California’s most coveted coastal metros are caught in a paradox: hundreds of thousands of residents are leaving each year, yet home prices in places like the Bay Area keep climbing. The result is a market where fewer people live in the state, but those who remain or arrive with money are bidding up a chronically short supply of homes. I see that tension most clearly in and around San Francisco, where agents now warn of “bubble territory” even as long-time Californians pack moving trucks.
At the state level, the numbers are stark. Analysts tracking the market say the statewide median home price is on track to push toward a record, even as population growth stalls and then reverses. That disconnect is not a mystery to housing economists, who point to a structural shortage of homes, restrictive local rules and a buyer pool that is shrinking in number but not in spending power. The California story is no longer simply about demand, it is about who is left competing for what little is available.
The exodus is real, but so is the demand at the top
Any honest look at California’s housing puzzle has to start with the people leaving. On average, 448,000 people have left the state every year since 2009, with that figure rising to 467,000 each year after the pandemic. Many are middle-income families pushed out by costs, who head for states where a single-family home does not require tech-level salaries. Their departure is a symptom of a market that has priced out the very workers who keep cities running.
Yet the people leaving are not the ones setting prices in San Francisco or coastal Los Angeles. High earners in technology, finance and entertainment, along with global investors, continue to compete for a limited number of homes in these hotspots. As one Bay Area agent put it, he expects 2026 to be “the most feverish market San Francisco has seen since the IPO boom of 2019,” with typical listings in the city sitting on the market for just 18 days, a pattern reflected in recent Bay Area forecasts. I see that as the core contradiction: the exodus is real, but the buyers who remain are wealthy enough to keep bidding prices higher.
A shrinking population does not fix a structural shortage
Residents often ask a version of the same question: If the state’s population is declining, why are housing prices so high. The short answer from researchers is that the market started with such a deep deficit of homes that modest population losses barely dent the imbalance. California spent decades underbuilding, particularly in job-rich coastal counties, so even a smaller population still faces too few units in the places where people most want to live…