Over a million more people moved out of California from 2006 to 2016 than moved in, according to a new report, due mainly to the high cost of housing. Housing costs are much higher in California than in most other states, yet wages for most workers aren’t. Even though the minimum wage in San Francisco is $14 per hour – one of the highest in the US – the median house price in this city is $1.61 million. Assuming housing is a third of your net income, you need a monthly take home pay of $36,000 to afford to purchase an average home in the city. This is just one example of what is going on across the state of California.
California attracts highly-educated high income earners who can afford these expensive homes. In the meantime, it is losing many hourly workers who just can’t afford to live in the state, including those in construction, retail, and manufacturing.
There are many reasons for the housing crunch, but the lack of new construction may be the most significant. From 2008 to 2017, an average of 24.7 new housing permits were filed for every 100 new residents in California. That’s well below the national average of 43.1 permits per 100 people. If this trend persists, analysts forecast the state will be about 3 million homes short by 2025.
What does it mean?
California homeowners spend an average of 21.9% of their income on housing costs, the 49th worst in the nation, while renters spend 32.8%, the 48th worst. The median rent statewide in 2016 was $1,375, which is 40.2% higher than the national average. And the median home price was more than double that of the national average. The top five destinations for California migrants between 2014 and 2016 were the nearby, but generally cheaper, states of Texas, Arizona, Nevada, Oregon, and Washington.