,100 more individuals moved out of California than entered from other states. 156,100 fewer people is hardly a mass exodus, considering California’s population numbers over 38 million. However, 2018 continues a negative migration trend experienced since the beginning of the 2000s. During California’s 2006 domestic migration trough, nearly 300,000 more individuals left the state than entered from other states.
One big reason why individuals might leave California for other parts of the country is the state’s high cost of living. This includes home prices and rents that are strikingly high relative to incomes. When including high income taxes, high gas prices and the sacrifices that come with these costs, it’s no wonder why some choose to leave for easier pastures.
So where do California’s domestic migrants go?
Texas is consistently number one for domestic migration. What does Texas have that we don’t? Some major draws include:
- a low cost of living (including low home prices, contributing to a homeownership rate nine percentage points higher than California’s);
- no income tax; and
- a strong economy (stemming primarily from the oil and gas industry).
Of course, Texas lacks California’s climate and cultural appeal. Those amenities, along with many thriving industries and a strong college and university system, keep most residents put.
Editor’s note — Even when migration to California was at its trough, the state’s population continued to rise (although at a slower pace than did the nation’s population growth.) This is due to more net births than deaths.
International migrants: the future
According to the most recent U.S. Census data, California was the number two state for receiving migrants from outside the U.S., netting over 117,800 individuals in 2018. Florida took first place, with 175,700 international migrants. More than one in four California residents were born abroad (twice that of the U.S. average).
Approximately 2.6 million of California’s immigrant population are undocumented. Across much of the country, undocumented immigrants are unable to become homeowners. However, this is not the case in California.
To purchase a home and take out a mortgage, an undocumented immigrant need only obtain an Individual Tax Identification Number (ITIN). Still, fear of deportation and the need to be mobile to follow jobs (particularly for agricultural workers) has caused homeownership rates among undocumented immigrants to remain a low 17%.
As immigration reform progresses, a greater number of undocumented immigrants will become documented and seek out agents to buy a home. Likewise, the rate of homeownership among undocumented immigrants will likely grow from 17% to 28-34%, closer to the homeownership rate of documented immigrants, according to the National Association of Hispanic Real Estate Professionals (NAHREP)
California’s beautiful climate, cultural resources, and diverse business environment will continue to lure new residents from around the world, particularly as the jobs recovery heats up in the coming years.
How to capitalize on migration in and out of California
Brokers and agents can benefit from California’s large international immigrant population by embracing the concept. Strategies include:
- learning the language of your area’s most populous immigrant community (Spanish, Mandarin, etc.) to become competitive; and
- becoming versed in the extra steps it takes for our 2.6 million undocumented immigrants to purchase homes.
Even the domestic migration out of California presents an opportunity. Agents can earn income from domestic migrants by joining a referral network to assist clients both leaving and entering the state. When you refer a buyer to an out-of-state agent, you receive income paid as a percentage of the other agent’s fee, and vice-versa.
Another way to make the most of California migration is to become a relocation agent. Many companies, including the larger franchises, offer relocation services throughout the country. Or, you can reach out to businesses on your own and offer your services to help employees relocate into and out of your area.
California will continue to lure the talented and wealthier residents from around the world. Preparing to work with these newcomers will allow agents to excel in California, no matter the swing of migration.