Not everyone leaving the Bay Area is priced out. Take Nicolette Manahan, whose family of four recently left El Cerrito for Denver, saying that the Colorado capital’s more affordable housing market allowed her to purchase a larger home.
“I’m so excited and happy with our decision,” Manahan said. Both she and her husband are able to work remotely.
A new study from BuildZoom and the Terner Center for Housing Innovation at the University of California, Berkeley, took a close look at who is leaving the Bay Area and why. Defectors like the Manahans, who earn above $100,000 per year, tend to move to desirable cities in the country while lower-income people tend to end up in less costly areas of California, according to the study.
“For those high-income households leaving California, many were drawn to other high-cost markets with vibrant economies, with New York, Seattle, Washington, D.C., and Denver leading the list,” the report found. “Who moves out of the Bay Area and where they go is not just about income, it’s also about race.”
The study, titled “Disparity in Departure: Who leaves the Bay Area and Where Do They Go?” found that the Bay Area is disproportionately pushing out low-income residents, blacks and Hispanics.
In contrast, high earners who leave tend to have more options and resources and move because of choice – not financial necessity. On top of that, newcomers to the region are more likely to be high earners.
“Those moving into the Bay Area are substantially more affluent and educated than those leaving, whereas the latter are disproportionately more likely to be Hispanic or black,” the study states. “The discrepancy between the inbound and outbound movers captures the intensity with which the region’s social fabric is changing.”
About 65 percent of people who move out of the region earn less than $100,000 per year and tend to move to Sacramento and the Central Valley — sometimes only a few hours away from the Bay Area. The downside to cheaper housing is that those regions tend to offer fewer economic opportunities.
“Many of (those former residents) still commute to the Bay Area,” said Micah Weinberg, president of the Bay Area Council Economic Institute, a think tank. “We keep gaining jobs without gaining houses, so people must be coming from somewhere.”
Some economists have warned that skyrocketing housing costs would eventually hinder the Bay Area’s job growth, but Weinberg said he hasn’t seen that play out yet.
In the report, the Terner Center points out that the technology industry keeps growing here despite numerous companies establishing satellite offices in other states.
“Silicon Valley and the broader regional economy are as vital as ever and continue to maintain a powerful magnetic pull,” the report states. “The Bay Area can create enough jobs to support far more population growth than it actually incurs, but because local land use policy and high construction costs severely limit the amount of new housing built, affordability pressures continue to mount and the population grows much more slowly than it otherwise would.”
The irony is that while Californians hail equity and inclusion as important values, the region’s inability to provide housing produces the opposite effect. The only way to make housing more plentiful and more affordable is to build much more of it, Weinberg said.
“The region from a purely economic standpoint will be fine,” he said. “But it isn’t fine for the people making these massive commutes.”
