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Northern California Housing Boom Spurs Mega-Region Development
May 2, 2022

Northern California Housing Boom Spurs Mega-Region Development

by The CE Shop Team

Huge Migrations to Northern California Have Impacted Housing Prices 

The ability to work from home continues to influence the housing market, and in this case, Northern California. New data from a report by popular universities in California highlights the impact this migration has on local housing markets and politics.  

This comes after a multi-year-long study conducted by UC Davis in conjunction with the University of Southern California and Occidental College.  

The large migration of Bay Area residents is to the Central Valley, primarily the Sacramento region, San Joaquin Valley, and Sierra Foothills.  

Multi-Year Study Findings 

The study tracked the number of residents who moved from the Bay Area. Pre-COVID (2018-2019) around 150,000 San Franciscans left the Bay Area. When the pandemic hit that number doubled, with around 305,000 leaving. 

Researchers wanted to figure out where these residents were moving, and what this mass migration would mean for the cities they moved to. Over time people relocate further and further down highways, or what researchers call transit corridors. These transit corridors directly impact the housing market and over time, decide where new housing developments break ground.  

"For example along Highway 80, people may be living in San Francisco but then move to Vacaville or West Sacramento or continuing down Highway 80," said Bernadette Austin, the Executive Director at the UC Davis for Regional Change told ABC10 in an interview. "People [are] increasingly moving inland, often looking for lower costs of living." 

Along with remote work, affordable housing has been the main driver behind Americans leaving big cities for smaller communities with more space. The study confirmed what we’ve all suspected: that the communities Californians choose to move to are directly correlated with income. 

"Higher-income households [have a] likelihood of moving to a place like Roseville or Folsom or the Sacramento area," said Seva Rodnyansky, Assistant Professor of Urban and Environmental Policy and Occidental College in an interview with ABC10. "Lower-income households (have a) much higher density to move to Stockton or Los Banos or Patterson.” 

San Francisco has one of the highest average individual and household incomes in the country. A family from the Bay Area moving to a city like Sacramento can take advantage of the affordable housing and living expenses. The multi-university study found that communities like San Jose, San Francisco, San Mateo County, Alameda County, and Contra Costa County are all losing residents, not gaining them. This is primarily due to unaffordable housing and living expenses.  

"None of those places are gaining," said Rodnyansky. "They're all losing." 

Northern California Housing Boom Spurs Mega-Region Development

Redfin Findings on Migration and Housing Investment 

To back this research up, in January 2022 Redfin found that the Sacramento area was one of the top relocation destinations in the country. According to the report, the portion of searches from users outside the Sacramento metro was 43.2%, with the top origin of users in California located in San Francisco, and the top origin of users outside of the state located in Seattle, WA. 

With the issue of California's housing inventory being so prevalent, markets like the Central Valley will have to respond with increasing building permits for home housing.  

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A California state audit released in 2022, found that the Sacramento region is still short 153,000 homes.  

Another Redfin report found that investors and banks purchased 56.3% more homes in Sacramento in 2021 than in 2020. For a full rundown of investment in California markets see the table below:  

Metro Area 

Share of Purchased Homes by Investors 

Investor Purchases Year-Over-Year 

Total Value of Homes Purchased by Investors 

Median Sale Price of Homes Purchased by Investors 

Anaheim, CA 

19.8% 

9.9% 

$2,683,359,000 

$1,070,000 

Los Angeles, CA 

18.8% 

25.4% 

$6,747,398,287 

$1,025,000 

Oakland, CA 

12.6% 

16.9% 

$1,362,828,500 

$990,000 

Riverside, CA 

15.6% 

29.9% 

$1,694,137,168 

$522,900 

Sacramento, CA 

19.1% 

45.8% 

$1,181,031,587 

$550,750 

San Diego, CA 

20.3% 

12.4% 

$2,352,469,559 

$820,000 

San Francisco, CA 

18.1% 

11.2% 

$2,100,461,400 

$2,125,000 

San Jose, CA 

12.0% 

5.0% 

$1,246,809,000 

$1,700,000 

Source: Redfin.com 

With increased investment in markets like Sacramento comes optimism that this will result in increased housing. One of the reasons why so many residents are moving to Sacramento is because the area has lots of space for growth.  

Rodnyanksy stated that because of this space, Sacramento and similar inland markets, are in a position to meet this demand and connect these inland areas with the Bay Area to form a giant mega-region in Nothern California through increased housing supply. In fact, there has been a spike in single-family and multi-family construction starts in California already, rising above the construction start rate in 2004. 

The transit corridors that follow Highway 80 and Highway 50 are expected to be built out and create what experts call “mega-regions”. In short, mega-regions are areas of a nation that comprise cities and suburbs that form powerhouse economic contributors through trade, transport, innovation, and quality talent.  

For more on the latest industry news pertaining to California real estate, read these blogs from The CE Shop: 

Disney Is Developing a Residential Community in California 

The Great Resignation’s Effect on California Real Estate 

Finding Your Niche: California’s Vacation Housing Market 

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