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No longer a boom state: New data shows residents fleeing California in near record numbers

Sacramento Bee logoSacramento Bee 12/17/2020 Tony Bizjak, The Sacramento Bee

Dec. 16—California's historically strong population growth has ground to a near halt, new data show, as far more people moved to other states than moved here from elsewhere in the United States. The birth rate also continued to drop and older Baby Boomers passed away, some from COVID-19.

In contrast, the Sacramento region continues growing, led by El Dorado County, which had the largest growth rate in the state in the year leading up to July 2020, much of it thanks to the ongoing exodus of people from the Bay Area looking for less expensive, more expansive housing and a more relaxed lifestyle.

Sacramento County ranked seventh in the state in growth, and Placer was 11th, as smaller, more rural and Central Valley counties led the state's modest growth.

The bigger picture, though, is that the Golden State, long seen as a beacon of opportunity, has become a more difficult and less attractive place in which to live, pay the rent, buy a house and do business.

The state growth rate in the year leading up to July 2020 was just 0.05%, the lowest number in modern recorded history, dating back to 1900. It is the third year in a row that the state has recorded a record low population rate increase, according to the state Department of Finance demographics unit. The 2019 July rate was 0.23%.

The state's new official population is 39.78 million, a mere 21,200 more residents than the previous year. Los Angeles County was the biggest loser, dropping more than 40,000 residents. The Central Valley gained population.

The new population is in fact 451 fewer people than state officials estimated the population to be six months earlier, on Jan. 1, 2020. Both numbers are estimates. If that trend holds up, 2020 could turn out to be the first year the state actually lost population since modern records were kept going back to 1900.

Nationally, population growth has been slow for years as well. But the new numbers serve as a warning to California policymakers.

"This data should focus public attention on problems with housing costs and the state's business climate," said economic Jeffrey Michael, head of the Center for Business and Policy Research at the University of the Pacific in Stockton.

"Policy-makers need to take greater account of this trend in financial and infrastructure planning."

California lost a net 261,000 residents to other states in the time period, the most in nearly 25 years. That migration pattern has been in place since the Great Recession a decade ago, but accelerated dramatically last year, and even more this year.

State officials said the latest population numbers may have been affected by the early stages of the COVID-19 shutdown.

"While domestic out-migration continued along previous trends, domestic in-migration seemed to slow in 2019-20, especially from April to June when the stay-at-home order was in effect," the state Department of Finance said in a statement.

California lost a net number of more residents to other states for several years in the mid-1990s when federal base closures led to a retrenchment in the aerospace industry, notably in Southern California, state officials said.

State officials said California remains a desirable place to live.

"There is still strong demand to live in the state, as evidenced by the record high home prices reached this year, and hundreds of thousands of people — disproportionately ones with higher incomes — who are willing to continue to put down roots in the state," the finance department said in its statement.

Sacramento region growth

The Sacramento region appears to be both a winner and loser in the last year, drawing new people from the coast, and losing others to lower-cost states.

El Dorado led the state with a 1.71% population increase, and ranked eighth overall in the state in total numeric increase with 3,210 new residents.

Sacramento's increase was 0.87%, ranking second among counties in the state in numeric increase at 13,302.

Riverside County gained the most, 20,364, drawing residents from Los Angeles and other coastal counties. Los Angeles lost the most residents: 40,000.

Placer and Fresno counties were also among growing counties. San Francisco and Alameda counties notably also grew, suggesting they have not been hit as hard by losses stemming from high housing costs.

Sacramento-area Realtor Erin Stumpf, nevertheless, says most of her buyers are people coming to Sacramento from the Bay Area for the affordability, and bringing their Bay Area jobs with them. Many of her sellers are people leaving Sacramento for other states. She recently sold homes for people headed to Oregon, South Dakota, North Carolina and Arizona. The seller headed to Arizona, a retiree, said she was sick of liberal politics.

"This year, it seems to be people who are moving closer to family members in other states," Stumpf said. She said she also is handling estate sales for families whose older relatives have died.

The new numbers notably also show that Central Valley communities in general are still gaining population while many areas of coastal California are losing people.

The COVID-19 pandemic may be a key player, triggering a power shift in the state as more coastal Californians move to the Central Valley for the same economic reasons that others are leaving the state.

Housing costs, business defections

Some of the state's problems are systemic.

Housing costs are among the highest in the country. Large wildfires have not only become the norm, they increasingly are burning homes in residential areas. In a clear sign of California's struggle to manage its basic affairs, utility officials intentionally now cut power to residents due to fears that electrical lines might spark fires in high winds. The state came close to cutting power this summer simply due to a lack of electricity.

"This does call into question how healthy the state is," said Ryan Lundquist, a real estate data analyst who has been exploring why people leave the state. He says he is seeing more "California hate" online, with people declaring they are leaving because they are fed up with some element of the state.

But he and others say it appears some of the anti-California commentary is overwrought.

Adam Fowler, an economist in Los Angeles with Beacon Economics, is bullish on California, based on its intellectual firepower and its overall beauty. But he says the state does have work to do, especially on providing more housing and fairer taxing.

"California rocks," Fowler said. "The weather is famously agreeable, the state's residents are some of the smartest and most innovative in the world, and the economic opportunity is virtually unparalleled in the United States."

That said, "robust population growth can paper over bad policymaking," he said. "Much of California's revenue policy, especially at the local level, is built around an assumption of growth."

When growth stalls, governments need to adjust policy to balance budgets rather than increase taxes, he said. "Higher local taxes aren't exactly an effective strategy in attracting new residents or retaining current ones. As higher taxes push out more residents (or potential residents), the cycle reinforces itself."

"If the state legalized more multifamily housing and implemented a fairer property tax regime, we would unlock population and economic growth that is currently constrained."

The Bee's Phillip Reese contributed to this story.

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