Americans have apparently had enough of the excessive home prices, rents and taxes in large metropolitan areas like New York City, Los Angeles and San Francisco and are packing up and moving out by the 1,000s. Not surprisingly, these domestic migrants are flocking to areas with a lower cost of living, lower/no state income taxes, less regulations and higher job growth (aka “Red” states).
Not surprisingly, the dark areas on the map above seem to match perfectly with the dark areas on this map which indicate those with the highest state income tax rates.
As noted in a recent Wall Street Journal article, the cities with the highest mortgage/income ratios are seeing massive outflows of people for more affordable locations. Ironically, only 2 out of the top 10 cities with the highest housing costs lie outside of the states of New York and California.
An April report from Trulia researcher Mark Uh found that lower-income households represent a larger share of those moving away from the most expensive markets than their overall population in those markets. For example, those earning less than $60,000 a year make up
27.4% of all households in the San Jose metro area, but they represent nearly half of all households moving away.
Another study this year from California policy group Next 10 and Beacon Economics found that New York state and California had the largest net losses of domestic migrants between 2007 and 2014, and that lower- and middle-income people were more likely to leave.
As one former California resident explained, the “numbers didn’t make sense” in California so he decided to move to Dallas where, within a year, he was able to purchase a personal home and then went on to purchase 3 other investment properties.
“In California the cost of housing is so high. The numbers didn’t make sense, in terms of acquiring property and renting it out,” he said. “I
couldn’t really do that in Los Angeles, but I could do that in Dallas.”
Within a year of moving, he was able to save enough money to purchase a new
home while still renting out his house in Oxnard, Calif. He now owns three homes in the Dallas area.
Of course, those at the lower end of the income spectrum are far more likely to “migrate” to more affordable areas.
Perhaps California Governor Jerry Brown, and his Democratic minions in Sacramento, should spend some time trying to absorb this data before they lose all of their businesses, and their employees, to the state of Texas.