(The Center Square) – California’s wealthiest residents sought to purchase luxury homes in other states during the COVID-19 pandemic, if not leave the state entirely.
(Article by Cole Lauterbach republished from TheCenterSquare.com)
A report from realty company Coldwell Banker suggests many of their California-based home sellers saw their wealthy clients selling and heading for more tax friendly climates that may have fewer COVID-19 restrictions.
The annual review, released in late February, examined the buying and migration patterns of the country’s wealthiest people, with homes selling for as much as $75 million.
Real estate agents in California echoed those elsewhere in the U.S. that buyers are looking for more space and amenities such as pools and home offices. The difference, they said, is their clients are buying elsewhere.
“The exodus is unlike anything I’ve seen in my 28 years selling San Francisco real estate, with many younger people leaving for financial reasons, and affluent residents just feeling that it was time for a new life outside of the city,” said Joel Goodrich of Coldwell Banker Realty in San Francisco.
Goodrich said residents who stayed in the state left for Napa, Sacramento and Lake Tahoe. The wealthy that left the state went to Washington, Nevada, Colorado, Florida and Arizona.
California’s current $75 billion budget surplus is partly attributed to the state’s reliance on high earners via its progressive income tax, which tops out at a marginal rate of 12.3%. Many of the state’s wealthy were able to work from home.
In Sacramento, a real estate agent said she had “more sellers than ever before leaving California for states like Texas, Tennessee and Florida.”
The story was the same in Los Angeles. The analysis said inventory growth outpacing sales suggests the area’s wealthy were “flocking to other states with lower tax burdens,” citing Texas, Nevada, Arizona, Washington and Colorado.
One real estate agent from the area said the Phoenix metropolitan area is a big beneficiary of the “California exodus,” with more than half of her luxury buyers being from the Golden State.
“We saw a significant uptick of buyers from the San Francisco Bay Area in 2020 and also from Seattle,” said Debbie Frazelle, an agent in the affluent Paradise Valley area. “Taxes are a big driver, but so are restrictive COVID-19 mandates.”
Population loss is an ongoing trend in California. The 2020 U.S. Census revealed the state’s out-migration and low birth rates caused it to lose a member of Congress for the first time in the state’s history. A report from the California Department of Finance estimated the state lost more than 182,000 people in 2020.