Housing costs drive people out of state
A couple months ago I wrote about the fact that in 2020, California’s annual population growth was negative for the first time in the state’s history. I also wrote that the Inland Empire does not have the same problem. The region’s population is growing, and more people come into the IE than leave on a yearly basis.
Even though out-migration is not a major issue at this time, it could turn into one, especially if the forces causing it start to intensify. As we will see, those forces are not demographics or even politics, but rather the dreadful state of the housing market.
According to the IRS’ migration files, over the past few years San Bernardino County’s out-of-state migrants mainly went to Arizona, Nevada, Texas, and Washington, in decreasing order of importance. There is an especially big cutoff between Texas and Washington, so that the top 3 states comprise over half of all those who left. (Among all Californians, the order is Texas first, Arizona second, Nevada third, and Washington fourth.)
As we will see in a minute, all of these top destinations have much cheaper housing than San Bernardino County.
But let’s start with the obvious - most people move for better economic opportunity.
A new job or a desire to be in a better labor market drives most decisions to move. But there are limits to this logic: economic opportunity needs to come with a moderate cost of living. If the cost of living in the new destination with better jobs is too high, it’ll scare some people away from moving. Or they might still decide to move, but they’ll choose somewhere else that also has economic opportunity but a lower cost of living. It’s this latter scenario that the region could be dealing with over the coming years.
Indeed, this logic likely drives San Bernardino migrants to Arizona and Nevada, who overwhelmingly went to Maricopa and Clark counties, containing the Phoenix and Las Vegas metro areas respectively. These areas offer economic opportunity and lower house prices. For example, the median house price in Phoenix is $340,000 and in Las Vegas $333,000. In San Bernardino County, it’s $436,000 and $490,000 in Riverside County.
Migrants to Texas are more spread-out. Tarrant, Harris, Bexar, and El Paso, as well as Dallas and Collin County all attracted San Bernardino County out-of-state migrants over the last few years. These counties all have relatively low house prices as well: medians are all below $300,000 with the exception of Collin County, which stands at $407,000.
One thing that might surprise you about these areas, even the ones in Texas, is that they are mostly diverse and politically moderate, if not liberal. Collin County, Texas is one of the only exceptions - it is known as a “rising” Republican enclave, but it also has some of the highest house prices. I say that this fact “might surprise you” because a narrative often discussed in the media is that people are moving for political reasons - people leaving “liberal California” for Texas, or vice versa. While there is a lot of variation in political affiliation within a county not captured by the data, the statistics presented here do not support a political migration story. If anything, the migration patterns to Texas over the last few years have made it more liberal than it was a decade or two ago.
People move for all sorts of reasons, and for multiple reasons at a time. But housing is certainly a major influence for IE residents planning to move out of state.