Heading for the Exits

The 1978 thriller is about a terrorist threat
to the San Andreas fault.

Economists Arthur Laffer and Stephen Moore predict an acceleration of out-migration from high-tax blue states: [bold added]

In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states. This migration has been happening for years. But the Trump tax bill’s cap on the deduction for state and local taxes, or SALT, will accelerate the pace. The losers will be most of the Northeast, along with California. The winners are likely to be states like Arizona, Nevada, Tennessee, Texas and Utah.

We have waved farewell to dozens of friends and co-workers who have cashed out of their Bay Area homes and moved to warmer climes where their retirement dollars go much farther. The "goodbye, California" phenomenon has become marked.

As the writers note, the Tax Cut and Jobs Act will increase the exodus:

Now that the SALT subsidy is gone, how bad will it get for high-tax blue states? Very bad. We estimate, based on the historical relationship between tax rates and migration patterns, that the pace of out-migration from California and New York will soon double—with about 800,000 net out-migrants each of the next three years. Our calculations suggest that Connecticut, New Jersey and Minnesota combined will hemorrhage another roughly 500,000 people in the same period.

The slight silver lining is that people who want to buy a home should see more supply as emigrants list their properties. Also, the TCJA drastically reduces the income tax subsidy on interest and property taxes for high-end homes, leading to less demand.

More supply and less demand? Even non-economists can predict that today's Chronicle headline will not be repeated much longer: Bay Area home prices soar to new record