Quick Answer: People are leaving California due to its high cost of living, including expensive housing and taxes. The housing crisis, characterized by high costs and a lack of affordable options, is a major factor. Employment opportunities in more affordable states, enabled by remote work, are also drawing residents away.
Additionally, rising crime rates and social unrest, particularly impacting lower-income groups, along with the decline in urban centers like San Francisco’s Union Square, are contributing to the exodus from California.
California houses a lot of iconic sites, great scenery, luxurious infrastructure, dreamy beaches, and unique employment opportunities. In addition, its economy ranks 5th in the world. But the question is, why then are lots of people moving out of California?
A recent study by UC Berkeley revealed that over half of the residents of California are looking into moving.
The state’s population has been reducing because of national migration since 2000; however, natural population increase and international migration have kept California’s population growing at a 0.35% rate as of 2016.
Below are our best estimations of what a California resident could consider when planning a move, and where the calculation might land them.
Almost 700,000 people relocate out of California just last year. There are different reasons for even permanent residents of California to leave the state and move out of it.
1. High Cost of Living
California is an expensive place to live. The cost-demanding moving candidates start from people in financial issues to those on a constant income, such as retirees and a new group formed in the pandemic time – an employee who can work remotely.
Consider what an interstate ‘price parity’ cost of living index of California from the Federal Bureau of Economic Analysis reveals to us about affordable moving possibilities, it shows the state is expensive to live.
2. Rising State Taxes
The marginal income tax rate is currently at 13.3% but legislators want to increase it to almost 17%. The move would not just affect rich residents of California but also small entrepreneurs, most of whom are facing challenges related to COVID-19 lockdowns and shutdowns. The sales tax is more than 7% already and there is a $0.50 gas tax.
Furthermore, residents of California are not even allowed to deduct most of their state taxes from their federal taxes all thanks to the Tax Cuts and Jobs Act by President Trump. Even though taxes in other states are high, California is one of the two states with a tax rate of more than 10% (the other is Hawaii). What that means in real life is highlighted below:
Simply put, someone who makes $50,000 per annum would be paying $9,679 in state and federal taxes. Someone who makes $100,000 per year would have to spend $28,923. Those that make $500,000 per annum would be paying a huge $210,949.
To complicate the matter, state legislators in California are now discussing retroactive taxes as well as an exit tax for rich residents of the state who leave California for another state. AB2088 doesn’t only seek to create a wealth tax in California but also force rich old California residents to pay the tax for nearly 10 years after they’ve left.
3. Political Problems
A lot of residents of California are in support of the policies of their state. However, a lot of conservative and even reasonable voters feel that California is moving too far to the left. Ben Shapiro, a conservative journalist talked about his personal decision to move out of state, stating increasing union influence, limitation on law enforcement officials, looting, and the stop to standardized testing in state universities as some of the factors that aid his decision to relocate to another state.
Others mentioned that they feel that their votes in California don’t count while others still complain that politicians focus on the needs of large cities while leaving the needs and wishes of residents of rural areas unattended. COVID-19 restrictions in the state have placed an extra strain on residents. 19 percent of California workers had filed for unemployment as of April 2020.
Even though some industries have resumed operation, others are affected by continued restrictions. Restricted businesses include gyms, restaurants, personal care services, bars, hospitality, and the tourism industry.
Other states don’t have so many COVID-19-related lockdowns as California does, which causes many business owners to seriously look into leaving the state to another one where they have hope of attaining success in their business.
4. Unemployment
Not everyone considering a move is just being cost-conscious. Job opportunity and wage levels are huge factors for others who know that highly affordable states usually come with lesser incomes. To calculate opportunities, We considered the annual average wages from the second quarter of 2020, making a national pay scale.
The maximum national average wages were seen in Massachusetts at $81,640, then $79,040 in New York. California ranked 3rd at $76,336 and is an important reason many people stay. On the fourth position was Washington at $74,048, Connecticut at $73,164, and New Jersey at $71,552. Many factors affect the value of those incomes.
Begin with being able to keep a job. Consider the average unemployment rates from 2015 to 2019 and you find North Dakota as the state in which you don’t have many risks of losing a job with a median 2.7% unemployment rate. Hawaii was the next and New Hampshire at 2.8%, Nebraska and Vermont were at 3%, followed by Iowa and South Dakota at 3.1%.
5. Housing Crisis
The average cost of real estate in California is a huge $600,000. And the latest data from Zillow shows that the median rent in California in mid-2020 is at $2,800 over the national average of $1,600.
Simply put, if you are not wealthy or ready to live with friends or relatives, you truly cannot afford to reside in the state. California’s local jurisdiction holds huge sway on what is built.
Officials have usually weighed into NIMBY (not in my backyard) pressure against new construction, many of it in a bid to protect the ecosystem, or preserving neighborhood character.
There are many reasons California had long-term housing storage: long-term homeowners possess local city councils, which encourages them to disallow the building of new housing projects in the name of saving the neighborhood character or protecting the ecology.
Old zoning laws ensure that cities can build dense urban locations; in fact, three-quarters of the entire residential land found in Los Angeles can only be used for constructing single-family homes.
A lot of California residents tried to navigate around these challenges by building homes outside the city; unfortunately, these homes are usually built in areas that got devastated by fires recently. We’ll discuss more in wildfires later.
6. Insecurity
Violent crime is increasing and a lot of people feel the COVID-19 restrictions are responsible for the problem. Even though some people think that California is cutting police budgets as rioters run everywhere unchecked, others complain about the difficulty people face in taking matters into their hands at the start of an attempted robbery because of state laws.
Former residents also fault prosecutors, accusing them of allowing criminals to run free. This reason is a major player in the speed of people leaving California as people are looking for security and stability, including cheaper housing in other states.
7. The Convenience of Working from Home
Remote workers don’t necessarily have to reside in California to work for a California-based employer, and a lot of them are choosing another city with an affordable cost of living. A recent survey discovered around 43% of California residents who can work from any location is considering packing their belongings and searching for greener pastures.
Even the decline in housing prices of recent is not enough to convince the state residents from leaving the state for another state with a lower tax rate.
8. Social and Economic Challenges
California has over 150,000 homeless people, no other state has up to that, and many of them are either mentally ill or addicted to drugs. They expose themselves in places where they are noticeable by children and many other challenges reported by residents. Former residents mentioned that homeless individuals can be seen everywhere in the state, even in areas where wealthy people live.
Others complain that there has been increasing in homeless encampments in suburban locations all over the state. The majority of former residents of the state feel that the Californian government is either not doing its best in solving the problem or is just compounding the problem.
9. Devastating Wildfires
More than 8500 fires burned almost 2 million hectares of land in California as of October 2020. This makes last year the biggest son in the history of the state.
Former residents of California made their frustration known on the issue of fires that are not likely to turn less dangerous in the coming future.
Others mentioned that they will move out of their home burns down one more time as they just can’t handle the cycle of unending rebuilding and destruction.
Also, the fires don’t just affect those that live in rural areas; the largest cities in California were covered in thick smoke as the fires raged, compelling residents of the urban area to remain indoors until the fires go down.
Top 5 Locations Californians are Relocating to in the United States
Former residents of California can be seen all over the country. Even so, there are states that seem to be more famous than others. If you are looking for where to call your next home, choosing where to relocate to from California can be hard.
Below are the five common states Californians choose to call home.
1. Texas
One of the major reasons most Californians are moving to Texas is the absence of state income tax. When you save more of your income in your pocket, why won’t you love it? Texas has also been ranked the 12th best state economy by Wallethub based on GDP growth.
The average house price in and around main cities is below $300,000, which makes it cheap to own your own home. And with many sports teams, culture, food, and entertainment, there is a lot to do and see.
Read what you need to know before moving to Texas
2. Arizona
Firstly, this state has the Grand Canyon. There is a lot to explore from the deserts to the mountains. The weather in this state is so nice. 300 days in a year are sunny in Arizona. Also, the cost of living is low with an average house price of $350,000.
Arizona has adapted to the 21st-cent technology with tech giants like Apple and Uber stretching into the state and making increased growth for employment opportunities.
Read what you need to know before moving to Arizona
3. Washington
The first reason for relocating to Washington is employment. Bigger companies like Microsoft, Starbucks, Amazon, and Boeing call this state home. Washington is referred to as a green state because you will find water and greenery all around.
It is home to a lot of other outdoor events with three National Parks, hiking in the 14,410-ft Mr. Rainier, and skiing during winter. Washington is one of the states that have no state income tax, which enables you to save even more of your income.
4. Nevada
This state also doesn’t charge state income tax. In addition, you save on medicine and food since there is no state sales tax on these items. Entertainment in Nevada is big with Las Vegas and Reno as the two of the major cities.
However, there is unlimited scenery, with Mt. Charleston just about one hour away from Vegas as well as Red Rock Canyons for those that love to climb rocks. There is also legal gambling in Nevada, which makes it a place for people that love to roll dice.
Read 2024 Guide To Moving to Las Vegas, Nevada
5. Oregon
If you love adventure so much, Oregon is your ideal destination. With more than 300 miles of coastline to navigate, lakes, streams, dunes, rivers, and mountains, you have unlimited possibilities.
Oregon is also where Crater Lake National Park is located. There is no state sales tax in Oregon as well, and you don’t even have to pump your gas.
Read 2024 Guide To Moving to Oregon
Conclusion
As you contemplate a relocation from California in search of more economical and promising horizons, several states stand out as prime alternatives to take the place of the Golden State. In your journey towards a fresh start, you can rely on the expertise of our long distance movers to facilitate both small and large moves, ensuring a smooth transition.
For further assistance and to explore your options, feel free to get in touch with Moving APT. You can also click to explore our selection of top-tier movers in California. Your seamless moving experience awaits.
