California’s population declines, again, as state grapples with housing crisis (2024)

California’s population has continued to plummet, according to a new state report, underscoring a continuing trend as the state scrambles to increase its housing stock and ease a cost of living crisis.

Californians are continuing to leave in droves for other states around the US, a fact some experts attribute to the increasing numbers of high-income workers working remotely during the pandemic. The state’s population shrank by 138,000 people in 2022, according to a report by the California department of finance, which showed a slightly slower decline than during the two previous years.

The contraction continued despite the fact that deaths declined and the number of immigrants moving into the state increased, returning to pre-pandemic levels.

“California is still losing a lot of people to other states,” said Hans Johnson, a demographer with the Public Policy Institute of California (PPIC).

However, HD Palmer, spokesman for the finance department, said that conservative pundits had overblown their analysis about population losses amounting to a mushrooming “Cal-exit”. He said state forecasts suggested the population was in the process of stabilizing after the pandemic.

“I think the situation is waning more than it is waxing,” he said.

Walter Schwarm, California’s chief demographer, said that the latest data for the last six months made it appear that the population was returning to its pre-pandemic pattern and would soon resume growing very slowly each year.

“We’re predicting a return to the same pattern we had prior to the pandemic where we had small but positive growth for three or four years,” he said. “The pandemic came at a time when California was facing some real issues with affordability, which was causing people to delay childbirth and driving some out-migrations.” The increased deaths and people moving out of state to work remotely had exacerbated that, he said.

Now, he said, births were up a bit, foreign migration was returning and, in the last six months, more people were getting driver’s licenses in the state, as some companies demand workers return to the office.

“Affordability is not miraculously better, but, on the other hand, other places outside California are now equally unaffordable,” he said.

Johnson has completed other studies showing that in recent years a growing number of the people leaving the state have high incomes and college degrees – a major shift from pre-pandemic trends.

“We hypothesize that the ability to work from home allows people to keep their California job and income while moving to places that are more affordable,” he said. “Housing costs are a huge factor in driving people out of the state.”

Johnson’s research showed that, while it used to be that California gained college graduates while losing those without degrees, the net departures during the pandemic hit nearly every income and education level.

“During the height of the pandemic, the flows out of the state became so large that almost every demographic and socioeconomic group has experienced net losses,” said his report, which emphasized that lower-income people are still leaving the state in higher numbers.

The latest state data shows some hope in the creation of new housing stock – the state added 123,350 new housing units in 2022. California has some of the country’s highest housing prices, with the average one-bedroom rental in Los Angeles costing $2,400 a month. Expensive housing coupled with a housing shortage has created a homelessness crisis in the state, which has twice as many unhoused residents as New York, the next highest state.

But Johnson noted that it appeared the new units California gained in 2022 were quickly snapped up – often by people who were already in the state and crammed into shared housing. Meanwhile, California vacancy rates are still among the nation’s lowest.

“There are a lot of people searching for a limited number of places where they can live,” said Johnson.

The PPIC report noted that, while the number of people leaving each year is relatively small – the state’s population declined by only 0.35% last year – the effects may add up dramatically.

Even though California’s population increased slightly each year before the pandemic due to immigration and births, the PPIC report found that California has lost residents to other states, most notably Nevada, Texas and Washington, every year since 2000.

The state has already lost one congressional seat as a result of its population not keeping up with other states’ increases. And school districts are starting to re-examine their future classroom needs. Impact on state and local budgets may soon be seen. But what the future effects of such dramatic population loss might be over a long period remained a big question mark, Johnson said.

“California is in unprecedented demographic territory,” said the PPIC report, co-authored by Eric McGhee. “Much has been made of the California exodus to other states, and rightly so. This migration, over the decades, has the power to reshape the state.”