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Many people are leaving California because it’s too expensive to live there. Housing prices, taxes, and everyday costs are high. Wildfires and earthquakes add more problems, and things like homelessness, crime, and frustration with state rules make life harder.
Because of these factors, it’s no surprise that California's population dropped to 38.96 million in July 2023, down 75,400 people in one year and more than 500,000 since 2020. These numbers show that more people are choosing to leave California to find a more affordable and stable life somewhere else.
What You’ll Learn
The top five factors that make California a difficult place to live for some
The destructive fires that affected thousands of Californians
The other big factors behind California’s exit trend
The top five factors that make California a difficult place to live for some
The destructive fires that affected thousands of Californians
The other big factors behind California’s exit trend
Summary
The Big Five Reasons Driving Californians to Move Out
High Cost of Living
California is the third most expensive state in the country, with a cost of living index of 144.8, significantly above the national average of 100. This high cost permeates different aspects of life in the Golden State, such as:
Housing: The median home price in California is $775,058, compared to the national average of $416,100.
Gas: California's gas prices average $4.6 per gallon, far above the national average of $3.2 per gallon.
The table below provides a breakdown of other costs related to living in California:
These expenses make it increasingly difficult for middle-class families, young professionals, and retirees to sustain a comfortable lifestyle, and are one of the main reasons to leave California for many of them.
Regional Comparisons Within California
California’s regions differ widely in cost, jobs, and services; residents should compare Bay Area, Southern California, and Central Valley metrics before deciding to move within or out of the state.
Bay Area
The Bay Area, encompassing cities like San Francisco, Oakland, and San Jose, is known for its booming tech industry but also for its exorbitant cost of living.
Housing Costs: The median home price is over $1.3 million.
Cost of Living Index: Around 144.8, significantly higher than the state average.
Challenges: Housing shortages, traffic congestion, and income inequality.
Los Angeles and Southern California
Southern California, including Los Angeles and San Diego, combines urban attractions with mild weather, but it still faces affordability issues.
Housing Costs: The median home price in Los Angeles is $891,000, while in San Diego, it is $940,000.
Traffic Congestion: Among the worst in the nation, with Los Angeles commuters losing over 100 hours annually.
Lifestyle: Offers more diverse cultural amenities but remains expensive compared to national standards.
Central Valley
The Central Valley, including Fresno, Bakersfield, and Stockton, offers more affordable living but comes with its challenges.
Housing Costs: Median home prices hover around $368,000, making it the most affordable region in California.
Job Opportunities: Primarily in the agricultural and logistics industries, with limited tech or white-collar positions.
Challenges: Underfunded infrastructure, air quality issues, and fewer educational and healthcare resources.
Demographic Breakdown
Millennials and Generation Xers make up a large percentage of movers, while wealthier individuals are relocating to no‑income‑tax states such as Texas and Nevada.
The Housing Crisis
California’s housing crisis stems from decades of underbuilding, restrictive zoning laws, and soaring construction costs. Key statistics include:
The state has a shortage of 2.5 million housing units.
Only 25 percent of households can afford a median-priced home.
Impact on Demographics
Young professionals, low-income families, and seniors on fixed incomes are the most affected:
Young Professionals: Many are priced out of homeownership, with 61 percent of millennials citing affordability as the primary reason to leave.
Seniors: Rising property taxes and limited affordable housing options strain retirement savings.
Comparisons with Other States
California’s housing prices are among the highest in the country. The table below, based on the latest data from Zillow, shows how the average housing prices in locations such as Texas and Florida are significantly lower than in the Golden State:
High Taxes and Difficult Business Environment
California's tax rates are among the highest in the nation, impacting both residents and businesses:
Personal Income Tax: The top rate is 13.3 percent, the highest in the U.S.
Corporate Tax: 8.84 percent, compared to 0 percent in states like Texas and Wyoming.
Sales Tax: 7.25 percent base rate, with local additions pushing it over 10 percent in some areas.
Aggressive Policies
California’s progressive policies on taxation, climate change, housing, and labor have contributed to its economic growth and innovation, but it also sparked criticism for their unintended consequences.
Strict policies like AB 5, targeting gig workers, have drawn criticism from freelancers and companies alike.
California’s aggressive climate policies, such as a mandate to reach 100 percent renewable energy by 2045, increase energy costs and impact businesses and consumers alike.
Corporate Exodus
Hundreds of businesses have left California due to regulatory challenges and high taxes:
Tesla: Relocated its headquarters to Texas in 2021.
Oracle and Hewlett-Packard: Moved to Texas, citing a friendlier business environment.
Certain industries have been hit harder by the corporate migration from California:
Technology: Hundreds of businesses have left California, pointing to high taxes and strict rules as the main reasons. Some, like Oracle and Hewlett-Packard, moved to Texas, saying the business climate there is easier.
Manufacturing: Manufacturing companies have faced problems with California’s strict environmental rules and expensive labor. Many of them chose states where it is cheaper to run factories.
Logistics and Distribution: Logistics and shipping businesses have left as well. High fuel prices and tough trucking rules made it difficult for them to stay, so they relocated to states with lower operating costs.
Job Losses and Economic Impact
The departure of businesses has had measurable effects on Californians:
Job Losses: When Tesla moved its headquarters to Texas, hundreds of high-paying tech jobs went with it. In manufacturing, both direct and indirect employment has dropped, leaving fewer opportunities for workers.
Economic Impact: Although California’s economy remains strong and diverse, certain areas are hit harder during downturns. Places like the Bay Area and Southern California lose high-paying jobs when businesses leave. This reduces local spending power and can slow down recovery in those regions.
Tax Revenue Declines: Once companies leave, they no longer pay into state and local budgets. This creates gaps in funding for public services and infrastructure projects, putting more strain on communities.
Ripple Effects
The corporate exodus doesn’t just impact the companies that leave. It also creates a domino effect that affects the broader economy:
Lower Local Spending: When workers lose jobs or move with their employers, less money flows into neighborhoods, small shops, restaurants, and service providers.
Impact on Other Industries: Housing, retail, and transportation also slow down when business centers lose companies and workers.
Weaker Business Ecosystem: Businesses that depend on bigger firms for contracts or steady customers also struggle when those companies leave.
Continued Resilience
Not everyone agrees that the corporate exodus is as damaging as it seems. Some counterpoints include:
New Businesses Are Replacing Those That Leave: California still attracts many startups, especially in fields like clean energy and entertainment. Supporters believe this growth helps offset the companies that move out.
The Exodus Is Limited to Certain Types of Companies: Many of the firms leaving are searching for lower costs. Other businesses remain committed, showing that California still has strong appeal.
California’s Economy Remains Strong: The state is still the largest in the U.S. and a global leader in innovation and overall output, giving it the ability to handle these changes.
Social Challenges
California faces significant social challenges, including homelessness, crime, and income inequality.
Homelessness
The state’s homeless population remains one of the highest in the nation, with many still living without shelter. Key facts:
The State Among the Highest in U.S. Homelessness: In early 2025, about 187,084 people in California were homeless, making up 28 percent of the nation’s homeless population. Homelessness in San Jose alone, the largest city in Silicon Valley, includes about 6,500 unhoused residents.
Growth Slower Than Expected: From 2023 to 2024, homelessness in California rose by just 3 percent, compared to an 18 percent increase nationwide.
Early Signs of Local Improvements: Preliminary 2025 data show notable drops in unsheltered homelessness in places like Los Angeles, with declines reaching 9.5 percent, and overall homeless counts falling by 4 percent in some areas.
Crime Rates
Recent data shows that overall crime has mostly declined, but some issues persist at the local level. Some trends include:
Statewide Crime Rates Fell in 2024: Violent crime dropped by around 6 percent, property crime declined by about 8.4 percent, and homicides also fell by more than 10 percent.
Major Cities Show Strong Declines: San Francisco saw homicides drop 35 percent in the first half of 2025 compared to 2024. The Bay Area’s larger cities also combined for a 14 percent decline in violent crime and a 21 percent drop in property crime.
Big Cities are Leading the Improvements: In the eight most populous California cities, violent crime fell 14.2 percent in 2025. Homicides dropped 24.5 percent and robberies declined 20.4 percent.
Income Inequality
The gap stays wide, and the difference keeps growing:
Gap Increased Over Time: In 1980, the top‑earning families made about seven times more than the lowest‑earning ones, compared to eleven times more in 2023.
Historic High Inequality: Between 2019 and 2023, the income gap grew another 14 percent, with top earners seeing the strongest gains.
Widening Middle Gap Too: In 2023, top‑income households earned three times more than middle‑income households, up from twice as much in 1980.
Natural Disasters
California’s susceptibility to wildfires, droughts, and earthquakes is a critical factor driving relocation. For example, the devastating 2023 wildfire season displaced tens of thousands of residents and caused billions in damage.
These disasters not only impose immediate physical and financial hardships but also lead to long-term psychological stress for residents.
August Complex Fire
California’s largest wildfire began in August 2020 with dozens of small fires that merged into one massive blaze, burning across seven counties.
Burned More Than One Million Acres: This fire raged across Glenn, Mendocino, Lake, Tehama, Trinity, and Shasta counties.
Destroyed Nearly 935 Structures: The fire destroyed homes and buildings.
Lasted Nearly Three Months: Fire crews, including over 2,900 personnel, battled the blaze across rugged terrain and high winds.
Dixie Fire
The fire began in July 2021 and burned nearly a million acres across multiple counties, and became the largest single-source wildfire in the state’s recorded history.
Burned More Than 963,000 Acres: The fire affected Butte, Plumas, Lassen, Shasta, and Tehama counties.
Costliest Fire to Suppress in U.S. History at That Time: It cost an estimated $637 million to contain, making it the most expensive wildfire containment effort ever recorded.
Smoke Impacted Air Quality as Far Away as Utah and Colorado: The wildfire produced massive smoke clouds that degraded air quality across the Western U.S., reaching neighboring states.
Mendocino Complex Fire
The fire began in July 2018 and burned across multiple counties for several months.
Spanned over 459,000 Acres Across Four Counties: The fire combined two separate blazes that burned through Mendocino, Lake, Colusa, and Glenn counties.
Destroyed Buildings: It destroyed around 280 structures and caused more than $257 million in damage.
Burned for Over Three Months Before Full Control: The River Fire was fully contained by August 13, while the Ranch Fire continued burning until full containment was declared on September 18, and the complex was declared inactive by January 4, 2019.
Other Big Factors Behind California’s Exit Trend
Employment Opportunities Elsewhere
Remote work has shifted how Californians think about where they live and work. It allows many to move to states with lower costs while keeping their jobs. In fact, a November PPIC Statewide Survey found that 14 percent of Californians work entirely from home. Meanwhile, 21 percent split their time between home and the workplace.
Many Californians are relocating for employment because of reasons like:
Cost of Living: By moving to states with lower living expenses, such as Texas or Arizona, residents can significantly increase their disposable income.
Job Markets in Other States: Cities like Austin, Texas, and Raleigh, North Carolina, are rapidly becoming tech hubs. These attract remote workers and job seekers alike.
Corporate Relocation: Many companies now support fully remote roles, making proximity to corporate headquarters less critical.
Quality of Life Concerns
Beyond finances, daily life in California wears on many residents. Traffic, pollution, and education challenges can push families to consider other states with stronger infrastructure and cleaner environments.
Traffic Strain: Los Angeles commuters alone now lose about 88 hours annually to traffic delays.
Air Quality Concerns: California cities frequently appear at the top of lists for the worst air quality in the U.S.
Education System Performance: California’s public schools generally rank between 30th and 40th among states for K–12 performance.
Final Thoughts: Moving Elsewhere
Leaving California often comes down to cost, taxes, housing, and everyday challenges like traffic and air quality. From rising living expenses to natural disasters, many residents seek relief elsewhere. States with lower costs, stronger schools, and shorter commutes offer the chance to build stability, comfort, and a better quality of life.
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Frequently Asked Questions (FAQs)
How many companies left California?
Between 2011 and 2021, about 789 California company headquarters, roughly 1.9 percent of more than 47,000, relocated out of state.
What specific zoning laws contribute to the housing crisis in California?
Restrictive zoning often limits most residential land to single-family homes, tightly caps building heights and density, imposes high development fees and parking mandates, and empowers local vetoes. This combines to suppress housing supply and increase costs.
What role does California’s agricultural industry play in the national economy?
California’s agricultural industry tops the nation, generating nearly $60 billion in cash receipts and accounting for about 10 percent to 12.5 percent of U.S. agricultural production, making the Golden State critical to the national food system.
What measures are being taken to address California’s housing shortage?
State actions include sweeping CEQA reform for faster projects, SB 9/140 enabling duplexes and ADUs, SB 79 allowing mid‑rise buildings near transit, SB 4 streamlining faith‑land housing, and a proposed $10 billion affordable‑housing bond.
