Demographic disaster: Newsom’s disastrous policies to blame for California’s population plunge

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Since the beginning of the year, California has faced several serious challenges, putting significant pressure on Governor Gavin Newsom and the Democratic leadership. The state is grappling with a budget deficit, adding to existing concerns such as migrant crisis, high house prices, the collapsing house insurance market, and substantial budget cuts recently announced by Newsom. These issues have led many Californians to question the state’s direction.

A recent survey by the Public Policy Institute of California revealed that Governor Newsom’s approval rating for his education policies has dropped to 60%, his lowest since 2019, and a 19-point decrease from two years prior. Tensions escalated last month when the California Teacher Association, a key ally of Newsome over the years with over 300,000 members, criticized his latest budget proposal, particularly the cuts in education spending. This backlash prompted Newsom to delay these cuts for at least a year.

Furthermore, a wage increase in April forced businesses to raise the prices of goods and services, impacting many Californians. As lawmakers debate allowing higher house insurance premiums to cope with insurers leaving the state, a survey found that rental prices are declining in some areas. This is attributed to residents moving elsewhere in search of better living conditions.

The details

According to the rental platform Zumper, several major cities in California have experienced significant declines in rental prices due to decreasing demand and population losses. In May, Oakland saw the most substantial drop, with rents falling more than 9%. Sacramento also saw a notable decrease, with rents dropping 8% from the previous year. Out of the 11 California cities analyzed by Zumper, seven recorded lower rental prices in May. Meanwhile, some cities outside of California are experiencing rent increases of up to 29%.

Read also: California is giving undocumented migrants even more rights: “The opportunity to succeed”

Population decline

Nationally, rental market trends diverge from those seen in California. According to Zumper’s national rent index, the median price for a one-bedroom home has slightly increased, surpassing $1,500, while two-bedroom homes have climbed to nearly $1,900, marking a rise of more than 1%. In contrast, rent prices in California are falling, largely due to declining urban populations. For example, as residents moved out of San Francisco, the reduced demand for housing led to lower rents.

Analysis of U.S. Census data by RealPage reveals significant population decreases in major Californian metros. The San Francisco-Oakland-Fremont Bay Area experienced a nearly 4% population drop from 2020 to 2023. The Los Angeles-Long Beach-Anaheim area saw about a 3% decline, and the San Jose-Sunnyvale-Santa Clara area’s population decreased by approximately 2.5% over the same period.

Drop in prices is linked to population losses

A spokesperson from Zumper explained that the declining rental prices in some major cities cannot be attributed to low supply, which is generally driving prices up nationwide. Instead, the drop in prices is linked to population losses in these areas, which align with official population figures. With fewer people, there is less demand for housing, which naturally leads to lower prices.

“It seems that it’s less of a supply factor that’s driving rents down in California, which is a trend that we’ve been seeing in a lot of other U.S. markets since there’s been record supply hitting the U.S. this year, but it’s more of a demand [issue],” Crystal Chen, a spokesperson at Zumper, explained to Newsweek.

Several major cities in California have experienced significant declines in rental prices due to decreasing demand and population losses
California Gov. Gavin Newsom, Courtesy of @CAgovernor on X

The jobs crisis fuels mass population losses, future doesn’t look bright

Zumper highlights that the job market in some California cities has not recovered from the setbacks incurred during the COVID-19 pandemic. Specifically, Los Angeles reports 60,000 fewer jobs than its pre-pandemic levels, a deficit attributed to the severe lockdowns that resulted in extensive business closures and layoffs. San Francisco also faces a reduction, with 45,000 fewer jobs than before the pandemic-induced economic downturn.

Moreover, California’s unemployment rate is currently at 5.3 percent, which is 1 percentage point higher than the national average. According to Zumper, this elevated unemployment rate is contributing to the weakening rental market in the state. This struggling job market might cause rental prices in Californian cities to keep decreasing in the future.

“The California economy isn’t doing the best right now and I think in the short term this trend will continue to happen where people are moving out of California since it’s so expensive to live here,” Chen added.

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