Is the Migration Out of CA to Oregon Good or Bad For Wine Sales?

For quite some time, California has lived with a negative migration issue. That is, more people are moving out of California than are moving in. I wonder what this means for wine sales in the Golden State.

Between 2007 and 2016, a net 1,000,000 more people have moved out of California than have moved in. The primary reason is the ongoing housing crisis. There is simply a deficit of housing in California and this is causing housing prices to rise tremendously.

On the face of it, this wouldn’t bode well for California’s wine industry. Fewer people in the state means fewer people to visit wineries and buy the wine, let alone buy wines on the predominantly California-heavy wine lists in restaurants and stocks on retail shelves in the state. But consider who is leaving and who is arriving.

A report released by California’s Legislative Analysts Office showed that people leaving California tend to be low income, low education folks struggling to afford the State’s cost of living. Meanwhile, the report showed those moving in tend to be high income, high education individuals. The latter is far more likely to be premium wine buyer than the former. In addition, those moving in tend to be middle-aged, while those moving out tend to be younger. This does bode well for sales. In essence, the entire state of California is gentrifying under the burden of high housing costs. (I suspect high taxes play a role too).

Another interesting tidbit is the states to which Californians are moving. According to the same report, Californians are moving to Texas, Nevada, Arizona and Oregon. This is very interesting to me. My bride and I have long considered a move to Oregon and are again thinking very seriously about relocating to the Willamette Valley. For us, its a question of housing prices and find a good place to raise Henry George. Consider that the median price of a home in Napa in 2017 was $625,000 in 2017. The median price of a home in Salem, Oregon (the main city in the Willamette Valley) in 2017 was $230,000.

It turns out that in 2016, Oregon had the third-highest rate of in-migration of any state in the country, with most folks entering the state coming from California. Meanwhile, United Van Lines reported that Oregon was the second most popular state to move to in 2017 after Vermont.

Moreover, those migrating to Oregon tend to be younger (20-30 years old), single, educated and taking down less income. But what’s interesting is that those who move in their 20s-30s are much less likely to leave once they arrive. They are in their “root setting” years. Does this bode well for Oregon?

Oregon’s wine industry has been on something of a terrific roll the past few years. There is no indication that this trend is in decline. More importantly, those moving into the state are likely to state as they move into their peak income-earning years. This is good for the state’s industry.

Despite Oregon’s reputation as a premier location for Pinot Noir, it’s ability to support a wide range of varieties is solid. The warmer southern AVAs in Oregon produce much more than Pinot Noir and with great quality. However, the Willamette Valley, with its focus on Pinot, is reaching a very unique position. In the United States, Napa is a Cabernet region. You might point to a few other places in California that are defined by a single variety, but nothing like Napa Valley and Cabernet and nothing like the Willamette Valley and Pinot Noir. Now, only Napa Valley and the Willamette Valley are in the position of Burgundy and Bordeaux and Chablis, where their reputation is made solid by their ability to excel by producing great bottlings of a specific variety. I don’t see this changing.

And this brings us to another question best left for another post. Are Californians “Cab People” and Oregonians “Pinot People” and if so, what does this say about these two groups?

 

 

 


7 Responses

  1. Bill McIver - May 14, 2018

    Our move from California to Washington state It definitely affects our purchases of California wines. I’m buying mostly Washington wines, especially in restaurants.

  2. Al Scheid - May 14, 2018

    Tom,

    I am an avid reader of you blog – keep it up. However, since the report you quote was written by a government department I think it has a political leaning. I believe that many people are leaving the state for political and tax reasons, especially income taxes. Let’s face it, high taxes, and CA is the highest, make people look at non-income tax states – like Texas.

    It serves the extreme left that runs CA politically would rather have us believe that housing costs, not taxes and politics motivates population moves. The truth is that both are negatives to people of all income levels.

    I know people who have moved. ALL of them say politics and taxes motivated them to leave. High real estate prices will cause building to expand. But the progressive politics of CA prevent much of that building via rules and taxes. Now, CA wants to force all new buildings to have solar panels. This is a lefty insanity if they really want more affordable housing.

    Nuff said – everyone reading this knows CA government policies are making CA a less desirable place to live.

    Thanks,
    Al Scheid

  3. Tom Wark - May 14, 2018

    Hey there Al.

    Thanks for reading. I don’t think we are looking at a report driven by politics that want to hide concerns about high taxes. Let me tell you why. We know that it’s lower-income people who are leaving and higher income people who are moving in. Lower income earners are less exposed to high-income taxes, while high-income people are more exposed.

    That’s not to say that some who are leaving don’t like the politics or high politics. However, lots of people who move are heading to Oregon. Oregon has no sales tax. BUT it has high-income taxes and high property taxes.

    The housing crisis in CA is real. Every year we are short on housing and this is driving up prices everywhere. I can by three to four times the home in Oregan than I can buy here in Napa. Three to four times more home. Think about that.

    In any case, keep writing. Despite this not being a political post, I and readers like to hear from all sides on this.

    Tom….

  4. Tom Wark - May 14, 2018

    Bill,

    And I suspect if we get to Oregon, that will be exactly our situation. But please tell me you’ve got SOME Matanzas Creek Merlot in the cellar!

  5. Wine Curmudgeon - May 15, 2018

    You’re welcome in Texas, Tom. No state income tax. And the Legislature is always worth a giggle.

  6. Tom Wark - May 15, 2018

    Thanks, Jeff. It’s not out the question….down the road. Kathy is from San Antonio and has lots and lots of family. And I’ve testified in Austin before. And I concur with your assessment

  7. Richard - May 15, 2018

    California doesn’t have the highest tax rates – aggregated, California is barely in the top 10 and Oregon has one of the highest taxes on income… Having said that, and being someone intimately familiar with both states (I work a lot in Oregon), beware – there is a lot of backlash against Californians in Oregon. That has not always been the case – when I first started coming to Oregon, Oregonians loved Californians, but the past few years, Californians have been blamed for every malady in Oregon – but mainly for the rising prices of real estate. There have been incidents of Californians being threatened and their cars (with California license plates) trashed as they slept!

    I love both states, but have seen the increasing hostility toward Californians in Oregon. Something I didn’t see when I’ve been in other states (Texas included – it’s more of a friendly rivalry, not the outright hostility from Oregon)…


Leave a Reply

Your email address will not be published. Required fields are marked *

*