Leaving California. That’s a buzzworthy topic. Let’s talk about migration today. I have lots of visuals and a few resources to share in case you’re in a different state and looking for data. I’d love to hear your take in the comments.
UPCOMING (PUBLIC) SPEAKING GIGS:
5/4/23 Housing Market Q&A 12-2pm
5/10/23 Empire Home Loans event TBA
5/18/23 SAFE Credit Union event TBA
5/22/23 Yolo YPN event (only for YAR members)
6/1/23 DJ Lenth Event TBA
7/20/23 SAR Market Update (in-person & livestream)
SOME LISTINGS DUE TO MIGRATION
Right now, it’s very difficult for many homeowners to list their homes because the price to replace a home is so much higher compared to the current monthly payment with a sub-3% rate. But there are still many owners who are going to list for lots of reasons including inheriting property, a change in family status, moving up, moving down, selling an investment, job change, economic pain, etc… And leaving the state is also a lifestyle category that we want to watch. In other words, outbound migration is a viable reason that some people today will sell as lifestyle needs and wants collide with market conditions. To be fair, not everyone who leaves the state is a homeowner, and not everyone who exits will sell their property either. Real estate friends, are you seeing listings due to migration? Do tell.
POPULATION CHANGE IN SACRAMENTO REGION
How has population changed locally? According to the latest U.S. Census Bureau stats, Placer County is clearly the big winner with the highest population growth, and Sacramento County lost population over the past couple of years. For real estate professionals, think about areas where people are buying and selling as you consider where to focus your business. By the way, I pulled the following stats here in case you want to make a table like this. There are stats available for every state.
PEOPLE ARE LEAVING CALIFORNIA (AND COMING)
When listening to media narratives, one might think people are ONLY leaving the state, but that’s not true. During the pandemic we saw a clear increase in migration out of California, but let’s not forget people who are entering the state too. When looking at data from the California Policy Lab during 2020 and 2021, about 1.92M residents moved out of California and 1.37M residents moved into California. This is based on credit card data for people who changed locations (interesting way to think about migration, right?). Anyway, here’s a visual from the California Policy Lab that shows exits (blue) and entrances (yellow). This data only goes through the end of 2021 unfortunately, but migration data takes a long time to publish. I’m interested to see where these lines go as we get more data.
People do actually move to California as the image above shows, and part of this stat is people moving back. Typically the number one destination for Californians is Texas, and often the number one sender of residents to California is Texas too. The joke is that it’s people who are simply moving back, but I haven’t seen stats to substantiate that exactly. I may push out some fresh stats soon to help show who is moving to California. Stay tuned.
THE CENSUS FLOWS MAPPER (A TOOL TO USE)
The Census Flows Mapper is a cool tool where you can pull up any county in the United States and track inbound or outbound migration. This data is based on the American Community Survey. The bummer is the latest stats only go through 2020, but I’m still excited that they finally added 2020 into the mix. Anyway, check out Placer County. Many counties send residents to Placer County, but Sacramento County is the number one sender.
MIGRATION STATS FROM PUBLIC POLICY INSTITUTE OF CA
Okay, some fresh stats. Who is leaving California? The Public Policy Institute of California has some stellar visuals they recently published. Having more residents leave the state than coming to the state really isn’t anything new as it’s been happening for decades (see first visual), but a declining population lately is a big deal since there has been a difference in other factors that affect population. Remember, population isn’t just about exits, but it’s also about entrances to the state, births, deaths, and international immigration. Thus, when only focusing on exits, we’re missing other components of population. But backing up, there has been an increase in higher-income residents leaving lately. Well, and residents of all income levels.
STATS FROM PATRICK CARLISLE
Patrick Carlisle is the chief market analyst with Compass in the Bay Area, and he put together this chart for Sacramento. This considers data from 2016 to 2020. For locals, I recommend following Patrick on LinkedIn because he puts out great charts. It’s important to stay in touch with Bay Area trends if you are working in Sacramento because there is a real estate relationship between the Bay and Sacramento (even though there is some tension right now between Kings and Warriors fans).
LINKEDIN MEMBERS CHANGING LOCATIONS
This is an interesting way to think about migration. While it’s only limited to people with a LinkedIn profile who moved locations, it’s pretty cool to consider. Check out other cities here from LinkedIn if you wish. Keep in mind Sacramento always has a relationship with San Francisco, so it’s not a surprise to see Sacramento higher on the list. I personally think migration has slowed, which I’ll talk about below, but Sacramento is still receiving residents from the Bay Area.
HOME SIZE IS A TELLING TREND
During the pandemic there was a spike in home size as buyers targeted larger and more expensive homes. Part of this was clearly Bay Area buyers moving to Sacramento during 2020 and 2021, but this could’ve also been buyers moving up to purchase their ideal home, so I wouldn’t say this was just the Bay Area. I don’t have deep migration stats to perfectly unpack this trend, but I can say the home size spike coincided with many stories from the real estate community about increased Bay Area migration. And we’ve seen this spike subside since the spring of 2021, which also lines up very well with the stories from the trenches of real estate regarding Bay Area activity.
THE WORD ON THE STREET
Today I’m NOT hearing anyone say things like, “All the buyers are from the Bay Area.” I used to hear that quite a bit in recent years, but that’s just not the case. This is only anecdotal, but there is something to it. I even spoke at the office of a big local builder a few months ago, and they echoed a change in the buyer demographic in that there have been fewer Bay Area buyers lately. In short, it looks like the pandemic migration bump has faded. At some point we will get some robust stats to potentially back this up, but for now all we have are stories from escrows. We’ll see what the numbers say eventually.
BRO, A BAY AREA UNICORN WILL BUY MY HOUSE
The danger about narratives is they can affect perception. So, if all sellers hear about is Bay Area buyers, they begin to expect a unicorn buyer to swoop in and drop fat stacks of cash on a house. My advice? Price for the market. Not the unicorn. If you get lucky with a lofty price, that’s a bonus. But don’t expect someone to overpay. And in today’s market, it just doesn’t feel like we’re getting the same migration.
WHEN MIGRATION DATA ISN’T MIGRATION DATA
I love Redfin as a data source. They put out incredible data. In fact, if you aren’t following their weekly trends, why not? All that said, I’m not a fan of the way their search queries stats are being used. To be fair, the misuse is often the media and real estate community, so this isn’t a Redfin issue per se. Anyway, here’s the issue. Sacramento has tended to make the top of the list for locations buyers are targeting based on search queries on Redfin’s website. Yet, we’ve literally had our worst volume ever while simultaneously making the top of the list for places buyers want to move. Thus, there is a disconnect between people who are searching for Sacramento on Redfin’s website and what is actually happening. Ultimately, this tells us search queries are NOT always actual buyers (not yet at least). Granted, this data is super interesting and we should be talking about it, but it can also create a false narrative when the media and real estate community conflate “queries” with “buyers.” I know, I’m such a killjoy. Again, nothing but love for Redfin for their data. And shoutout to Taylor Marr, Redfin’s Deputy Chief Economist (follow his weekly Substack).
I hope this was helpful.
Questions: What are you seeing right now in the trenches of escrow with migration? Do you know people who are leaving the state or coming to the state? I’d love to hear your take.