Why are so many people leaving California for Arizona? In a word, housing costs.
Okay, that’s two words. But you get the picture: It’s cheaper to own a house in the latter than it is in the former. How much cheaper depends on where in the Grand Canyon State you decide to take up residency.
According to a new migration study from StorageCafe, a nationwide storage space marketplace, nearly half of all recent arrivals to Arizona from California buy houses within the first year at their new locations, often saving $1 million in the process.
While StorageCafe's report found that Texas is the top relocation spot for Californians, Arizona is quickly catching up. More than 630,000 Californians, the equivalent of the entire city of Tucson, have moved to Arizona over the past decade, an average of 173 people per day.
Californians also migrate to Washington, Florida, and Nevada, just not in as large of numbers. The top starting points are the Golden State's Los Angeles, San Diego, and Orange Counties.
The route from Los Angeles County to Maricopa County, where Phoenix is located, is the busiest, with nearly 8,700 Angelenos relocating to the Phoenix area annually. California's San Diego County (5,200 movers), Orange County (4,000), Riverside County (3,300), and San Bernardino County (2,700) were also significant departure points to Maricopa.
But the path from San Mateo County to Phoenix's Maricopa County saved people the most money, according to the study. They went from a location where the average housing price was $1.44 million to one where the average was just $371,400. That’s a difference of $1.07 million, or 288%.
The run from Santa Clara, Calif., to Pima County, Ariz., home of Tucson, paid off even more. The average price in Santa Clara was $1.32 million while it was just $258,300 in Pima, a difference of 410%, or $1.06 million.
Of course, not everyone moving from the state is buying, at least not right away. Nearly half rent for the first year. And they, too, save big money, according to the StorageCafe report.
Moving from Santa Clara to Pima County, for example, a renter can cut his rent by 154%, from an average of $2,719 to $1,071, a monthly-payment difference of $1,648.
Another study released today by the National Association of Realtors (NAR) did not examine specific migration routes, but also found that housing costs was a driving factor in why borrowers chose to relocate.
The main reason was to be closer to family and friends (30%), followed by more home for your money (21%), and lower or more favorable taxes (16%). Another factor influencing people's decisions to move was the inability to buy a home where they were (8%).
Why did they go where they went? According to the NAR survey, 42% wanted outdoor space and 31% needed more living space. About 16% said they were after a shorter commute to work. One in ten, however, traded in for less square footage.
While job location did not play a role in where 43% of the movers chose to buy, it did influence 37% who work at least some of their time in an office. But only 2% said their moves were because their employers said they had to return to their offices.
For its 2024 Migration Trends report, NAR polled 1,000 members who had represented someone who bought a home this year. It’s the first time the trade group has undertaken such a study. It includes regional figures as well as national figures.
Regionally, for example, NAR's report found 46% of all movers headed south, while 25% did the Horace Greely thing and went west. Only 11% moved to the Northeast. Slightly more (18%) picked up and went to the Midwest. A tiny 1% left the country entirely.
This squares with Census Bureau numbers, which indicate that Florida and Texas are the top two states for in-migration. Florida landed 322,900 new residents in 2023, Census reports, while Texas netted 315,300. The next closest state in terms of net migration is North Carolina, which took in 126,700 new inhabitants.
NAR also found most people moved out of the South and the West, nearly twice as many as those who left the Midwest and the Northeast.
A whopping 94% of the movers said their changes of address were permanent. But 18% – nearly one in five – returned to an area where they had previously resided.
Besides less expensive housing, taxes play an important role in the decision to leave the Golden State, where the individual income tax rate is the highest in the country at 13.3% and the corporate rate is 8.8%. In Arizona, on the other hand, the individual rate is 2.5%, a fifth of California’s, and the corporate rate is 4.9%, just about half that in California.
