A measley 3 bed 2 bath 1250 sqft house in LA sold for $800K in 2008. Now, it is worth $1.8 million. That's a $1 million equity/gain/profit. Why don't CA home owners with million dollar equities cash out and sell, and move to cheaper areas? Maybe even retire? Are they staying put for their jobs? I would just quit my job, retire, and find a beach, if my house had $1 million in equity!
Let me see... I purchase my home about 10 years ago, when the housing market crashed for 200k. it is now worth over 3 times my purchased price. Yes, I could sale it and walk away with half a million in my pocket. However, I really can't get into another home in the same area for anything less than 750K. I think that's the dilemma most Californians are in.
As for retirement, and moving away, most are not ready, they are still young or is still in love with work or is still putting their kids thru college.... or some other factor. In addition, as crazy as it may seem, some really like living in California. They were born here and it's the only way of life they know. It's like being in a toxic relationship, you know you have to get out, but you're so entangled in it that it seems there's comfort in staying.