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California is called the Golden State for a couple of reasons — including the golden sunlight that bathes much of the state and the riches to be found there. That helps explain why California easily ranks first among the states in both population and gross domestic product. But those leads are shrinking amid a recent trend that has seen both residents and businesses move out of California and settle elsewhere.
California’s population has mostly been on the decline this decade. The Golden State did see a net gain of 67,000 residents in 2023, the AP reported. But that was the first year since 2019 that the population didn’t decrease. Meanwhile, high-profile companies like SpaceX and Chevron are among the hundreds that have left California over the last half-decade or so.
Much of the problem has to do with finances: high home prices, high costs of living and high exposure to natural disasters that put property at risk.
Here are four financial reasons to move out of California, including real estate investments.
Expensive Housing
This is well-documented problem in California, where the median home sales price was $746,667 as of June 30, 2024, according to Zillow. That’s more than double the national median of $361,500.
More than half (52.1%) of homes in California sold for over the original list price during the 2024 second quarter — a sign of multiple offers. Nationally, the percentage that sold for above the list price was only 34.6%.
Natural Disasters
Real estate is not just an investment — it’s also a physical piece of property. And in much of California, those properties are at risk of being wiped out by wildfires, earthquakes and other natural disasters. A recent example involved the coastal city of Rancho Palos Verdes, which got hit with massive landslides that led to power outages and threatened more than 100 homes.
The landslides were the result of a couple years of heavy rains, according to experts interviewed by NBC News. In case you haven’t heard of Rancho Palos Verdes, it ranks as the richest retirement town in the United States, according to a GOBankingRates study. Now many of those retirees face the prospect of losing their homes to extreme weather conditions.
Thanks!
According to a Climate Change Risk Index compiled by SafeHome.org, California ranks No. 10 in the country in terms of its exposure to extreme weather events.
High Taxes (But Only in Some Areas)
California ranks as the most expensive state in the country when it comes to state taxes on retail purchases, at 7.25%. In terms of state income taxes, California has the highest upper-income rate at 12.3%, though the lowest earners face a comparatively small 1% rate.
On the bright side, California is not among the most expensive states for property taxes.
High Costs of Living
California ranks as one of the priciest states in the country in average cost of living, according to a GOBankingRates study of U.S. government data. The Golden State ranked third — behind Hawaii and Massachusetts — with a cost-of-living index of 139.7.