I said goodbye to some family members this past weekend. Like many Californians they’re leaving the state. It’s probably not surprising to hear, but California lately has been having more residents leave than come. Of course other states are feeling this too because they’re now welcoming (or not) West Coast refugees. Let’s talk about this. Here are a few things on my mind.
Why are people moving? People move for lots of reasons, but affordability is a huge one. We see lots of Baby Boomers wanting to take their California cash elsewhere to retire and live the good life. We also see young families move to lower-priced areas in hopes of putting down roots and even buying a home. But it’s not just about finances. Some residents are looking for a different lifestyle, less traffic, a better job market, more space, more land, and a different business and political climate.
Cashing out at the top: In coming time I expect we’ll see more migration if sellers think the top of the price market is near. I suspect we’ll see this dynamic in the Bay Area too, though they may eye a lower-priced Sacramento instead of out-of-state.
Changing markets: Migration can change a local real estate market in the obvious way of increasing prices and tightening supply, but it can also spur new construction and commercial development. We have to remember builders sometimes even cater their product to buyers coming from out-of-town. This is why locals sometimes look at a project and say, “Who can afford this?” Well, the answer might be wealthy out-of-towners.
DATA SOURCES I’M WATCHING:
1) Local publications: I’m digesting what the Sacramento Bee, Sacramento Business Journal, and Comstock’s Magazine have to say about trends. Here’s a 2018 piece from SacBee that states locals moved most often to Reno, Las Vegas, Phoenix, Seattle, & Austin. I don’t have updated stats yet, but I’m guessing Boise might make this list at some point. Here’s a piece from SacBiz talking about general migration issues. Additionally, the Greater Sacramento Economic Council is essential since they focus heavily on Bay Area migration.
2) Word on the street: What is the real estate community saying? Where are people coming from? And where are they leaving to? These are often clues what is happening in the trenches of escrows. I saw a Realtor recently provide a workshop on how to move to Idaho too, and that’s certainly a reflection of the times (and forward thinking).
3) National publications & data: I’m paying attention to studies from Redfin, Zillow, and other organizations. I’m also keen on articles discussing US residents migrating to the middle of the country. Lots of these studies and articles of course pull data from the U.S. Census Bureau. Here is some research from the Legislative Anaylist’s Office (this is a couple years old but some of the best stuff I’ve seen).
4) Moving companies: One way to get a sense of migration patterns is to listen to moving companies. For instance, SF Gate published a piece a few months back stating more people took a one-way U-Haul trip to Sacramento and Roseville from the Bay Area than any other location last year. Newspapers tend to publish stats like this, so it’s not like you have to go read studies. Here’s a sampling of migration reports though from Atlas Van Lines, United Van Lines, and North American Moving Services.
WIN A SIGN FOR MOVING DAY
When my family moved out of town I made an “Idaho or Bust” sign so we could take pictures on moving day. It was pretty cool for photos, so I made some more signs for locals and real estate agents to give away. In the next few days or so I’ll roll out a simple contest to win a sign on my Facebook page, so be sure to check it out. I’ll keep the contest open for a week or so most likely.
APPLICATION STEP: Last but not least, it doesn’t mean much if we acknowledge a trend without doing something about it. So here are some questions. I shared these a few months back, and they are definitely relevant in this conversation.
QUESTIONS FOR REAL ESTATE PROFESSIONALS
Who are my clients going to be over the next few years?
What are my clients going to need from me?
What skills do I need to add to be ready for the future?
Who is coming to the market?
Who is leaving the market?
Who is going to be participating in the future market?
What steps do I need to take to position myself for the future?
Where can I meet future clients?
VIDEO MARKET UPDATE: Here’s a video market update including lots of cool stats on the million dollar market. Enjoy if you wish.
I hope this was helpful.
Questions: How have you seen migration patterns affect the real estate market? What are the pluses and minuses? What are you seeing happen in your area? I’d love to hear your take.
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Great post Ryan. Oregon welcomes all, even Californians. Tell your friends to come on up. I might need to have you start making me some, “Welcome to Oregon” signs.
Thanks Gary. Hey, I appreciate your welcoming attitude. That doesn’t happen everywhere. 🙂
That is a major turnaround for Oregon. They used to have signs at the border saying “have a nice visit”.
Mark, are you seeing lots of Californians move to your area in Arizona? How has that influenced the market?
We have been seeing a lot of California for the past 20+ years. Dorn Homes is building as fast as they can. A lot of cash sales from CA. Most common phrase from buyers I hear: “getting sick of CA and the way the operate”. Most spent their life there. It has been a good spring.
Thank you Mark. Yeah, on one hand it’s a financial decision for sure, but this is a huge deal. Lots of people just want out. They’re fed up. I have so many friends who have moved out of state. Like I say to locals, we are the Bay Area buyers in other locations…
I too know a number of people who plan on leaving the State the second they retire. It’s a tough decision for people who have spent their whole lives here. Personally, I never WANT to leave, but with ever increasing taxes and cost of living – I completely understand why people do leave.
I read awhile ago about how much more expensive housing is becoming in flee states like Idaho – so natives of those states are forced to flee to cheaper states themselves.
Thanks Matt. I appreciate hearing your story. Lots of people feel similar. Frankly, I’m concerned about my kids being able to stay in the state. They aren’t adults yet, but it’s just not easy to afford life in California, so I wonder what the future will hold.
I think you’re so right about retirement. One other layer we have to consider too is anyone getting a California pension can do extremely well in a lower-priced state. This is why a correctional officer friend tells me several of his co-workers plan to retire in Idaho.
What we’re seeing with migration is like mass-scale gentrification.
We are fleeing to TX for many, many reasons. Political, governmental, and personal.
We do NOT want to leave as we grew up here, our lives are here, our friends are here. But we have been legislated out of the state.
In research, everything that CA has told us not to do and that we CANT do, TX has legislated that we should do and can do and are allowed to do.
There are no mountains and the weather is worse but from the scouts and advance parties, the people are family-friendly and the state is as well and they STRONGLY support personal and business freedoms.
But if too many people who do not support those values flee CA for financial reasons and bring their nanny-state-ism with them, CA will have moved everything we dont like to a cheaper(for a while) location.
Look at Denver, Austin, Boise. Look at the politics, migration patterns and house prices. Compare that to your location and note the differences. Look at the trends. How are they headed.
In 1 area of TX, rents have increased 14% in less than a year due to migration.
Also-be aware, if you leave CA and do not hit the lottery, the only place you are moving back to is Modoc county….
Thanks Mark. I think your comment highlights how lots of people feel. It’s sad because we have so much potential in California, but we can’t seem to pull it together. In terms of real estate we have a tremendous amount of land too, but we can’t seem to build. This is part of what we need to retain residents.
I think you’re spot on with other locations. It’s going to be interesting over time to see what happens. I do hear some “Don’t California my Texas” type of slogans here and there, so I know locals elsewhere are aware of different ideas coming to town.
“But if too many people who do not support those values flee CA for financial reasons and bring their nanny-state-ism with them, CA will have moved everything we dont like to a cheaper(for a while) location.”
That’s happening in Vegas right now.
Thanks Paul. How are you seeing that show up specifically? No pressure to answer. I’m curious.
The Las Vegas/Nevada election saw a California flavor. My brother lives there and can’t stand the change. Politics can matter as much as money. Look at changing laws and the direction they are taking; look at criminal prosecutions and sentences.
Thanks. I don’t know enough about politics there to gauge change. I appreciate your take.
Look at Colorado in the last 5 years. They went from being reasonably conservative to really, really CA like in the laws passed and the politics. They passed so many gun laws that major gun makers had to leave the state because the products they were making became illegal in that state. Tech jobs from anti-business CA came to CO to build new and brought with them a bunch of Bay Area politics and employees. CO is pro-business but the employees brought anti-business and anti-freedom mentality with them. They moved for financial reasons and brought political influence with them. The volume of people who displace voters of a traditional nature brings influence that disrupts the local politics and usually Californicates the reason most people lived there in the first place.
Thanks Mark. I’m wondering. Are there that many Californians to have swayed the vote? Or has public sentiment changed? Could the mass shootings have something to do with that too?
“I’m wondering. Are there that many Californians to have swayed the vote? Or has public sentiment changed? Could the mass shootings have something to do with that too?
I can answer that. The state used to be purple and yes, there are that many Californians that have relocated here to sway the election results. Unfortunately, I think many of those voters are uninformed or they vote for 1 issue. I moved from California, but I’m not a recent transplant nor did I move for political reasons and I’ve been here for some time. I don’t believe that public sentiment has changed, although it can be influenced. As to the gun violence–the mass shootings have been caused by people with mental health issues. There’s been a huge influx of homeless and those with mental health issues. I, as many residents I know, feel that a lot of it is related to legalizing marijuana. I don’t however have the stats to back that up.
I hear you Ryan, House prices in Sacramento are laugh out loud. Since interest rates are near zero, it would pay to go to a more reasonable state and pay rent to yourself.
Personally I think Oregon is overpriced as well as Reno. It’s all knock on effects. Did you know Boise is high desert? High, cold, arid, desert. As for Texas, Austin used to be reasonable. Guess again. The rest of Texas is tumbleweedtopia with exciting destinations like Oklahoma and Arkansas just over the horizon!
There are some promising destinations toward the middle of the country. We’re looking at some. Knock on wood.
Of course there’s always the chance the economy will crater as the Fed goes on into QE4, but I suspect Chinese money (with Hong Kong and Singapore) will pour investment money into Nor Cal and Tomato town. Look also for investors from the distressed Middle East.
We’ve been looking at places and waiting for sanity to return to the market for nine years. I do not think it’s going to change for sometime because, unlike 2008-9, there will be no economic backstop. Hence, the government and the Feds will move heaven and earth to maintain current interest rates.
Thank you Ricardo. Yeah, a friend who recently bought in Idaho paid a good chunk of change for new construction. I was taken aback. The price would’ve been much higher here, but it’s not like property was being given away…. More than real estate prices though, people are watching gas prices, property taxes, and general living expenses. So even if someone cashes out here and makes an expensive home purchase elsewhere, there can be a real monthly savings.
Let’s keep watching the market. I agree that there is strong incentive to keep rates low.
I welcome all Californians to Texas! As a 7th generation Texan, I love my state. Just a note, as more have migrated here, the demand has driven up prices. On a positive note, this price increase has seemed to flatten out for now.
Thank you Shannon. I appreciate your hospitality. We need more kindness in the world. While prices have gone up, I imagine many locals have benefited quite a bit from the expansion. Business owners and anyone in construction has surely reaped the benefits. This migration has been going on for years too. It seems our markets are in a bit of a similar place in that prices have really slowed lately.
I completely agree. Many businesses have benefited from all of the population growth. All of us that have been here a while still drive by the areas with the most growth and just shake our head remembering the cattle ranches or hay fields that now have very large residential and retail developments
That’s not the feeling I got at all when I visited there a few years ago. The waitress leveled with us and told us that Oregonians hated the rich Californians coming up and paying inflated prices, and then the resident’s property taxes go WAY up! No prop 13 in Oregon.
I can imagine that. I appreciate the warm welcome I hear about from some, but I imagine there are some horror stories too. It probably depends on how well Californians assimilate into the local culture too. I get locals resenting wealth moving into an area. On a micro level we see this in many cities with gentrification.
Politically, Portland and other cities are just like California so we would blend in.
When visiting a friend in Montana, the first thing I was told is “Don’t tell anyone that you’re from California.”
It isn’t just the money.
Ryan, how does Fresno compare to Sacramento? To Bay Area refugees? Costs are lower than Sacramento.
I wish I had stats Gilbert, but I don’t have anything as far as how many Bay Area residents are moving there. I’d guess the influx is much higher in Sacramento though for many reasons. One of the big ones is the commute would be one extra hour or slightly more from Fresno to San Francisco. It’s dang hot in Fresno too (not that it’s not hot in Sac though to be fair). Prices are definitely lower in Fresno. I’m guessing prices are easily 30% cheaper based on some median price figures I’ve seen in Fresno compared to Sacramento.
I enjoyed your post this week! Migration is an interesting thing to watch. In Cleveland, we don’t have a huge migration in or out. It’s generally pretty stable. People leave due to the weather, some move here due to employment or more affordable housing. One day, my wife and I would love to move to the Sacramento area, where are friends live. (Placerville) But who knows what the future will hold. I wish your parents the best on their move! I love the signs you made! Thanks for a thoughtful post, as always!
Thanks Jamie. It’s interesting to hear about your market. It’s fascinating how trends differ by location too. Placerville is a beautiful place. I say go for it. Though one dynamic right now is expensive fire insurance. You’ll have to consider that if you ever pull the trigger. The wildfires in California have not been kind to more rural communities in terms of insurance prices. Hopefully this won’t be a long-term issue.
I appreciate your heads up on the fire insurance! I hope that California has some peaceful and uneventful years in terms if natural disasters. I know it’s been tough out there.
Great post and I like the signs, Ryan. Is the state trying to do anything to keep people from moving by making it more affordable? I don’t know if that is possible but if there continues to be a mass exodus I would think that would hurt the tax base and it might create a downward spiral.
Thanks Tom. I think there is lots of talk about making California more business-friendly and doing something about the housing crisis, but I don’t see much real action. I’d love to see results instead of rhetoric, but I’m not terribly optimistic about seeing change. The reality though too is it’s a beautiful place and it’s just expensive because demand is so high to live here. We have a real trend on our hands though with more residents leaving than coming, so it’s a big deal.