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If California’s the future, why are so many leaving?

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Can newly elected leaders reverse the Golden State’s rising cost of living?

Santa Monica, California
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California, many say, is the future. A center for creative industries and new technology—look at its impressive rollout of electric vehicles and autonomous cars—it’s also a diverse state, pushing progressive policies that could be models for the rest of the country. Governor-elect Gavin Newsom said “the future belongs to California” during his victory speech on November 6.

Yet people are leaving in droves for opportunities elsewhere.

The actual migration patterns in California aren’t quite as bad as that sounds—at least not yet. But a report released earlier this year by the California Legislative Analyst’s office looking at domestic migration patterns shows that cracks continue to form in the state’s bright facade. Between 2007 and 2016, a million more people have left the state than have moved in from other states.

Spread over a decade, that’s not terrible. It’s actually less severe than domestic out-migration during the previous decade. But the patterns of who’s moving in, and who’s moving out, underline some of the social and economic pressure that have made California, and other coastal areas, so prohibitively expensive.

While state leaders slowly respond to an affordable-housing crisis that’s been decades in the making—look at the polarized debate around state Sen. Scott Wiener’s bill to upzone housing around transit—Californians are finding their own solutions. For many, that includes moving. Last year, 130,000 more residents left California than arrived from other states.

New Californians are arriving from New York, Illinois, and New Jersey, while the Golden State’s existing residents move to Texas, Arizona, Nevada, and Oregon. For the most part, newcomers have left wealthy pockets of the Northeast, and those departing are heading to less-expensive, lower-tax regions of the Sun Belt.

California is seeing a net gain in high earners (making $110,000 or more) and the highly educated (graduate degrees or higher), while losing those representing the other end of the socioeconomic spectrum. Families with kids are headed for Texas. Blue-state college graduates are moving in. In other words, California’s experiencing what looks like statewide gentrification.

Due in large part to the state’s housing crisis, California is becoming wealthier and more economically stratified, as more of its citizens find it difficult to make ends meet. Every year, the state falls roughly 100,000 units short of what it needs to keep up with housing demand, and Prop 10, a midterm ballot measure that would have repealed state restrictions, expanded rent control, and potentially provided a short-term affordability boost, was roundly defeated at the ballot box this week. The acute lack of options is pushing many middle-class residents out of the state, with little hope of returning.

A recent McKinsey Global Institute study, for example, found that a third of metro-area renters in California can’t afford what they pay, a sobering sign of the lack of new affordable housing being built.

And it’s not just Los Angeles County and the Bay Area—where a salary of $150,000, adjusted for median income, means you’re earning less than a middle-class wage—shedding residents. The state’s Central Coast is also hemorrhaging its working and middle classes. As one recent Texas transplant told Quartz, California is “a lost cause.” Newsom has pledged to build 3.5 million new units by 2025, a moonshot objective that critics have called “impractically astronomical.”

The affordability crisis is so bad that without new units and cheaper options, Silicon Valley’s vaunted competitiveness and ability to hire the best talent will take a hit.

“Companies are starting to understand that if they don’t help with these problems, they eventually won’t be able to hire anybody to work here anymore,” Allison Arieff, New York Times columnist and editorial director at the nonprofit San Francisco Bay Area Planning and Urban Research Association (SPUR), told Curbed.

States like Texas, and, to a lesser degree, Nevada and Arizona, have gained from California’s losses. People are leaving the Bay Area for Las Vegas, enticed by its attractive cost of living and the relatively low price of new homes there, which sell for between $200,000 and $300,000. (In fact, a Newsweek analysis found that the price of renting a moving truck from Vegas to San Jose costs $121, while one heading in the opposite direction is an unsubtle $1,990.)

Some of the states Californians are fleeing to offer a life without corporate or personal income taxes and home costs in the low six figures. Texas, for instance, has boomed, becoming one of the fastest-growing states in the nation. It’s now home to 867,000 new residents from California, who arrived between 2010 and 2016.

Californians rightfully celebrate the state’s incredible scenery, quality of life, and diversity. But without serious and sustained action on housing, that lifestyle will only be available to an increasingly select few who can afford it.