November 7, 2005

Saying Goodbye California Sun, Hello Midwest

A growing number of people are leaving California after a decade of soaring home prices, according to separate data from the Census Bureau, the Internal Revenue Service and the state's finance department.

Last year, a half million people left California for other parts of the United States, while fewer than 400,000 Americans moved there. The net outflow has risen fivefold, to more than 100,000, since 2001, an analysis by, a research company, shows, although immigration from other countries and births have kept the state's population growing.

The number of people leaving Boston, New York and Washington is also rising, and skyrocketing house prices appear to be a major reason, said Mark Zandi, chief economist at From New York, the net migration to Philadelphia more than doubled between 2001 and 2004, with 11,500 more people leaving New York for Philadelphia last year than vice versa. The number of New Yorkers who have moved to Albany, Charlotte, N.C., and Allentown, Pa., among other places, has also increased sharply.

But the change seems most pronounced in California, which has long been a beacon that draws people from all over the country, with its sun-drenched coasts and dynamic economy. Popular culture has reinforced that image, with fictional characters from the Joads of "The Grapes of Wrath" to the Beverly Hillbillies coming to the state.

Today, however, the same factors that have made California so alluring have also made it unaffordable for many young families, retirees and recent immigrants to the United States. Some are heading to fast-growing cities like Las Vegas, as they have been for decades. But even less-glamorous destinations, like the Rust Belt and Texas, are on the receiving end of the migration.

The last few years appear to be one of the few times on record that California has lost domestic population when its job market was as healthy as the rest of the country's, economists and demographers said.

"People are saying, 'Even though I have to take a 10 percent wage cut to go to Vegas or Phoenix, it's actually a wage increase,' " said Ross C. DeVol, the director of regional economics at the Milken Institute, a research group in Santa Monica, Calif. "They look at what housing costs here, and they're making decisions to go elsewhere."

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