California’s Population Loss Isn’t What You Think

When the news broke earlier this year that California’s population contracted, jaws dropped. The census delivered the startling bulletin: the state’s population shrank by 182,000 people. It was the first annual population loss in the state’s history, and an illustration of the migration to secondary Sunbelt states during the pandemic.

But—the population change isn’t really a sign that the state had lost its luster, as The Los Angeles Times suggested, or that the market is no longer a solid apartment investment market. According to experts at GlobeSt.com Multifamily in Los Angeles, there is no cause for concern.

Richard Barkham touched on the topic in his opening keynote speech. His take was international migration that has tapered and caused a contraction in the state’s population.

In fact, Los Angeles, San Francisco and San Jose are gaining population in certain demographic groups. Barkham said that the three major metros in the state are seeing inward migration from highly educated workers. “This fuels a highly productive economy,” he said.

Hessam Nadji also spoke on the supposed California exodus during his US and California Apartments Outlook presentation. He agreed that concerns over population loss in California were inflated. “When you think about the size of California, and you think about losing people to other states, it isn’t nearly as bad as the headlines might suggest,” he said. “From a demographic point of view, California isn’t the growth story. But from an investment standpoint, California looks pretty good. The supply and demand perspective, it is better than the national average.”

Overall, the Western US is actually gaining population faster than any other region, according to Barkham, who added that the fundamentals in both the State of California and in the Western region are strong and support economic growth and apartment investment. “The West doesn’t need to fear migration,” he said.

There are other looming concerns in California that could cause some disruption or deter investment. Those include expanding rent control efforts, legislative issues like the extended eviction moratorium and taxes. Barkham noted that landlords need to do a better job of educating the community to create housing models that work for everyone. “We need to prove the relevance of our business model to the economy,” he said.