Los Angeles Among Highest for Outward Migration in US

The affordability crisis in Los Angeles is driving people out of the area in search for more affordable living options. In fact, Los Angeles had one of the highest net migration losses in 2017, while the neighboring Riverside County had one of the highest net migration gains. This pattern is largely attributed to the increasing housing costs in Los Angeles and other coastal markets. According to a recent report from ATTOM Data Solutions, affordability has dropped to the lowest level in a decade.

Migration patterns are one of the consequences of affordability. “We here a lot about it anecdotally,” Daren Blomquist, senior vice president at ATTOM Data Solutions, tells GlobeSt.com. “If you can’t afford Los Angeles, you move to Riverside County, where it is more affordable. Or, you move to Dallas. In the migration numbers, we see a clear connection between affordability and migration patterns. Los Angeles County had one of the biggest net migration losses in 2017, after Cook County, Illinois. Riverside County, which is right next door, had one of the biggest increases of migration—the third highest in the country.”

Riverside County isn’t the only market that is seeing growing inward migration. Denver, Grand Rapids and Dallas are also markets that have net migration gains as a result of affordability problems. In fact, those three markets are now the least affordable markets in the country relative to their long-term averages. “They are not the highest priced markets in the country, but relative to their historic affordability norms, they are the most out of sync,” explains Blomquist. “If you look at those markets, they have strong inward migration, especially Dallas. There are more people moving in than moving out, and many of them are coming from higher priced markets. Psychologically, those people are willing to pay more and they are used to paying more, or if they sold a house in a previous market, they may be coming flush with equity to put into a new house.”

These migration patterns could impact housing demand in Los Angeles. As more people leave, demand and therefore pricing will begin to level off. “People are moving to places that they can afford and where they still have access to jobs,” says Blomquist. “That is response that we are seeing that could affect some of these high priced markets on the coast of California, and it could be a bad sign going forward. If population is leaving, you could see the demand for housing fall off, and it will fall off.”

Blomquist says that eventually outward migration will have a negative economic impact, if the only people that can afford to live in a market are those with the highest income. “It is a natural market response, but the danger is that you have this country club effect where the people that can afford to live there are the top sector of the job market,” he says. “You need people that are making average wages to be working in Los Angeles to help drive the economy.”