Americans Move Around but Taxes are Probably Not the Primary or Sole Reason for Moving: Despite That, Believing It Plays Well in a Conservative Mindset: Cause and Effect are Often Complicated
American Eclectic
June 15, 2023
Fox News carried a story in 2016 about Californians moving to Texas. Using IRS data, they cited that over 250,000 California residents left the state with 33,626 moving to Texas, about 13.5 percent of the total. Nathan Nascimento, the director of state initiatives at an organization called Freedom Partners stated:
California’s taxes and regulations are crushing businesses, and there are more opportunities in Texas for people to start new companies, get good jobs, and create better lives for their families. When tax and regulatory climates are bad, people will move to better economic environments—this phenomenon isn’t a mystery, it’s how marketplaces work. Not only should other state governments take note of this, but so should the federal government.
Freedom Partners is partially funded by the Koch Brothers and is a conservative organization which states:
[Our] principal goal is to educate the public about the critical role played by free markets in achieving economic prosperity, societal well-being, and personal happiness. We seek to build support for a fiscally responsible government, and policies that support entrepreneurship, spur job creation, and increase opportunities for all. We focus primarily on four issue areas: health care reform, federal spending, energy policy, and cronyism.
The Fox News article forgot to mention anything about Freedom Partners but putting it in perspective helps one understand that a statement by their spokesman needs to be taken with a grain of salt.
Fox Business ran a story in April 2021 with, again, the message that Californians were leaving the state because of high taxes and house prices. This time a segment featured a Dallas real estate agent, Rogers Healy, who stated on Mornings With Maria, “We’ve never seen something like this….We have lines out the door for people seeing houses all across all sorts of price ranges.” The theme as with the Nathan Nascimento segment was that high taxes, perhaps associated with the high cost of living were driving Californians to leave the state. No doubt Healy as a real estate agent was hoping to cash in on commissions from this exodus.
Fox Business carried a story on Varney & Co. in April 2022, featuring Caitlyn Jenner in which she complained about high taxes in California, with her stating, “We’ve lost 18,000 companies. We lost a congressional seat because we have less people living here.” Then she praised Florida and its governor (Ron DeSantis, “[Florida has] a commonsense governor…everybody wants to go there.” The headline across the bottom of the screen as she spoke read, “Americans flee California for Low-Tax Florida.” A sentiment with a message geared to support the same message in 2016 with Nathan Nascimento.
Jenner may have wanted to use her brief appearance to throw in a few good words for DeSantis, but the population growth has little to do with him as governor and extends back decades. A 209 percent increase in the state’s population with 80 percent of that increase from people moving there since 1970, well before DeSantis became governor in 2019 transcends whatever Jenner felt the need to say about DeSantis. Florida with its good climate is often stated as the reason to move there, but, interestingly, in looking at the 20 reasons in the Census Bureau 2020 data on why people move, change of climate is far down the list at number 18.
Three Fox News and Fox Business short-burst segments addressing the same message: high taxes in California are forcing residents to flee/leave/exodus the state. Obviously, the broader message is that low tax states are better. As Lenin might have said (it is often attributed to him), “They have voted with their feet.” This was, apparently, a reference to Russian soldiers abandoning the front lines during the First World War. A broader way of looking at the term is that someone shows their disapproval for a place by leaving it.
Well, sounds simple enough, a direct relationship: Leave a state because of high taxes. The problem is understanding migration: People move in this country for a variety of reasons and the simplicity of anything on Fox News or Fox Business is simply ideological-coated storytelling. I think it can be assumed that Fox News or Fox Business are not done milking that cow and we can assume there will be more short-burst segments in the future with the same theme. It, obviously, plays well with a Fox audience—tell them what they want to hear to reinforce whatever stereotype thinking they have—particularly of California (unless, I guess, you are a California resident watching Fox News), why muddy the waters with a picture that is a lot more nuanced than a real estate agent seeing an opportunity to get some more clients and collect more commissions.
Admittedly, taxes play a role, along with a host of other issues in people deciding to move. United Van Lines looked at people moving and had New Jersey high on their list where people were leaving with high taxes cited as one reason for their departure. But Kansas, a state with a lower cost-of-living than New Jersey and lower taxes, has people leaving. Kansas jobs are cited as paying less so leaving to make more money elsewhere matters. Louisiana, a state also with low taxes and a low cost-of-living has people leaving because they are in search of better jobs elsewhere too. Indiana lost people in 2021 and the reason seems to be that states nearby pay better. Indiana is a good Republican state so do not expect to see the loss of population addressed on Fox Business. I’m sure, however, Fox Business stories on Kansas and Louisiana are planned. Another moving company, northAmerica noted in its 2021 report that there was a 20 percent jump in people moving in contrast with 2020. Taxes are cited as a reason for moving but so was the desire for a new job opportunity or to be closer to family. The report noted that the ability to work remotely increases the opportunity to move, “Remote work drove an additional 14-23 million Americans to move 6 months after the pandemic began, and that likely contributed to the 20% overall uptick of movers in 2021.”
Based on the 2020 Census data, some 15 percent of people moving say they want a better or larger house or apartment. This might address California where house prices are beyond the roof. The average (assume median) home price in California is $760,800 (some sites put it above $800,000), which may explain why it has the second lowest homeownership rate in the country. Utah has an average home price of $544,868, which can seem high, but the average size of the house is 50 percent more than the national average.
The impact of Covid on moving is indicating that people moved from a high-density population area to a less populated area. No doubt it will take several years to see if this is a long-term trend that has an impact, perhaps on small communities and maybe exurbia (that area beyond a Metropolitan area but not quite seen as rural). In 2020, 18 percent who moved cited Covid as a reason to pack their bags and leave, but by 2021 only 9 percent cited Covid as a reason to move. That would indicate that Covid’s impact on moving was short-term but assuming there will be mutations (if that is the correct word) for Covid, such as the Omicron Variant and other mutations to come, this virus might have some long-term impact on moving patterns.
With the Federal Open Market Committee (FOMC) raising the Federal Funds rate, as a way of driving up interest rates on everything else, to fight inflation, mortgage rates are affected, which impacts decisions on when to sell your house and when you can afford to move.
Economic patterns can affect moving: The Great Recession (around 2008) impacted moving patterns. As one report noted:
What we found was that interstate moves declined — probably because people didn’t have a lot of resources to move and because everywhere else was hit hard — and that local moves increased.
Saying there might be a recession and trying to grasp how severe that recession might be or when recovery out of a recession might occur are all different issues, inter-related but still examined separately.
Recessions might have an impact on housing markets by reducing the value of your home so you would have less to put down on another home, so a desire to move can temporarily go out the window. Zillow Research looked at the Great Recession and concluded, “Recessions do have an impact on the housing market, but the widespread collapse of home values during the Great Recession is an outlier.” Bear in mind Zillow Research is associated with Zillow and their business is selling homes. A short recession and one not as severe as the Great Recession might not affect home values. The 2001 recession lasted eight months, so was seen as mild. But even after it ended in November of 2001, the unemployment rate continued to climb reaching 6 percent by June of 2003. Unemployment can have an impact on decisions to pack up and move.
If a recession does not affect the value of your home, the interest rate increases pushed by the FOMC rate hikes should push mortgage rates up and that will, most likely, effect house prices. You decide to move but the equity out of your house can be less than you had originally thought, suddenly you begin to wonder if you can afford to move. If the unemployment rate goes up, which is what appears needed to bring down inflation, then how will that effect your pool of potential buyers interested in your home? Moving becomes something to put off for another time.
The availability of affordable homes is another factor to consider in moving and buying a home as opposed to renting an apartment. One report noted the shortage of affordable homes as this summer heats up. The report pointed to some 320,000 homes not available at $256,000 or less, which is the maximum home price needed for a $75,000 income. Places such as El Paso, Texas, Boise, Idaho, and Spokane, Washington are seen as having the greatest problems in available homes for middle class incomes.
By the time you get to this part of this essay, what should stand out is that silly Fox News or Fox Business stories on people moving because the state they live in is a high tax state are simple, foolish, and useless. These stories/news segments are not designed to educate or enlighten anyone, they are done with the intention of supporting a position that state taxes need to be cut. How cutting California taxes, all by itself, will reduce the median price of a California home is not clear at all. But, then again, Fox News is not really interested in that, just throw up a simple, superficial news story, have Caitlyn Jenner say something without much thought behind it, and have an engaged Fox audience eat it up.
More broadly, ideological ways of looking at the world around you—in this case using some superficial way of understanding what it means to be conservative-support for lower taxes, will not help you grasp issues with many moving parts.
Ideology, whether liberal or conservative, are often abstract and play well as long as reference to real life situations are kept to a minimum and are often used to simply reinforce a belief or outrage. Using ideology as a way of applying it to understand a wide cross section of events, circumstances, and situations is difficult to do. A belief or position that supports a policy of tax cuts is the norm for people who like to call themselves conservative. Based on the above Fox News and Fox Business stories, the point is to say California needs tax cuts. Is it assumed that if California cuts taxes that less people will leave? How will home prices come down because taxes are cut? A poll conducted by the University of California, Berkeley found that 71 percent said housing costs were a reason to leave the state. Nothing in these foolish Fox News/Fox Business stories addressed this issue. Will the cost-of-living in California become bearable with tax cuts? In one ranking, four of the ten most expensive American cities to live in are in California. How much should taxes be cut and which ones exactly? How would public services be affected? Since Ronald Reagan began his term as governor of California in 1967, there have been eight governors, four Republicans and four Democrats. To get to the point where a median priced California home is $800,000 has taken years of accumulated price increases. Fox News may want to create the impression that the financial woes of living in California can be easily pinned on Democrats and associate them with high taxes, but it is a lot more complicated than a simple blame game. Do you want to blame one of the four Republican governors or is that too inconvenient to conservative thinking?
Ideologically motivated Fox News or Fox Business stories will not help their viewers with critical reasoning. Caitlyn Jenner does not impress me as someone who spends a lot of time thinking deeply about basically anything. No doubt any appearances by her on a quick Fox News segment will consist of some outrage in sound bite format. I doubt we can expect some extended thoughtful presentation from her on the state of the California economy.
Notes
Deane Biermeier and Samantha Allen, “10 States People Are Fleeing And 10 States People Are Moving To,” Forbes Home (April 27, 2022):https:// www.forbes.com/home-improvement/features/states-move-to-from/
Rajeev Dhir, “The 10 Most Expensive Cities in the U.S.,” Investopedia (June 1, 2021):https://www.investopedia.com/articles/personal-finance/080916/top-10-most-expensive-cities-us.asp
Stephanie Giang-Paunon, “Caitlyn Jenner slams high-tax California, praises Florida: ‘I would leave,’” Fox Business (April 6, 2022):https:// www.foxbusiness.com/politics/caitlyn-jenner-california-florida-high-tax
Erika Giovanetti, “Here’s where Americans moved to-and away from-in 2021,” Fox Business (February 2, 2022):https:// www.foxbusiness.com/personal-finance/american-moving-trends-2021-study
Jamie Hayes, “The States Americans Are Leaving (And Which Ones They’re Going To),” Factinate (No date, we can assume sometime in 2021 since the article refers to a 2020 report by United Van Lines): https:// www.factinate.com/editorial/the-states-americans-leaving/
“How Previous Recessions Affected Home Values,” Zillow (May 28, 2020);https:// www.zillow.com/resources/stay-informed/previous-recessions-affect-home-values/
Kevin Masmela and Christine Dulion, “Why are people leaving California for more affordable lifestyles?” The Mil Source (September 14, 2021):https://themilsource.com/2021/09/14/why-are-people-leaving-california-for-more-affordable-lifestyles/
Median Home Prices by State 2022, World Population Review: https:// worldpopulationreview.com/state-rankings/median-home-price-by-state
Christelle Nahas, “Great Recession saw more Americans move locally,” UCLA Newsroom (August 1, 2013):https:// newsroom.ucla.edu/stories/great-recession-saw-more-americans-247724
Catie Perry, “Exodus from California, high-tax states driving unprecedented real estate boom,” Fox Business (April 27, 2021): https:// www.foxbusiness.com/real-estate/exodus-california-high-tax-states-driving-real-estate-boom
Jennifer Sor, “Housing has become so unaffordable that over 75% of homes on the market are too expensive for middle-income buyers,” Markets Insider (June 12, 2023): https://markets.businessinsider.com/news/commodities/housing-affordability-crisis-shortage-inventory-high-mortgage-rates-middle-class-2023-6
Matthew Stafford, “US housing market faces unaffordability crisis after coronavirus,” The Mil Source (January 12, 2021):https://themilsource.com/2021/01/12/us-housing-market-faces-unaffordability-crisis-after-coronavirus/
2021 US Migration Report, northAmerican Moving Services (2022):https:// www.northamerican.com/migration-map#:~:text=Key%20Takeaways%20from%20the%202021%20Migration%20Report%201,million%20Americans%20to%20relocate%20in%202021%20More%20items