Aug 24, 2025
California remains an economic powerhouse, but rising living costs — particularly housing — are prompting more residents to consider leaving.
"There's a lot of evidence that that's driven by the high cost of living and especially the high cost of housing," Eric McGhee, senior fellow and policy director of the Public Policy Institute of California (PPIC), told KMPH Fox 26.
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When remote work became widespread during the pandemic, many high-income earners gained the flexibility to move to states with lower costs and friendlier tax codes — all while continuing to earn California-level salaries.
The top destinations for these movers have something else in common: no state income tax.
Texas, Florida and Washington have emerged as popular relocation magnets for affluent remote workers looking to stretch their income further — especially as inflation and home prices remain high.
So what’s driving people out of California? Research points to three primary factors behind the state’s ongoing outbound migration.
1. Housing costs and the price of staying
Housing remains a leading pressure point. In July 2025, California’s median home price reached $828,900, according to Redfin — more than double the median in Texas ($352,700) and significantly higher than in Arizona ($439,200) and Nevada ($465,200).
For families facing affordability challenges, the numbers alone make a compelling case to relocate.
California also levies a top state income tax rate of 13.3% on incomes over $1 million — the highest in the country.
By contrast, states like Texas and Nevada impose no state income tax, making them particularly attractive to high earners.
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2. Political climate and lifestyle fit
Politics may not be the primary reason people move, but it increasingly factors into relocation decisions.
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According to the Public Policy Institute of California (PPIC), residents who left the state between 2020 and 2024 were more likely to identify as Republican, while those moving in tended to lean Democratic.
Even when finances or family are the main drivers, a state’s political climate can influence where someone chooses to settle — especially when other factors are comparable.
3. Remote work changed the game
Before 2020, high housing costs kept many Californians tied to urban job centers. Since the pandemic ushered in remote and hybrid work, more residents have taken the opportunity to relocate.
According to data from the Public Policy Institute of California, outbound migration among high earners has tilted heavily toward neighboring states like Arizona, Idaho, Nevada, and Oregon which offer more affordable housing markets.
Although this trend has cooled slightly as employers call workers back to the office, it’s unlikely to disappear anytime soon.
The reasons behind California’s outmigration aren’t all that different from those in other states — cost of living, quality of life, political climate.
In California, those factors are amplified. Housing prices remain among the highest in the country, taxes hit top earners hard, and post-pandemic flexibility has made relocation easier.
For anyone still on the fence, the advice is simple: run the numbers yourself before making a decision.
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Monique Danao is a highly experienced journalist, editor and copywriter with 8 years of expertise in finance and technology. Her work has been featured in leading publications such as Forbes, Decential, 99Designs, Fast Capital 360, Social Media Today and the South China Morning Post.
