CALIFORNIA AND THE SOUTHWEST: TRENDS AFFECTING RENTAL HOUSING INVESTMENT
LIVIN’ THE DREAM
In decades past, the California Dream lured millions of people not only to come, but to stay. Between 1900 and 2000, the population of California doubled more than four times—from two million to 34 million, far surpassing the growth rate of the United States 1 . My forebears were part of this demographic tsunami: my maternal great-grandparents migrated to California from the Midwest at the turn of the century, and my paternal grandparents came from Arkansas in the Dust Bowl. They helped build the societal and physical infrastructure that underpinned a prosperous and promising state economy.
As long as there is a Hollywood Walk of Fame, Golden Gate Bridge and Yosemite National Park, California will continue to attract tourists from around the world. Today, however, visitors who choose to stay will notice greater numbers of people heading in the other direction. Since 2000, 2.4 million more people have left California than moved there. 2 Childbirth and international migration simply cannot replace the Californians moving to places like Arizona, Idaho, Texas and Oregon. For the first time in its statehood, California will lose a congressional seat in 2023. 3 What is driving this historic shift? Beyond the generic “high cost of living” response, there is no simple answer, yet we can glean some causality from other significant trends. Starting in the mid-1990s, California lost a disproportionate number of military bases, 4 and job loss in the critical aerospace industry followed. 5 Meanwhile, public-sector employment costs in California have skyrocketed, with over 340,000 government workers now earning over $100,000 per year. 6 An unfunded pension liability of $1 trillion places unrelenting pressure on Sacramento to raise taxes, as legislators are chronically unwilling to reduce expenses. California now is the highest-ranked state for capital-gains tax, income tax, sales tax, gas tax and business tax. 7
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