More Leaving O.C. Than Moving In, Report Says

For the first time since 1996, more Orange County residents left the county last year than migrated here from elsewhere in the nation, according to new state figures.

Analysts said that the negative turn in the county’s net domestic migration was an indication that soaring housing costs are discouraging people in other counties and states from moving here. That could threaten the county’s long-term economic growth.

The state Finance Department said 716 more people moved out of Orange County than other U.S. residents settled in the county between July 1998 and July 1999. Although small, that negative figure followed a positive net domestic migration of more than 8,000 in the previous period and a somewhat smaller figure in 1997.

Last year, Orange County’s overall population grew by 49,800, to 2.81 million, but that was entirely because of births and immigration from other countries.

In the latest period measured by the Finance Department, Orange County showed robust job growth, which analysts say would ordinarily lure more people into the county than those leaving. And to be sure, some residents of neighboring counties are commuting to jobs in Orange County. But analysts believe that a major factor in the negative domestic migration is home prices: The county’s median home price jumped 9% last year, to $258,000 in December, and employers have been increasingly having trouble recruiting workers.

And as of December, Orange County renters were paying a record $1,037 on average, an increase of almost 7% over a year earlier, according to Novato, Calif.-based RealFacts.

“In real terms, people tell us they would be worse off moving here because of high housing costs,” said Anil Puri, a Cal State Fullerton economist.

Puri noted that Orange County’s typical housing prices now exceed almost every other metropolitan area outside California. Moreover, he suggested, the labor crunch will not ease because strong anti-growth sentiments are only further constraining the building of more affordable houses.

Similarly, other major counties in California with high home prices--notably Santa Clara and San Francisco counties--also experienced negative net domestic migration last year.

Statewide, there was a small net gain of domestic residents last year, as 15,366 more people from other states moved into California than those who left.

That compares with a net domestic migration of 15,467 in the previous yearly period and 28,181 from July 1996 to July 1997. For several years before 1997, California lost residents to other states as hundreds of thousands left during the deep recession.

Since then, demographers and analysts had been expecting net domestic migration numbers to increase. California’s robust economy has created a hefty batch of jobs and the state has regained its luster after being pounded by recession, riots and earthquakes. Last fall, U.S. Census Bureau figures showed that more whites were migrating to California than leaving for the first time since the early 1990s.

Still, the overall net domestic migration into California in the last three years pales in comparison to the 1980s, when the state often gained 100,000 residents annually.

Last year California continued to draw many immigrants--about 229,000--who helped fill many job openings. But analysts expressed concern that California isn’t attracting enough residents from other states to help keep the state’s economy growing robustly.

“With such a great economic boom, these [domestic migration] figures should be highly surprising,” said G.U. Krueger, an economist at the California Assn. of Realtors. “And there can be only one answer,” he said. “That is home prices.”

In Santa Clara County, for example, domestic net migration turned negative last year for the first time since 1995. That county, home to Silicon Valley, lost a net 13,000 non-immigrant residents from July 1998 to July 1999. The county’s median home price, as of last December was $411,000.

Los Angeles County also had a negative net domestic migration: About 39,000 more residents moved out of the county than in. But that negative figure was about half the net outflow in 1998.

Given such statistics, William Frey, a demographer at the Milken Institute in Santa Monica, doesn’t expect a surge of out-of-state residents moving into California. With nationwide unemployment at a 30-year low and wages being bid up everywhere, he said, people in other states who previously may have considered California are now more likely to settle elsewhere or simply stay put.

“Times are so good in other parts of the country that nobody is beating a path to California anymore,” said Ted Gibson, chief economist at the Finance Department.

California’s adult population growth, analysts said, will continue to be driven by immigration. By the Finance Department’s calculations, California’s population in July 1999 was just over 34 million, an increase of 542,000, or 1.6%, from July 1998. About 55% of that came from natural increases--births minus deaths--with almost all of the remainder from immigration from other countries.

On average over the past five years, employment growth has exceeded new homes by more than a 3-to-1 ratio. Builders last year received approval for 140,000 homes statewide, nowhere near the levels of the 1980s and far short of the number analysts say is needed.

Out-of-state residents wanting to move to California areas where job growth has been strongest--such as Orange County and Silicon Valley--are finding “prices that are unaffordable except to a two-earner household,” said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto. “It will eventually be a barrier to economic growth in the whole region.”

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Priced Out

California’s net domestic migration--the number of people from other states moving here minus California residents leaving--declined in the 12-month periodending July 1, 1999. Analysts say one big reason that more residents from other states aren’t moving here is the high housing costs in California’s major counties.

Median Home Prices

Includes new and resale homes and condominiums for December 1999.

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California $198,000 Los Angeles 192,000 Orange 258,000 San Francisco 420,000 San Mateo 425,000 Santa Clara 411,000

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Source: Acxiom/DataQuick

NET DOMESTIC MIGRATION

For state and selected counties (July 1, 1999 population)

California (34 million)

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1995 -307,862 1996 -200,460 1997 28,181 1998 15,467 1999 15,366

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Los Angeles (9.8 million)

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1995 -193,445 1996 -145,4521997 -71,459 1998 -73,259 1999 -39,337

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*

Orange (2.8 million)

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1995 -21,512 1996 -15,650 1997 3,076 1998 8,070 1999 -716

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San Francisco (797,200)

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1995 -12,222 1996 9,121 1997 -253 1998 2,989 1999 -1,525

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San Mateo (727,300)

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1995 -2,142 1996 -1,720 1997 2,758 1998 -933 1999 -4,997

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Santa Clara (1.7 million)

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1995 -16,448 1996 7,149 1997 3,314 1998 600 1999 -13,078

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Sources: Acxiom/DataQuick, California Department of Finance