Dream State No More - Why Californians Are Fleeing Record High Housing Costs

California, the beloved “Golden State”, is experiencing a dramatic population decline unlike anything seen in its recent history. Between April 2020 and July 2022, the United States Census Bureau reports that California lost more residents than any other state save New York. Why are so many individuals leaving California is an intriguing topic brought up by this tremendous exodus.

At the heart of the issue are the state’s astronomically high housing prices and an overall decreasing quality of life. The median home price in the state now tops $800,000, pricing out many middle-class families and workers. Lingering effects of the COVID-19 pandemic, such as the rise of remote work, have also incentivized Californians to seek out more affordable areas with lower population density. Crime rates in major metro areas like San Francisco and Los Angeles are also deterrents, as is the notorious traffic congestion and long commute times in these cities.

The domestic migration's economic effects are already being felt. In the wake of the next 2020 census, California may experience a first: the loss of a Congressional seat. Higher-income residents, who pay a larger share of state taxes, are among those most likely to leave, costing the state billions. Sectors like technology and entertainment could face talent shortages as workers set their sights on opportunities in states like Texas and Florida.

Some forecasts predict California may not see a return to positive net migration for years to come. The state government has been slow to address core issues like housing affordability, transit infrastructure, and crime that have caused the exodus. Texas and Florida, on the other hand, gained over 884,000 and 707,000 new residents respectively from 2020 to 2022, benefiting from California’s losses.

While the future is uncertain, it is clear major changes are needed to slow or reverse the outbound migration trends. Cutting red tape and taxes around housing construction, expanding transit networks, cleaning up city streets, and improving schools are potential solutions experts have proposed. With smart policy reforms, the California dream may once again become reality rather than a relic of the past. But the state’s leaders will need to act quickly and decisively.

If current trends hold, the socioeconomic fabric of California could unravel rapidly. The state's prosperity is tied to that of the entire country because it accounts for nearly 14% of GDP. Perhaps even more significant are the personal repercussions.  Millions of livelihoods and communities are at stake if the factories, offices, and neighborhoods lose the people who animated them.

Some counter that the panic over California’s population loss is overblown. After all, the state remains the most populous by a wide margin, home to nearly 40 million residents. The declines are partially just the market correcting extreme growth from decades past, they argue. There is also a limit to sprawl before quality of life suffers in the fastest-growing destinations like Phoenix and Las Vegas.

However, the opposing view predominates: the magnitude and drivers of the exodus make clear it is not simply a minor market correction. California must take bold action or risk the collapse of its growth model. Other left-leaning states like New York and Illinois now face similar pressures to reform taxes, housing policy, and their business climates.

In the end, the California dream lives on, but is dimming as residents pack up U-Haul trucks or connect to remote jobs in new states. The “Golden State” moniker itself originated in part thanks to the 19th century Gold Rush. Today, however, it is not gold that Californians are chasing, but affordability, space, and opportunity increasingly out of reach in their home state. The next chapter of the California story has yet to be written, but the outlines are clear: adapt or risk decline. The only question is if and when the state’s leaders will muster the vision and courage to change course.