California Population Decline: 3rd Straight Year and Exodus Slowing
The U.S. got larger by about 1.6 million residents in the past year. According to the Census, America grew by 0.5% to just under 335 million. It seems like a rebound from the pandemic is fully underway. More states had positive growth this year than in any since COVID-19 rewrote history.
A shot of the Hollywood sign - via Skype Nomad
A Fifth of a Percent Since 2022
To be exact, California dropped 0.19% between 2023 and 2022, totaling 75,423 residents.
This kind of phenomenon happened to seven other states during the same time. New York was the most severe, with just over half a percent (-0.52%). For a bit of context, the highest growth was in South Carolina, where there was a +1.71% increase.
An empty street in Ventura California - via Ken Lund
Nearby states were mostly population-positive through July 1 2022 to 2023, except for California’s northern neighbor, Oregon. In that state, there was a -0.14% drop in population, though every state to the East until Illinois (-0.26%) and Louisiana (-0.31%) saw growth, not decline.
Hawaii was the hardest hit nearby state in terms of population between 2022 and 2023, losing -0.3% of its residents.
What is Causing this Population Decline?
The California population decline is likely a result of birth and death trends, immigration, and interstate migration. Despite this, Cali is still the most populous of all states, with just under 39 million residents.
Huntington Beach, California - via Ken Lund
Here are some key causes of California population decline:
Cost of Housing and Living
Of course, housing costs are an issue for many, becoming a major motivator for some. According to one survey from the PPIC, that was the reason given by about 34% of those asked.
California is home to some of the most affluent and expensive places to live, but its allure is undeniable.
Politics and Social Unrest
The situation in San Francisco has made headlines all over America. The homelessness problem that affects many urban centers is present, as is the drug epidemic that often comes with it. Violent crime is lower than national averages, but theft and burglary are higher than average. The police department is also understaffed, even according to officials.
Many residents feel that the post-pandemic response was not enough. Shelters were filling up, leaving those without means out in the open, even once the city reopened.
San Francisco’s political situation contributes to exodus and population decline. An overwhelming majority of the population seems to swing left, with Liberal stances on matters.
Tax on Businesses
Taxes on businesses in San Francisco are higher than anywhere in the Bay Area. San Jose is much, much less expensive for businesses, and nearby Oakland is at least twice as cheap for large corporations.
Here’s what a 2022 study showed us. Imagine your business has 75 employees and $100 million in taxable gross receipts. In San Francisco, the tax bill for such a corporation will reach $1.1 million. In Oakland, it’s half as much at just $493,000. That may seem like a big improvement, but in San Jose, it would be hundreds of times less expensive to run a corporation of this size.
This creates a large problem for businesses looking to open up downtown, or anywhere in San Francisco.
Changes in business operations have allowed employees from many areas of the workforce to move. No longer needing to show up to the office finally gave homeowners a choice they might not have had before. The work-from-home revolution has been a lasting after-effect of the pandemic.
A Changing Workforce
Recovery from the pandemic meant that California regained its jobs, though not consistently across the industries. Fewer local government positions are filled compared to 2020 figures, while over 436,000 nonfarm jobs were added. This means that some of the workforce might not have been able to return to work in their chosen field and may have sought prospects in other states.
Remote work policy shifts that companies made are likely stabilized at this point, with few major changes on the near horizon.
Birth and Death Rates
To say that birth rates are problematic in California would be looking at a mountain through a keyhole. It would be fair to say that birth rates are declining in many nations, not just in a single American state.
That being said, California’s rates have fallen quicker than other states. It used to be a leader in 2008 when it boasted a rate of 2.15. By 2020, the Golden State had a birth rate of 1.52 - the seventh-lowest in the nation. This is a complex issue affecting everyone, from young people deciding to get married to middle-aged couples looking to create a family. Looking specifically at women aged 35 and up, the birth rates appear very similar to 2008 levels.
A Return to Normal Patterns?
If you were wondering. ex-Californians mostly went to Texas, Arizona, Florida, Washington, and Nevada (Mark Whalberg's choice).
These headlines about exodus can seem dramatic, but the Census indicates California population decline could be approaching the pre-pandemic figures.
The key takeaway is that there is still an exodus, though the number has lessened.
Sure, more than 75,000 people leaving between July 1st, 2022, and 2023 may sound drastic, but it's far less than the prior year, when around 350,000 exited.
Vacaville California - via Jirka Matousek
A spokesman for the California Department of Finance said, “We see a continuing decline in deaths due to COVID relative to prior years, and secondly, we’re finally seeing a return to more normal patterns of legal foreign migration that was significantly constrained during the Trump administration.”
H.D. Palmer, working with a department that produces reports from Census data, cautioned that growth is anticipated - though it may be at a lower level than seen in the past. San Francisco rent, Palmer mentioned, could be a cause for population growth.
Obviously, the pandemic effects won’t be brushed off lightly, but the slowing exodus is a step in the right direction.
What is Next for Californians?
Going forward, the numbers suggest a plateau of around 39 to 40 million residents. A rapid rise in population like California saw in the past is quite unlikely. The birth rate will continue to draw the eyes of many. Parental leave will play a major role, but so will the fundamental things families need.
For those looking to settle down, the slowing tide out of California will also create investment opportunities. Up-and-coming neighborhoods will emerge and transform, so you’ll need to be aware of local trends. Whether you’re planning on moving or capitalizing on the current market, we’d love to answer your questions.
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If you have more questions about what to expect from the markets around the Bay Area, don’t be afraid to reach out to us today. Our experts are experienced in all property types and the entire San Francisco Bay Area, and we can help you to find what you need to know today.