Is California's Increasing Out-Migration Fueled By Unaffordable Housing?

This is the second in a series of articles examining issues related to housing affordability.

Aug 2020

*This research report is currently a work in progress but I've posted my findings up till now for review.

My motivation to investigate this issue stemmed from reading a number of articles claiming that California was experiencing increased out migration due to rising housing costs. As a Californian and potential home buyer in the near future I was personally invested in learning more about this trend. However, to my disappointment, none of the articles I came across put forth sufficient evidence to support this claim. Here are a few examples: example1, example2, example3, example4, example5. While pointing the finger at housing seems intuitive, I decided to investigate this question in greater depth and quantitatively assess the impact of housing cost on migration into and out of the state.

Questions Explored:
- Are Californians really leaving?
- If so, where are they going?
- If so, do rising housing costs or stagnant/decreasing incomes play a significant role?

Analysis Approach: In order to track domestic migration in and out of California, I examined migration data from the Census and IRS spanning 1991-2018 (full details can be found in this project's Github repository). It should be noted that the data below encompasses only interstate migration and excludes international migration data due to it being unreliable and/or incomplete. Furthermore, note that migration data does not factor in population change caused by births, deaths, or other causes; therefore, it's possible for a state to experience net negative domestic (US) migration and overall population growth simultaneously (as is the case in California).

Are Californians Really Leaving?

Summary of Findings: Yes, the narrative that California perpetually experiences greater outflow of residents than arrivals from other states is firmly supported by the data, as illustrated in the net migration chart below (left). Although negative net migration is a consistent trend, it appears to ebb and flow, ranging from about -50,000 to -430,000 migrants annually from 1991-2018. Three spikes of out-migration appear during this period, with their peaks occurring in 1994 and 2005, as well as the one currently forming. These peaks may provide clues about the underlying causes of migration, which I will investigate below.

The chart on the right reveals an inverse relationship between migration into and out of California; in other words, less people move in during years where Californians move out in greater numbers (and vice versa). This pattern suggests that the same living conditions that caused CA residents to move elsewhere likely also discouraged migration into the state, which in turn implies that these conditions are not unique to California. In my analysis below, I attempt to identify the degree to which housing cost and income play a role in migration by exploring the following comparisons:

Comparing California housing and income data in peak years versus non-peak years
Comparing housing and income data for the top 50 net in-migration counties against the top 50 net out-migration counties
*Note: net in-migration counties are those where the number of residents from that county who moved to California was greater than the number of Californians who moved to that county; net out-migration counties reflect the opposite migration pattern.

While causation is difficult to prove, if housing or income conditions impact migration trends then clear correlations should be evident in the data. However, before digging into the factors behind California's consistent outflow of residents, I will first highlight a few key findings about California's migration patterns.

Where Did Outbound Californians Move To in 2018?
*Note: all maps are interactive (scroll over states for migration details).

Top 10 Destination States (2018)

Unsurprisingly, West Coast states received many of California's out-migrators, though the clear top destination was Texas. This list of states remained relatively unchanged from 1991-2018 with the top seven states from 2018 appearing in the top ten every year during this period.

California Net Migration - States (2018)
*Blue states = more CA residents moved there than residents of those states moved to CA (and vice versa for orange states).

Mapping net migration reveals some interesting geographical patterns. In most years, states west of the Mississippi tend to be net receivers of residents while states in the Great Lakes and Northeast regions tend to be net senders of residents. Identifying the reasons behind this pattern requires a more granular view of the data, which the county migration map below presents. It should be noted that figures vary somewhat from year to year. Changes in net migration over time (state & county level) can be viewed here.

California Net Migration - Counties (2013-2017)
Top 50 net CA in-migration and out-migration counties

*Note: the map above is interactive- hold ctrl and scroll to zoom and hover over states to view migration data.

Despite county-to-county migration data only being available as five year estimates (the most recent of which represents 2013-2017), the same geographical pattern from the 2018 state map above is present on the county level but with greater insight. For example, it's clear that certain counties affect a state's net migration figures more than others. Another interesting revelation is that some neighboring counties reflect opposite net migration patterns, such as Georgia's Cobb and Fulton counties (referred to as nearby opposite counties below). Comparing housing and income data in these counties may provide further insight into potential causes of migration.

What is Causing Californians to Leave?

Below I explore housing and income data from the following angles to gauge their causal impact on migration:
1) Comparison of the top 50 net in-migration counties against the top 50 net out-migration counties (defined above)
2) Comparison of nearby opposite counties (top 50 counties, all available years)
3) Comparison of California in peak years against non-peak years
4) Comparison of California with other states
5) Intra-state migration (between CA counties)

1) Comparing Top 50 Net In-Migration and Out-Migration Counties

*Why net migration? I focused on net migration as opposed to total in-migration or out-migration because it highlights imbalances in migration (i.e. where migration between two counties is disproportionately one-directional). Comparing housing and income data between counties where this imbalance occurs can potentially clue us in on why individuals are more likely to move in one direction over another.

a. Housing Costs:

The first two plots below present median monthly housing costs for homeowners and renters in the top 50 net in-migration and out-migration counties. Median mortgage costs in the top 50 net out-migration counties are almost all within the $1000-$2000 range, whereas almost half of the top 50 net in-migration county medians are above $2000. Similarly, median rents in the top 50 net out-migration counties are almost all within the $800-$1200 range, whereas almost half of the top 50 net in-migration county medians are above $1200. This pattern suggests that households moving to California are generally wealthier than those moving out of California, as indicated by their higher monthly housing costs. This pattern suggests that increased housing cost is positively correlated with increased migration out of California.

*Note: circle sizes represent county net migration figures.

The two charts below plot the distribution of housing costs for all of the top 50 net in-migration and net out-migration counties (layered on top of each other) and reflect the same correlation with migration as the charts above.

*Note: these charts are composed of 100 histograms- one for each of the top 50 net in-migration and out-migration counties, layered over each other.

- Higher mortgages and rents are more prevalent in the top net in-migration counties, as indicated by the heavier presence of gold bars on the right side of the distributions.

b. Home Values and Income:

Similar to the charts above, median home values and incomes also reflect that in-migrators are wealthier as a group than out-migrators.

*Shaded box represents where the majority of out-migration county values lie.

*Ratios represent home value divided by annual income (median in each county).

- Median home values and annual incomes are lower overall in the top 50 net out-migration counties, further supporting the hypothesis that housing and income are correlated with migration. Comparing home value and rent expense relative to income reflects the same correlation, though to a lesser degree.