Even before the ongoing global pandemic, people had begun leaving California, hoping for fewer financial challenges in various new locations. That being said, the COVID pandemic has increased the number of California’s, leaving the state even more significantly.
The State of California Department of Finance released a report that declared that California’s growth rate is the lowest since 1900, landing at a rate of only 0.05%. Many people that have chosen to leave list high taxes, the cost of living, and even politics as the various reasons for their departure.
Overall, the most common trend discussed with those who have chosen to leave the state is complaints regarding costs of living. It’s no secret that many people are attracted to an ocean view and the perfect 70-degree year-round weather that California offers. The ability to surf and ski on the same day is an experience most states can’t provide.
San Diego is experiencing increased investment in technology companies, with many tech organizations increasing their purchase of Commercial Office Space. In 2020, San Diego residential real estate experienced the third-highest appreciation rate in the country, with a forecast of similar appreciation in 2021.
A perfect example of this is Apple’s recent announcement of their intention to bring thousands of new jobs to San Diego. ABC News San Diego specifies “The workforce increase in San Diego and several other locations is part of Apple’s plan to invest $430 billion and add 20,000 new jobs across the United States over the next five years.”
Following the onset of the COVID pandemic, many predicted that our country would face the greatest recession since the Great Recession in 2008. While the pandemic has played a challenging role in the lives of many, the real estate market failed to follow the trends that many predicted, given the similarities to the last recession.
When reviewing the cost of living by state, it’s not difficult to see that California is one of the highest on the map. It clocks in at nearly 50% above the national average. This not only has an effect on the finances of individuals and families but on businesses as well. By these standards, it’s simpler to see why people are leaving the Golden State for more affordable lifestyles.
Another main factor that plays a role more heavily in the decision-making process of business owners is the status of California state taxes. Differences in income tax rates, franchise taxes, payroll taxes, etc. all play a significant role in the affordability of running a business in California.
As individuals, investors, and business owners decide to either build or expand business ventures within the state of California, there are considerations to be had about the affordability of it long term. While there are significant challenges associated with living in California, the real estate market continues to flourish competitively as it serves those dreaming of sunnier skies.
Our Innovative Capital team supports commercial deals across the country, including but not limited to the state of California. Our unique team of private investors specializes directly in deals within California. If you’re looking for support identifying and solidifying a lending solution for your next project, contact our team today.