This is a big problem because Californians are pricing out locals from buying a home in cities such as Phoenix, Las Vegas, Boise, Reno, and Austin. These are the metros experiencing the most positive net migration from California. Not surprisingly, real estate prices in these places have appreciated like crazy over the last five years as a result.
Interestingly, migration from other areas of the US (such as states like New York or Massachusetts) don’t seem to have the same impact on increasing home prices and real estate values. This indicates that California transplant have a special ability to increase prices and cause a bubble in the markets they move to.
Why? Well, there are three central reasons:
1) Californians tend to make a lot of money, especially those working in tech, who can afford to overpay for real estate.
2) Californians often are selling original homes worth way more than the values in the new markets they are buying into, also allowing them to overpay.
3) Californians are notoriously bad real estate investors, who tend to BUY HIGH and SELL LOW. This same trend occurred before the last Housing Crash.
2001 to 2006 was also an era where California experienced significant outward migration. And back then many of the same things happened – migration to and price appreciation in cities such as Boise, Phoenix, and Las Vegas.
From 2007 to 2015 the trend reversed. Home prices went down in California, causing people to move back to the state. This then caused price declines in the cities Californians had been moving to.
Is history repeating itself right now? Let me know your thoughts!
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0:00 Californians Ruining Your Real Estate Market?
2:12 Top 10 Cities for California Exodus
4:38 Net Migration % – a Better Metric
6:42 Cali Migration = Housing Bubble
8:50 Non Cali Migration = Doesn’t Matter
10:30 Californians are Bad Real Estate Investors
12:20 History Repeating Itself?
14:20 Migration Reversal: California Growth Surge?
16:13 Historical Data is Important
#USHousingCrash #CaliforniaExodus #CaliforniaBubble