As reported by the LA Times, according to data recently released by the Department of Finance, California’s population growth rate for the year ending July 1, 2019, was the lowest the state has experienced since 1900. Estimates indicate the Golden State’s population grew by 0.35 percent over the course of the year (or by 141,000 people), down from 0.57 percent for the previous year ending July 1, 2018.
California’s growth in population was buoyed by the net difference between births and deaths in the state, which amounted to 180,800 people. However, this number was tempered by net losses in migration, which indicate more people are exiting the state than entering it.
While international migration or legal immigration into the state added to California’s population, there was significant negative domestic migration — or rather, people leaving California for other states — amounting to nearly 40,000 residents. According to the Department of Finance, this phenomenon represents “the first time since the 2010 census that California has had more people leaving the state than moving in from abroad or other states.”
What Happened to California’s Population Growth?
But where are these people going? According to William Frey of Brookings Institution, they’re heading elsewhere in the West to places economies are picking up, housing costs are cheaper, and there may be no state income tax. According to Frey, the most popular destinations were Arizona, Colorado, Nevada, Oregon, Texas, and Washington.
Immigration levels are also declining, which accounts for some of California’s drop in population growth. “In the past, California would be growing because immigration would counteract domestic outmigration,” Frey told the LA times. “The outmigration is in places where housing prices are high and therefore immigration is not being able to counter that.”
Dowell Myers, a demographics expert at USC, told the LA Times that California housing prices are preventing millennials from really establishing the requisite “nest” needed to have kids. He pointed to the shortage of housing choking the supply.
“I think we need to have enough housing for workers to live in and for people to start families. Older people have the right to stay in their houses, but we need to make room for the young people or else we will turn into a retirement city by the sea,” Myers explained. He pointed to LA County as an example, given it experienced a 17 percent decline in the amount of children residing in the area over the last 10 years.
As noted here, California’s housing woes, particularly in its major cities, are further exacerbated by zoning laws that restrict builders to building only a certain type of housing in a large proportion of the city. In San Francisco, for instance, in nearly three-quarters of privately held land, builders are not permitted to build anything but single-family homes or duplexes.
There’s also the issue of regulation. In cities such as San Francisco, the planning code is an unwieldy mess, adding years of angst to the building process. For instance, even procuring approval for a multi-unit building project can take twice as long in San Francisco as in other districts. In result, there’s now a cottage industry in San Francisco of flipping entitlements (or approval to build) on purchased land, meaning many are scooping up property with no intention of building.
Rent Control Is Killing the Housing Market
But perhaps the biggest culprit of ensuring housing stocks will stay low and housing costs high is the policy much-loved by economically ignorant Democrats, the ever-infamous rent control.
Indeed, there are few notions in economics that receive near-universal consensus from economists, and the principle that rent control strangles housing markets is one of them.
As I explained prior in opposition to Bernie Sanders’ endorsement of nationwide rent-control:
Once a price cap is established, it becomes harder for landlords to justify investing in upkeep of their properties if they don’t get to see reward from such efforts in the form of being able to charge higher rent. In the more extreme cases, the inability to charge market prices compels landlords to pull their properties from the market. This pressure on landlords has a two-prong effect over time: It reduces both the quality of the current supply and the quantity of current supply.
In other words, rent control kills the supply of the housing market while encouraging increased demand as a result of overpromising affordable housing. A recent study by Rebecca Diamond, Tim McQuade, and Franklin Qian of Stanford University was performed on the expansion of rent control in the 1990s in San Francisco. Unsurprisingly, the trio found that rent control significantly diminished the available rental housing supply.
For instance, the study noted a 10 percent increase in the conversions of housing from rental to owner-occupied (i.e., converting an apartment into a condominium), as well as a 25 percent drop in the number of renters living in rent-controlled apartments. In other words, expanding rent control policies decreases the number of people who actually are subjected to it or benefitting from it.
In California’s major cities, the rent control rates are staggering. In San Francisco, nearly two-thirds of the rental housing market is rent-controlled, while in Los Angeles, close to 80 percent of rental housing units are rent-controlled. If housing prices are the scapegoat for net migration losses, it seems rent control isn’t achieving its purported purpose.
California Homelessness Problem Is Uninviting
Lastly, while there is no metric to measure the overall quality of life in California’s major cities, it’s worth noting that California’s homelessness problem, which is intimately tied to the housing crisis and to lax enforcement of city laws, has created looming quality of life issues for Californians.
According to the U.S. Department of Housing and Urban Development, homelessness in California rose by 16.4 percent or by 21,306 people in 2019 alone. In Los Angeles County, the homeless population increased to 60,000 people. And these numbers can hugely affect the quality of life of those living in the area, which is no doubt reduced by increased theft, the need to sidestep human feces, and increased public use of drugs.
In fact, the LA Times conducted a poll last month finding that 95 percent of voters felt homelessness to be Los Angeles’ biggest problem, despite a sales tax increase funneling billions of dollars to the issue. The New York Times recently referred to the overall backlash against the homeless problem as the liberal “breaking point,” given the state’s notorious left-leaning bend.
Enforcing vagrancy laws already on the books and enforcing penalties for possession of Schedule I controlled substances may help to reduce the perception that California’s cities are conducive to homelessness. As noted by the magazine Cal Matters, homelessness numbers indicate that “the vast majority of the state’s homeless population does not utilize temporary living arrangements provided by either charitable organizations or government programs. Rather, [the homeless] have been found living on the streets, parks, or other places not meant for human habitation.”
When I lived in San Francisco, I witnessed children in the Tenderloin neighborhood picking their way over needles to get to elementary school. It seems if California wants to keep its residents, it needs to increase incentives and foster a state where people would actually like to raise children.