California’s skyrocketing housing costs, taxes prompt exodus of residents
Living in San Jose, Kathleen Eaton seemingly had it all: a well-paying job, a home in a gated community, even the Bay Area’s temperate weather.
But enduring a daily grind that made her feel like a “gerbil on a wheel,” Eaton reached her limit.
Skyrocketing costs for housing, food and gasoline, along with the area’s insufferable gridlock, prompted the four-decade Bay Area resident to seek greener pastures — 2,000 miles away in Ohio.
“It was a struggle in California,” Eaton said. “It was a very difficult place to live. … It’s a vicious circle.”
Eaton is far from alone.
A growing number of Bay Area residents — besieged by home prices, worsening traffic, high taxes and a generally more expensive cost of living — believe life would be better just about anywhere else but here.
During the 12 months ending June 30, the number of people leaving California for another state exceeded by 61,100 the number who moved here from elsewhere in the U.S., according to state Finance Department statistics. The so-called “net outward migration” was the largest since 2011, when 63,300 more people fled California than entered.
“The main factors are housing costs in many parts of the state, including coastal regions of California such as the Bay Area,” said Dan Hamilton, director of economics with the Economic Forecasting Center at California Lutheran University in Thousand Oaks.
“California has seen negative outward migration to other states for 22 of the last 25 years.”
A recent poll revealed that an unsettling sense of yearning has descended on people in the Bay Area: About one-third of those surveyed by the Bay Area Council say they would like to exit the nine-county region sometime soon.
“They are tired of the expense of living here. They are tired of the state of California and the endless taxes here,” said Scott McElfresh, a certified moving consultant. “People are getting soaked every time they turn around.”
The area’s sizzling job market and robust economy have created a domino effect: income spikes for highly trained workers, more people packing the area’s roads, red-hot demand for housing.
What’s more, the technology boom has unleashed a hiring spree that has intensified the desire for homes anywhere near the job hubs of Santa Clara County, the East Bay and San Francisco. The South Bay job market has hit an all-time high after a 5,800-position surge in May, fueling an overall gain of 3,400 jobs for the Bay Area, according to a state labor report released Friday.
The region’s soaring housing prices are a key factor driving dissatisfied residents toward the exit door. Several people who have departed, or soon will leave, say they potentially could have hundreds of thousands of dollars left over even after buying a house in their new locations.
- California’s skyrocketing housing costs, taxes prompt exodus of residents
- Google, Facebook and Apple draw hordes of tech tourists
- Bay Area sports collapses: Where Warriors’ freefall ranks among notable Hurt Parades
- Brock Turner: Facebook page defends Stanford sexual assailant as ‘real victim’
- NBA Finals: Fan hospitalized after fight, fall from deck
“They’re taking advantage of the housing bubble right now,” McElfresh said. “The majority of the people we are seeing are moving to states that don’t have state income taxes.”
Thomas Norman, of San Francisco, said he and his wife, Patricia, are seriously considering leaving the Bay Area. They have actively scouted for houses in the Rocky Mountains region, including a trip to Colorado to look for prospective homes.
“The inconvenience of the Bay Area is a major factor,” said Thomas Norman, a lifelong Bay Area resident burdened by a two-hour round-trip commute to an East Bay optometry practice. “The traffic is very bad. It is becoming more congested with all the housing that is being added here.”
Eaton, who left the South Bay to relocate near Dayton, Ohio, cited the high cost of living as a major factor driving her decision. The struggle to make ends meet became too much.
“You can’t get ahead,” Eaton said. “It’s more than the cost of living; it’s the high taxes.”
Eaton and her sister had a $724,000 house in The Villages in South San Jose that they sold before moving to Ohio. Their mortgage payments were $2,200 a month, plus $1,000 for association fees in the gated community. They were able to pay $300,000 in cash for their new home in Ohio.
Priya Govindarajan, a San Francisco resident, is planning to leave the Bay Area at the end of June and head with her husband, Ajay Patel, to North Carolina.
Govindarajan, who works in the consumer packaged goods industry, and her husband, who is in the medical profession, determined that their wages aren’t going far enough to cover their living expenses.
Living in UC San Francisco housing, the couple pays $2,100 a month in rent. And they have to cough up $1,900 a month for child care.
“My husband’s salary would be in the six figures, but six figures is not enough to cover the rent, day care (and) food prices,” Govindarajan said. “It all starts to add up.”
Govindarajan said she figures they can put down 20 percent on a nice house in North Carolina and have a monthly payment of $1,800 — which would include the mortgage, property taxes and insurance.
“I get why people want to live in the Bay Area, I really do,” Govindarajan said. “But it is so difficult to live here, especially for people coming here for the first time.”
Some experts believe the boom in the Bay Area has exacerbated the problem of income inequality and the resentment that can accompany that economic reality.
“There is a declining middle class in the Bay Area,” said Christopher Hoene, executive director of the California Budget & Policy Center, a research group that recently completed a study about income inequality in Silicon Valley. “Widening income inequality can create polarization socially and economically.”
In 1989, the middle class accounted for 56 percent of all households in Silicon Valley, but by 2013, that share had slipped to 45.7 percent, the study found.
“The region’s middle class has shrunk, while the numbers of lower-income and higher-income households has grown,” the report stated. Silicon Valley, for the purposes of the study, consists of Santa Clara County, San Mateo County and San Francisco.
Lower-income residents accounted for 30.3 percent of Silicon Valley’s households in 1989, and that number grew to 34.8 percent in 2013. Upper-income residents had 13.7 percent of the share of households in 1989, and that figure swelled to 19.5 percent in 2013, the study found.
“A lot of middle-class jobs have vaporized,” said Russell Hancock, president of San Jose-based Joint Venture Silicon Valley. “The support positions, the assembly line positions, the jobs that paid the middle class — a lot of those have gone away.”
A big chunk of the jobs that are being created in the Bay Area are in the high-tech sector, which requires specialized skill sets to fill them. When jobs that would cater to the middle class wane, that can force people to relocate — in many cases, out of the Bay Area entirely.
“This summer, I have booked more business than in any of the other 27 years that I’ve been working,” said McElfresh, the moving consultant. “People are packing up and leaving.”
Eaton, while happy to have escaped the high cost of living and traffic, recently found herself longing for one Bay Area staple — its mild weather.
“There’s a huge thunderstorm overhead,” Eaton said while talking to a reporter. “Got to get used to that, I guess.”
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.