My View: Sacramento Region Continues to Buck Growth Trends

Photo by Aaron Kato on Unsplash

By David M. Greenwald
Executive Editor

A common refrain for people arguing against building more housing—California is losing people.  So why do we need to build housing?

That common refrain suffers from some problems, however.

One is that the cost of housing is part of what is driving that exodus.

A recent article in the Sacramento Bee using data from Redfin, found, “At a median sale price of more than $840,000, California has some of the most expensive real estate in the nation.”

That has led to Redfin findings that a net of 41,000 people searching for homes on the site are looking to leave California.

In short, “thousands of more homehunters are looking to flee California than are interested in moving here from other states.”

So problem one with the refrain is that cost of housing is a huge driver in that net migration.

Problem two is that we happen to live in the part of California where that’s not true.

The Bee reported that the Sacramento region remains a national hot spot.

“Sacramento had the highest net inflow of Redfin shoppers among more than 100 metropolitan areas,” the Bee reported, as compiled by Redfin.

Sacramento, with a net positive of 4800, was the only California region to crack the top 10.  It was followed by Las Vegas, Orlando, Florida and Myrtle Beach, South Carolina.

And yet, many of the people coming to Sacramento were fleeing the ridiculous prices of San Francisco, where a single-family home—median price—could cost nearly $1.6 million.

The Bay Area was the state’s most expensive region with a median sale price of $1.3 million.  Sacramento County’s median sale price was $545,000.

San Francisco had the largest net outflow of potential homebuyers in the nation. Los Angeles and San Diego also cracked the top 10.

You see how this stuff works?  People go from high home prices to lower home prices.

The Bee added, “The interest in Sacramento real estate from outside the region has remained strong despite data showing that new listings and sales have plummeted this year. Home sales were down 25% in Sacramento County in September, according to the California Association of Realtors’ figures.”

In a recent explainer of California’s dynamics, PPIC explained, “A significant driver of the state’s population loss has been residents moving to other states—most often Texas, Oregon, Nevada, and Arizona. Housing costs loom large in this dynamic.”

In a recent PPIC survey, “about a third (34%) of Californians say they are considering moving out of the state due to housing costs.”

There are other factors such as a declining birth rate and aging population.

PPIC notes, “The pandemic led to sharp drops in international immigration to the US and California. The net flow into California from July 2020 to July 2021 (44,000 immigrants) was the lowest in at least three decades. The number has since rebounded—nearly tripling to 126,000 from July 2021 to July 2022—but remains low by historical standards.”

This could become a problem.

“Lower birth rates and declines in immigration may have significant effects on the future workforce—for example, there may be fewer health care personnel to care for the growing number of older Californians—and may also change demand for infrastructure and education. K–12 enrollment in California’s public schools has been declining for several years.”

Current projections have California’s population plateauing between 39 and 40 million people in the long term.

“While the future remains uncertain, it is unlikely that California will return to a period of rapid population growth,” they write, but it’s also worth noting that just a few years ago, the trend was pointing toward a 60 million population.

Projections seem very sensitive to small changes in outlook and also assumptions of the model.

From a policy perspective, California needs to address the runaway cost of housing first and foremost.  And then it can address other issues.

As PPIC notes, “Improving housing affordability through residential construction will be crucial to stemming outmigration, especially among middle- and low-income households.”

Hence the focus at the state and local level on addressing the housing crisis, which is part of the driver of population decline.

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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1 Comment

  1. Tim Keller

    Interesting to hear that Sacramento is bucking that trend, but more to the point, so long as we see that we have 20,000 people commuting IN every day because they can’t find housing here, then the statewide numbers mean exactly nothing for DAVIS.

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