Report: Los Angeles Is Shrinking While San Francisco Expands

The latest quarterly economic survey by California’s Next 10 and Beacon Economics found that Los Angeles is shrinking while the Bay Area is adding residents.

Approximately 1,090,600 more Californians left for other states than moved from other states to California in the decade from 2006 to 2016. Although the Bay Area’s big gains in high-paying jobs attracted Americans from other states, Los Angeles and the Inland Empire’s heavy loss of high- and middle-paying jobs fed the migration to other states out of what once was referred to as the Golden State.

High wages averaging over $50,000, especially in the Bay Area’s booming tech sector, attracted migrants from other states and countries. But the report warned that a “strong economy can also be dysfunctional,” because housing costs are much higher in California than in other states while wages for workers in the lower income brackets are not.

The average take-home pay for a low-paid Californian is about the same as a low-paid resident in other states, but cost of living in California is much higher.

The survey’s economic analysis found that L.A. and the Inland Empire’s out-migration was predominantly due to housing costs crimping “lower-skilled, lower-paying fields — namely sales, transportation, and food preparation — which together accounted for a net outflow of more than 180,200 people from 2006 to 2016.” But another 93,500 middle-paid workers making between $30,000 and $49,999 also left the area for other states in the period.

The report blames the lack of new housing development for driving California residents to flee to other states. According to the report’s statewide statistics for statewide building permits recorded between 2008 and 2017, only 24.7 new building permits were issued for every 100 new residents in California. That compares to a national state average of 43.1 permits recorded for every 100-resident increase in population. If the trend continues through 2025, California will have a housing shortfall of about 3 million units.

Tthe report found the top out-migration destinations for Californians during 2014 to 2016 were the five nearby states with cheaper average home prices. Texas was the leader for Californian out-migrators, with an average home price of $295,000; followed by Arizona, at $339,000; Nevada, at $344,900; Oregon, at $420,000; and Washington, at $420,000.

With the obvious housing crisis in the Golden State, the California Department of Finance reported building permits for single family residential starts rose 24 percent for the six-month period ending in March 2018. Multi-family construction also increased by 16 percent during the same period.