Get CP&DR
  • Become a subscriber
    Get access to all CP&DR premium articles including the past article archives.
Connect with CP&DR

facebook twitter

Follow us on Facebook and Twitter

Articles by Category
Solimar Research

Inland Growth Exceeds Coastal Growth At Last

William Fulton on
Apr 21, 2019

The Census Bureau’s annual county population estimates – released last week – allow us to take a look at California’s population growth patterns since the last Census in 2010. And these estimates reveal two astounding facts.

First, annual population growth has taken a huge tumble in California since 2015 – dropping by more than half.

And second, during this same period population growth in inland metropolitan areas has finally exceeded population growth in coastal metropolitan areas – not just in percentage terms, but in absolute terms as well.

It’s a sea change in California population patterns, most likely brought on by the gigantic increase in home prices, especially in coastal areas, over the past few years.

Let’s look at California’s overall numbers first. For decades, the state’s population growth has hovered at around 300,000 to 400,000 persons per year. Obviously, the percentage increase has declined over time – it’s been at around 1 percent for some time – but the raw number has stayed more or less the same. In the past couple of decades, the components of this growth have also been more or less than same – significant natural increase, big international immigration, and a modest decline in net domestic migration (meaning more people were leaving California for other states than the reverse).

This pattern held until 2015. But since then we’ve seen a really significant change.

First, overall population growth has dropped significantly – from around 320,000 people per year to only about 150,000, almost certainly the smallest population increase since the late 1970s, when California population growth stalled completely.

California Population Growth, 2010-2018

Why is this happening? As the chart below shows, the answer is pretty simple. International migration is steady. Natural increase is declining significantly. But the real difference is a spectacular increase in net out-migration to other states since 2015 – growing from approximately 50,000 per year to about 150,000 per year. (By contrast, as the Census Bureau noted in its press release, the counties with the biggest population increases last year were in Texas, Arizona, and Nevada – all of which are almost certainly capturing lots of those Californians.)

Components of California Population Growth, 2010-2018

That’s astounding enough. But even more astounding is where this drop is coming from: Metropolitan coastal California.

For decades, inland California has been growing faster than coastal California in percentage terms. But in the last two years, for the first time, inland California has been growing faster than coastal California in raw numbers as well.

And that’s not because inland California is growing faster than before. It’s because the population growth in coastal California has dropped spectacularly in the last three years – not just in Los Angeles, as I reported last year, but in the Bay Area and other coastal metropolitan areas as well.

The chart below depicts what I regard as metropolitan areas both inland and along the coast. Since 2010, population growth in the inland areas – the Inland Empire, the eight Central Valley counties, and the Sacramento region – has been constant at about 100,000 persons per year.

 

Coastal and Inland Metropolitan Population Growth, 2010-2018

 

But population growth in coastal metropolitan areas – the Bay Area; Ventura, Los Angeles, and Orange Counties, and San Diego – dropped from 200,000 in 2015 to only 30,000 in 2018.

That’s the biggest, most dramatic reversal between coastal and inland California that I’ve ever seen.

And it’s clearly tied to home prices. The drop in coastal population growth coincides with that moment in late 2014 or early 2015 when the median statewide home price crossed the $500,000 threshold. Median home price was $500,000 once before – during the housing boom of the mid-2000s – but that growth was fueled by subprime mortgages. In those days, you could buy way past your qualifying income to get into a house. Today you can’t.

And it’s not that inland areas are getting cheaper relative to coastal areas. For example, the average single-family detached home price in Riverside County has remained consistently half of that in Orange County for many years, according to the California Association of Realtors.

It’s just that everything’s going up. The average single-family home price in Riverside County now exceeds $400,000 – about what a typical California family can afford.

It’s hard to know whether anything might change this situation. Gov. Gavin Newsom has made a commitment to build 3.5 million houses by 2025 – an almost impossible goal to reach. Sen. Scott Wiener and other legislators are aggressively pursuing legislation to make it harder for cities – read: coastal cities – to block new housing projects. But for now, the trend is clear: the growth in California’s population is heading inland – and beyond, to Phoenix and Las Vegas.

0 Comments Posted Leave a comment

 

Add a comment:

Sign in to comment on this entry. (Required)