Real Estate Round-Up: The exodus from California

Two years in a row, California is losing more residents than it is gaining. In 2018, 38,000 more people left the Golden State than entered, according to the U.S. census.

A recent Edelman Trust Barometer survey found 53% of residents and 63% of millennials were considering leaving because of the high cost of living. California used to be a middle-class paradise, with affordable education, a dynamic economy and known as a technological and medical leader. Home prices and salaries were in sync with each other.

It is the middle class and retirees that are leaving the state. California is becoming a state of the rich, the poor and the transient population. In San Francisco, the epicenter of high-tech startups is losing people. San Francisco is second only to New York, and ahead of Los Angeles and Chicago. Losing more than 28,000 people in the second quarter of 2019, California’s losses for 2019, will blow 2018’s losses away.

Even the wealthiest Californians are leaving. Many are newly minted millionaires thanks to public offerings of companies such as Lyft, Uber and Slack, because they aren’t excited about sharing their windfalls to state taxes, so they are looking elsewhere.

What are the key issues that are driving people away? The cost and availability of housing is the No. 1 reason, with 72% of survey respondents naming it as the biggest challenge.

Coming in at 62% is homelessness. The homeless crisis isn’t getting solved, and recent state laws have made it nearly impossible to do anything to help this group. The simple answer has been to build shelters for them.

But providing housing is only one leg of the stool. Without training and rehabilitation, including substance abuse and mental disorders, housing only provides a Band-Aid but not a cure for the real issue.

Did you know that even though public spaces were created for “all” of the public, nothing can be done when those spaces become encampments for the homeless? Did you know that heroin and cocaine are now just considered a misdemeanor drug offense, so there is no jail time for these offenses, only an arrest, a possible fine and they are released back to the street? It’s a no-win situation with these failing rules.

High health care costs, crime and security, lack of affordable higher education and the drought round out the top reasons those surveyed believe California’s economy will struggle going forward, which will ultimately hamper growth.

So where is everyone going? Phoenix is the No. 1 spot on the list of metro areas. Las Vegas, Austin, and Dallas are next in line. Why there? They offer lower state income taxes.

There are nine states with no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Given our predilection for gentle weather, some of these states are less desirable than others.

Something has got to change. State legislators have passed laws that actually impede any progress to build additional affordable workforce housing; that put rent controls in place that discourage building rental units and that provide protection but no solutions for the homeless or the unending influx of noncitizens into the state.

I urge everyone to be prepared to stand up for your rights by voting and hold those representatives accountable. Democrats hold a super majority in both houses, with 61 of 80 seats in the Assembly, and 29 of 40 in the Senate.

The Democrats have been the majority in both houses since 1970. That’s a long continuous time to be able to fix things in the state. Good intentioned words alone don’t make things right if the policies aren’t making things better.

The value of your property will ultimately be impacted if the state doesn’t get things corrected. The answer isn’t more taxes for you and me; it’s effective use of the funds and talents that we already have. It’s time for you to take action or the Golden State will lose all it’s luster, except for the sunshine.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.