We need more babies.

A decline in families with children and a slowdown in immigration have contributed to a labor shortage in the state. It’s not so much that Californians are fleeing the state as much as it is that those who leave aren’t being replaced, according to a leading economist.

“Who’s leaving? Families with kids,” said Chris Thornberg, an economist and founder of Beacon Economics. “Who’s moving in? People without kids. We have skilled, high-income people moving into the state and lower-skilled, lower-income people with families moving out of the state.”

Thornberg spoke to about 300 people at Radius Commercial Real Estate’s 14th annual Real Estate & Economic Forecast on Wednesday morning at Santa Barbara’s Hilton on Cabrillo Boulevard.

The Los Angeles-based economist said single people are moving into California and taking up the housing stock, which hurts the housing market and contributes to the labor shortage.

“We don’t have enough people,” Thornberg said. “For all the complaints about Texas vs. California, why do they grow faster than we do? Because their labor force grows faster than ours. Why does their labor force grow faster than ours? Because they build enough housing and we don’t.”

He said the people who are here “are spreading out.” Single, educated kids want their own places, and that takes up housing stock.

“When people spread out, in a limited housing supply, somebody gets pushed out,” Thornberg said. “If you don’t build housing even to meet the increase in demand of your current population base, somebody must leave.”

A slowdown in immigration, he said, also is contributing to the problem. Despite a national narrative that the borders are being overrun with immigrants, Thornberg said that’s not true, and that the economy thrives with more immigration.

“Actually, immigration is just getting back to normal levels, and normal levels are not enough to make up for a lack of babies,” he said, adding that the country needs national immigration reform.

The lack of children hurts the retail economy, Thornberg said, noting that in the 1990s retail sales grew by 10% during the Christmas season.

“We were all buying stuff for kids,” Thornberg said.

Now, it is just 5%, he said.

“You can see how it is torquing the economy in different ways,” Thornberg said, “and it is only going to get worse.”

The number of young people in the state is declining as well as the labor force.

“Suddenly, we don’t have enough workers,” Thornberg said.

In addition to Thornberg, Michael Lopus, a senior associate at Radius, discussed multifamily investments, and Gene Deering, a principal at Radius, gave a nuanced overview of the commercial sales and leasing market.

Deering had the crowd laughing out loud with his March Madness basketball analogy. He showed slides resembling a Final Four bracket and concluded that Montecito, over the Funk Zone, Santa Barbara and Goleta, would be the hottest market in 2024.

Deering said people who own buildings in Montecito don’t want to sell them. People who live in Montecito want to own commercial space near their home.

“It’s just a hot market with a lot of demand,” Deering said. “Whenever things come up in Montecito, they move quick.”

Deering said demand at Coast Village Circle is “incredibly strong” and that people are willing to pay higher costs than in Santa Barbara for commercial buildings.

“If you own space in Montecito, you are probably pretty happy,” Deering said.

Wednesday’s event also paid homage to Steve Brown, a Radius founder, who has hosted the event for the past 14 years.

Paul Gamberdella, principal at Radius, presented Brown a trophy with a bronze cast of his favorite shoes, commissioned from Tri-Valley Trophies in Goleta.

The trophy read, “Steve Brown, big shoes to fill, as the king of the mic.”

“There’s no replacing a legend,” Gamberdella said.

Brown said that going forward he plans to spend more time fishing than selling real estate.

At the end of Wednesday’s event, he told the crowd: “We are the luckiest people in the world just because we live here. We should somehow get around to appreciating that.”