Earlier this year, Trulia published an interesting article on how thousands of Californians are emigrating to other states due to exorbitant housing costs, with many choosing to settle in Texas:
A constant debate in California politics is whether jobs and people are leaving the state…
Here are the basic facts. In 2011, 562,000 people left California, and 468,000 came, according to the Census’s American Community Survey. That means 120 people moved out of California for every 100 people who moved in. Out-migration reached its peak in 2005, when 160 people moved out of California for every 100 people who moved in. The California exodus rose with the housing bubble and subsided in the recession. Lower home values in 2008-2011 made California more affordable, encouraging in-migration and discouraging out-migration, as well as pushing some California borrowers underwater, further discouraging out-migration.
Who leads the charge out of California? Even though California’s richer residents face high tax rates, lower-income households are more likely to leave. From 2005 to 2011, California lost 158 people with household incomes under $20,000 for every 100 who arrived, and 165 for every 100 people with household incomes between $20,000 and $40,000…
Since 2005, far more Californians have turned Texan than the other way around: 183 Californians moved to Texas for every 100 Texans moving to California. (The average flow since 2005 between California and all other states – not just Texas – has been 133 out for each 100 in.)…
Let’s take a closer look at California versus Texas. What does Texas have that Californians want? Cheaper housing, more jobs, and lower taxes.
…housing costs matter the most: the exodus from California was strongest when and where the gap in housing costs between California and other states was biggest. This detailed analysis confirms what the above chart showed: outmigration from California was most dramatic in 2004, 2005, and 2006, which were also the years when California home prices were most expensive relative the rest of the country.
In the above Business Insider video, Trulia’s Chief Economist, Jed Kolko, builds on his earlier work by discussing the key reason why Americans are moving from California to Texas: cheap housing.
The below charts provide further insight into why Californians are migrating to Texas.
First, house prices in California are very expensive (and volatile) compared to the national average, whereas Texas’ house prices are highly affordable (and stable), due to its abundant land supply and permissive market-based urban planning system (see next charts).
Because housing is so affordable in Texas, the proportion of median household income chewed-up by interest payments is very low compared to both California and the national average (see next chart).
Amazingly, affordability and stability of Texan house prices has been achieved despite very strong population growth, with Texas’ population growing at more than twice the rate of both California and the national average between 2000 and 2012: a testament to Texas’ highly responsive urban planning system (see next chart).
Finally, affordable housing and below average unemployment are not the only things going for Texas. It also has experienced higher than average income growth (see next chart).
Chalk that up as a win for responsive land-use (planning) regulation.
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