Californians are fleeing to Mexico to escape outrageous housing prices

February 16, 2022, 8:52 PM UTC

Southern California might be a great place to live, but the pandemic and an expensive housing market have pushed many residents to move—like, all the way to Mexico.

Year-over-year home prices in the Los Angeles metro area were up 15.2% in 2021, while prices in Southern California overall went up 15.4%, according to a report by Norada Real Estate Investments. Shockingly, almost half of America’s “million-dollar cities,” where the average price of a home is at least $1 million, are in California, according to a Zillow study published today. The Los Angeles metro area has 57 million-dollar cities, and the state of California has 44% of all million-dollar cities nationwide. 

For residents in these cities, affordable housing is increasingly found over the southern border.

“Since the beginning of the pandemic, the number of buyers and people looking to rent a house in Tijuana has increased considerably,” Fermín Kim King, president of the Real Estate Association of Tijuana, recently told reporters from Border Report

But Kim King also pointed out how the influx of new residents has made affordable housing less available for locals. “There’s a tremendous shortage of housing over there,” he said.

The new arrivals are mostly U.S. citizens with U.S. salaries, and Kim King notes how their interest in Mexico’s housing market has driven up prices for everyone.

“We are seeing that rent prices have gone up by 30% as low- and mid-range housing is now in high demand by Americans coming here,” Kim King said.

Out-of-town homebuyers jacking up prices in hot housing markets is nothing new, but in today’s highly competitive and expensive real estate market, newcomers are starting to push locals out of the game altogether.

People relocating and moving to new towns have almost 30% more to spend on a home than the average budget for locals, according to a recent study by Redfin, a real estate brokerage firm. The study analyzed 49 U.S. cities popular among relocators and found that in 42 of them, newcomers had larger budgets and much better prospects on the housing front.

Ex-Californians disrupting housing prices and markets in Mexico are doing the same in smaller U.S. cities as well, as people are fleeing the Golden State en masse to head toward more affordable cities, often in states with more forgiving tax regimens.

“We’re seeing a lot of out-of-state transplants, mostly from states like California that have an income tax,” said Redfin agent Hope Geyer in a company press release. Geyer works out of Nashville, which is located in a state, Tennessee, which has no income tax.

In Mexico and cities like Nashville, Atlanta, and Miami, wealthy newcomers are driving up prices to the point that most locals simply cannot compete anymore and are deciding to continue renting indefinitely.

“People moving from the West Coast will pay way over asking price without batting an eye,” Geyer said. “In their eyes, they’re getting a deal. It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one.”

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