For over a century, Hollywood in Los Angeles has reigned as the heart of the global film industry, but it is now grappling with an unfamiliar shadow of crisis. A combination of natural disasters like recurring wildfires, labor strikes, and less competitive tax incentives compared to other states has led to filming locations being snatched away by rival regions.

As Hollywood actors, no longer needing to reside in LA, relocate elsewhere, the high-end housing market is also feeling the impact. According to real estate data provider Realtor.com on July 9, only one in five U.S. films and TV shows is currently shot in LA. A FilmLA report indicates that the number of filming locations in the first quarter of this year plummeted by 22.4% compared to the previous year.

Once regarded as the mecca of the global film industry since studios and production companies established roots in the 1920s, Hollywood now risks being relegated to a “Rust Belt,” symbolizing a declining industrial hub. An anonymous film industry executive described the current situation as “grim, like a town where factories are shutting down.”Reasons for Hollywood’s growing neglect by production companies include the economic fallout from the COVID-19 pandemic, massive wildfires, frequent labor strikes, a decline in movie theaters, high production costs compared to competitors, and generous tax incentives offered by rival regions.

The decline of Hollywood’s film industry is also leading to a drop in tourism. Recent federal crackdowns on undocumented immigrants, coupled with rising homelessness and crime, have further reduced the number of tourists visiting Hollywood, according to analyses. Tax credits offered by other states and countries are delivering a critical blow to Hollywood studios. Canada introduced film production tax credits in the 1990s, while the UK and Australia also provide such incentives. Cities like Atlanta, New Orleans, Las Vegas, and Albuquerque, New Mexico, offer 30-35% tax breaks, attracting film projects.

Film productions, which can last from three months to several years, are a major driver of local economies. Actor Kevin Costner has built a $100 million film studio and soundstage in southern Utah, while Zachary Levi is raising $40 million to construct a $100 million studio near Austin, Texas. With less need to stay in LA, major stars are leaving California, including Mark Wahlberg, Matthew McConaughey, Glen Powell, and Rachel McAdams.

This exodus of Hollywood actors is dampening Angelenos’ desire to remain in LA. Realtor.com reports that 38.1% of LA homeowners have explored housing options in other states, with the most popular destinations being Las Vegas, Phoenix, Dallas, Portland (Oregon), and Lake Havasu (Arizona).Southern California real estate agent TJ Convertino noted, “We’re witnessing the ripple effects of celebrity migration patterns on LA’s housing market.” He added, “As film production slows in the region and shifts to places like Georgia, Texas, Las Vegas, and Canada, the pressure to buy homes in LA has lessened, particularly for high-end properties.

”With the situation reaching a critical point, California is scrambling to offer tax incentives to bolster its film industry, but critics argue the state may have already missed its chance. Governor Gavin Newsom is currently pushing a $7.5 billion tax relief package. California real estate agent Victor Curry emphasized, “The core of the film and TV industry is business. If shooting in Vancouver or Atlanta can save millions of dollars, Hollywood producers will make that choice.”