The top state tax bracket is 13.3% on income. It hits 8% at only $40,000 of income, which isn't enough to live in much of CA. Housing of course is expensive near any of the major cities, and not really cheap elsewhere. The middle class are getting squeezed. The uber wealthy don't care. If a lot of middle class folks move out, one might expect to see a drop in housing prices for 3 bedroom type homes in the 'burbs, but they seem to go higher still.