Dive Brief:
- Nonprofit group Next 10 has released a report, authored by Beacon Economics, that found between 2007 and 2014, California lost a net 625,000 residents, largely due to the skyrocketing cost of housing, according to Curbed Los Angeles.
- The Beacon report found that most "out-migrants" are lower-skilled workers in crucial jobs like food service and transportation, earning less than $30,000, and usually have a lower level of education.
- California has a booming employment market but cannot supply enough affordable housing to accommodate workers of all income levels, according to the report. The founder of Next 10, venture capitalist F. Noel Perry, said the dearth of affordable housing could cause more of the state's vital workers to relocate, negatively affecting California's economy.
Dive Insight:
So where do the out-migrants go when they leave California? Curbed LA reported that most are headed to Texas, Oregon, Nevada, Arizona or Washington.
One example: Toyota, which is moving its headquarters from Torrance, CA, to Plano, TX. According to Albert Niemi, dean of the Cox School of Business at Southern Methodist University, the move can be chalked up to employee complaints about the high price of housing in California and their desire to live "the American Dream," even if that means moving to another state. Toyota took heed and is planning a move into its new $350 million Plano headquarters in 2017.
The Beacon report found the average U.S. apartment rental is $1,227, versus $1,602-$2,557 in California, depending on location, which translates into significant savings for renters who leave the state. And when it comes to homeownership, a home in the most expensive market in Texas — Austin — has a median price of $261,000, versus California’s $395,000.
One way California is fighting the lack of affordability is through the implementation of inclusionary housing laws that require below-market set-asides in most new housing developments. The mayor of Los Angeles has also entertained the idea of developer fees to finance his goal of 100,000 additional units of affordable housing.
