Bay Watch – Population Exodus Over?

Bay Watch: A Weekly Look into the Bay Area Economy

January 23, 2024

San Francisco population decline abating

The California Department of Finance released new county-level population data for 2023, and for the first time since 2012, San Francisco saw positive net domestic migration. The city’s housing affordability crisis, paired with a largely permanent hybrid/remote work has contributed to large swaths of young professionals leaving for more affordable cities or states. These data indicate a reversal in a trend that started long before the pandemic. Although foreign immigration levels remained strong in the 2010s, domestic migration turned increasingly negative as high housing prices forced many residents. As losses due to domestic out-migration accelerated during the pandemic, so too did lower births (when accounting for deaths), and near zero foreign immigration.

In the 9-county region, domestic out-migration has been a major problem and contributor to the region’s population loss. If it weren’t for positive foreign immigration and net births, the region would have lost 111,000 people in 2022. In 2023, the region’s net domestic losses nearly halved, while foreign immigration increased by over 7,000 residents, leading to an overall population gain of nearly 15,000 residents. Yet the continued 2023 decline is mostly the result of increasing out-migration with the largest outflow from Santa Clara and Alameda counties.

For San Francisco, rents continue to remain below pre-pandemic levels, an unusual trend among its peers. As domestic in-migration continues on an upward trajectory, it is likely that rental prices consequently rise. As San Francisco, and the region more broadly begins to recoup its pandemic-related population losses, the next needed steps involve lowering the cost of building new housing, changing zoning to allow more and less expensive housing to be built and, hopefully, state funding to offset some costs of housing.