Home prices in California are down 2% year-over-year and roughly unchanged since July 2022.

By Wolf Richter for WOLF STREET.

California’s population declined again in the 12 months through July 1, 2025, to 39.36 million people, after two years of growth, and is 200,400 people below the “estimate base” of April 1, 2020 (39.56 million), according to the Census Bureau annual data on the US population.

That put California’s population where it had been in about 2017 – essentially eight years of no population growth.

The decline was caused by a plunge in Net International Migration (immigrants minus emigrants). NIM was still positive but much lower than in the prior three years. Net domestic migration continued to be negative, but at a slightly lower rate (more people moving to other states than moving from other states to California). And natural growth (births minus deaths) edged down a hair.

Net International Migration plunged by two-thirds under Trump’s immigration policies. In the 12 months through July 1, 2025, NIM was only 109,300 people, meaning that 109,300 more people immigrated from other countries to California than emigrated from California to other countries.

NIM plunged in every state in the US during this 12-month period, and has plunged in the US overall. While NIM was low for California, it was still the third highest of any state in the US behind Florida (178,700) and Texas (167,500).

But this period through July 1, 2025, still included six months of Biden’s immigration policies. The effects of a full year of Trump’s immigration policies will be reflected in the 12-month period through July 1, 2026 (data to be released in December 2026).

The Census Bureau expects NIM to decline further and projected for the US overall that it could turn “negative” if current trends continue.

Net Domestic Migration in the period through July 1, 2025, was the least negative since the lockdown: 229,100 more people left California to other states than arrived from other states.

California has always been a “gateway” state, with many people arriving from other countries, while established people leave to other states, creating a constant flow where California acts as a gateway. When California’s population was still growing, high Net International Migration compensated for Net Domestic Migration, with natural growth doing the rest.

Natural growth (births minus deaths) inched down to 109,700, a hair below the prior year, a hair above the two years before – so roughly stable, but not enough to compensate for the massive plunge in NIM.

But California’s huge population is largely packed into massive urban areas at the southern tip of California and in the Bay Area, which are immensely congested, with horrendous traffic, forever urban sprawl, and for many people infernal commutes. The government wants a larger population in order to collect more taxes to pay for its promises and pet projects, but the people that are already here?

Over the five years from the “estimate base” on April 1, 2020, during which California’s population declined by 200,394 people, Texas added 2.56 million people and Florida added 1.92 million people.

Most Populous States
		Estimate Base April 2020	1-Jul-2024	1-Jul-2025	YoY	since 2020 Estimate Base
1	CA	39,555,703	39,364,774	39,355,309	-9,465	-200,394
2	TX	29,149,498	31,318,578	31,709,821	391,243	2,560,323
3	FL	21,538,207	23,265,838	23,462,518	196,680	1,924,311
4	NY	20,203,696	20,001,419	20,002,427	1,008	-201,269
5	PA	13,002,753	13,045,848	13,059,432	13,584	56,679
6	IL	12,821,741	12,703,033	12,719,141	16,108	-102,600
7	OH	11,799,445	11,860,621	11,900,510	39,889	101,065
8	GA	10,713,861	11,204,208	11,302,748	98,540	588,887
9	NC	10,441,392	11,052,061	11,197,968	145,907	756,576
10	MI	10,079,362	10,099,962	10,127,884	27,922	48,522

The “Housing Shortage” has been a huge topic in California for years, and a series of state laws have been passed to deal with it, to overcome local opposition to new construction, and especially to increased density. So kudos. Bring on the supply, by all means.

There is obviously no actual shortage of housing; but there is a huge shortage of housing that people can comfortably afford. That’s the result of the price surge that lasted for years, and a separately timed rent explosion. Home prices and rents are too high – that’s the problem.

But a declining or stagnant population combined with newly built supply provide the market with the tools to deal with the price-and-rent issue.

The total housing stock in California grew by 125,300 housing units (70,700 single-family homes including ADUs and 53,500 multifamily units), to 14.95 million housing units by January 1, 2025, according to the latest report by the California Department of Finance (the next report will be released in May).

In the prior year, the growth in housing units was similar, according to the Department of Finance.

New private housing units authorized by building permits have been running between 100,000 to 120,000 per year over the past 10 years through 2025. So if these new-builds are occupied on average by 2.3 people per unit, they would create housing for about 253,000 people per year, or for about 2 million people over those eight years during which the population didn’t grow, despite the ups and downs in between.

Overall home prices in California are down by 2% year-over-year and nearly flat with July 2022, seasonally adjusted, according to the ZHVI – with big declines in some places, such as Oakland, and firmer markets in other places.

But from 2012 to 2022, in that decade, home prices exploded by 174%. That’s the problem. And a stagnant or declining population along with new supply can address that problem further:

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WOLF STREET FEATURE: Daily Market Insights by Chris Vermeulen, Chief Investment Officer, TheTechnicalTraders.com.