1 million leave California for more affordable states
By Ron Trujilloemail@example.com
Imagine California without San Jose. The city’s third-largest city disappeared during the past decade, at least when it comes to the loss of residents, according to a new report.
The Golden State lost about 1,090,600 residents from 2006 through 2016, just about the population of San Jose, according to the Beacon Economics and Next 10 report. About 20% of those left the state in 2006, the peak of the housing bubble.
Lower-income residents especially those earnings less than $50,000 per year, were the most likely to abandon the state during this decade-long stretch, which included the Great Recession and the housing crash. Texas, Arizona, Nevada, Oregon and Washington were popular destinations for Californians fleeing the state.
The reason for the 1 million-plus to leave the state is simple: The high cost of housing. The solution to the problem is much more difficult.
California only had 24.7 building permits issued for every 100 residents from 2008 to 2017, significantly less than the 43.7 permits for the same period nationwide, according to the report. At the current pace, the state could have a shortage of 3 million homes by 2025.
Basic supply-and-demand economics came into play during the 10-year period. Limited supply prompted higher prices. A lot higher prices in some areas.
California homeowners spend 21.9% of their income on housing costs — mortgage payment, property taxes and insurance — the second-highest in the nation, behind only New Jersey (a high property tax state:. Renters in the state spend 32.% of their income, with an average of $1,375 per month, 40.2% more than the national average.
There are numerous reports detailing the challenge to find affordable housing for Californians. ATTOM Data Solutions found that no county is affordable for middle-income households in the state.
So, as housing becomes more difficult to find and harder to pay for, lower-income residents are leaving the state. The disparity between lower-paying jobs in California vs. many other states — for example, Texas — is not that big, but the housing costs are great. Former Californians are finding their dollars, even if they earn less, go farther in other states.
Feature photo of Arizona state sign by Mike Flippo/Shutterstock
CoreLogic: $44,500 equity gain in one year
For Californians who can afford to own a home, they enjoyed the largest gain in equity during the fourth quarter and the past year, according to CoreLogic.
The average home in the state increased by $44,500 during the final three months of 2017, easily the largest in the nation. In fact, the Golden State’s average home equity increase was almost three times the national pace of $15,100.
Washington state, another hot market, had an equity gain of $40,000 during the three-month period compared to a year ago, the second-largest increase in the nation.
Of course, the Bay Area, where the median-home price exceeds $1 million in four counties, and Southern California have reported the largest jump in values. Several areas, especially the Central Valley, think Bakersfield to Modesto, and extreme Northern California continue to deal with a sluggish housing market.
With the fast-rising home prices, negative equity remains a minor issue in the state. Only 3% of homeowners with a mortgage owed more than than the value of their home during the fourth quarter. The national average is 4.9%.
San Francisco has the lowest percentage of underwater mortgages at 0.6%, while Los Angeles is at 1.8%, the third-lowest among major cities.