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What we can learn from the Great California Exodus (Sept. 2012)


By turtledove   Follow   Sun, 23 Dec 2012, 7:52am PST   10,844 views   148 comments
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I hope this hasn't already been posted. Didn't see this on the site. Thought it was interesting.

http://www.manhattan-institute.org/html/cr_71.htm

Executive Summary

For decades after World War II, California was a destination for Americans in search of a better life. In many people’s minds, it was the state with more jobs, more space, more sunlight, and more opportunity. They voted with their feet, and California grew spectacularly (its population increased by 137 percent between 1960 and 2010). However, this golden age of migration into the state is over. For the past two decades, California has been sending more people to other American states than it receives from them. Since 1990, the state has lost nearly 3.4 million residents through this migration.

This study describes the great ongoing California exodus, using data from the Census, the Internal Revenue Service, the state’s Department of Finance, the Bureau of Labor Statistics, the Federal Housing Finance Agency, and other sources. We map in detail where in California the migrants come from, and where they go when they leave the state. We then analyze the data to determine the likely causes of California’s decline and the lessons that its decline holds for other states.

The data show a pattern of movement over the past decade from California mainly to states in the western and southern U.S.: Texas, Nevada, and Arizona, in that order, are the top magnet states. Oregon, Washington, Colorado, Idaho, and Utah follow. Rounding out the top ten are two southern states: Georgia and South Carolina.

A finer-grained regional analysis reveals that the main current of migration out of California in the past decade has flowed eastward across the Colorado River, reversing the storied passages of the Dust Bowl era. Southern California had about 55 percent of the state’s population in 2000 but accounted for about 65 percent of the net out-migration in the decade that followed. More than 70 percent of the state’s net migration to Texas came from California’s south.

What has caused California’s transformation from a “pull in” to a “push out” state? The data have revealed several crucial drivers. One is chronic economic adversity (in most years, California unemployment is above the national average). Another is density: the Los Angeles and Orange County region now has a population density of 6,999.3 per square mile—well ahead of New York or Chicago. Dense coastal areas are a source of internal migration, as people seek more space in California’s interior, as well as migration to other states. A third factor is state and local governments’ constant fiscal instability, which sends at least two discouraging messages to businesses and individuals. One is that they cannot count on state and local governments to provide essential services—much less, tax breaks or other incentives. Second, chronically out-of-balance budgets can be seen as tax hikes waiting to happen.

The data also reveal the motives that drive individuals and businesses to leave California. One of these, of course, is work. States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average. Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes. States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.

Population change, along with the migration patterns that shape it, are important indicators of fiscal and political health. Migration choices reveal an important truth: some states understand how to get richer, while others seem to have lost the touch. California is a state in the latter group, but it can be put back on track. All it takes is the political will.

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bmwman91   Sun, 23 Dec 2012, 1:17pm PST   Share   Quote   Permalink   Like (4)   Dislike     Comment 1

Cost of living, it has to be #1. OK sure, you can EASILY pull $100k a year in the Silicon Valley. Couples pulling $250k are very common. At present, it will not get you anything more than a condo unless you have $200k+ in cash to support a $1M jumbo loan. $200k cash can get you a nice 2 story 3/2 or 4/2 in most of the rest of the nation. Yes yes, the weather sucks, but other than that, you buy the house and you can easily take a 50% pay cut because your living cost is property tax, insurance and some maintenance. Chances are that your living standards will be at least the same, despite half of the total income (the progressive income tax setup helps a lot). A certain member here keeps talking about how it is impossible to give up a super high salary, but if you can just go and pay cash for a house elsewhere, you require a lot LESS gross income to maintain the same lifestyle. You just have to sack-up and accept the less pleasant weather or lack of interesting geography. Some people can't handle politically centrist or right-leaning areas either, which basically confines them to the super expensive liberal enclaves along the coasts. I have found people in much of the rest of the country to be much more politically "balanced" than people in CA give them credit for, and in many ways they are much more "balanced" than the progressive-or-die types around here.

Vicente   Sun, 23 Dec 2012, 3:43pm PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 2

Easy come, easy go. Mistaking your turn on the upside for "divine providence" and hard work, is a common piece of arrogance IMO. Next decade it could be New Jersey that's hot.

lostand confused   Sun, 23 Dec 2012, 9:12pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 3

bmwman91 says

Cost of living, it has to be #1. OK sure, you can EASILY pull $100k a year in the Silicon Valley.

Yeah. I was going to move back to CA, a few months ago and that job fell through. At this point, only looking for full time gigs, as ready to settle down and have kids. Lucky for me the fiancee does not care where and is in IT too, so both very flexible.

Now where I live in the mid-west, I rent a two bedroom for 720 dollars a month. After splitting everything with my room mate, it comes to about 440-480 dollars a month-including all utilities. Gas is about a buck a gallon cheaper than CA. Jobs are plentiful -at least in my area of IT-and contracts last much longer. The rates are lower, but significant overtime negates that.

I am again negotiationg another full time time job right now-two actually. In in L.A. and one in Michigan. The one in L.A only pays 5k extra a year. The difference in living expenses is simply astounding. My fiance is very savings oriented and has a few cousins in CA and loves visiting there. I am really grasping for straws on why we want to move back.

Here, it is 15-20 min commute, tons of savings and no debt. Now the winters are brutal, cold, windy and humid too. Just recently we had a day with temps in the low teens, with howling wind and snow(so with wind chill close to zero F) and close to 100% humdity. That is why!!! Plus I really miss the mountains and ocean. Now after spending time in the south for a small project-I really didn't like it much . But that is just me. But Houston is the same-a nice gated community with swimming pool is 710 for a 2 bedroom . My colleague who was from CA, moved there when he lost a job and couldn't find one. He travels the country on IT projects and the best thing he doesn't have to pay state taxes. His wife has a small time job and they are very, very happy. it does get humid and apparantly, unlike CA, it doesn't cool down that much in the evening either.

But that is one of the drawbacks of CA-wether you are renting or bought, you don't get much savings and if something were to happen-and in today's world, something will happen-just paying the rent or mortgage will make you broke. Both me and finacee are on the same boat-well settled, no debts and ready to settle down. She has visisted CA, while visiting her cousins, so is ready to try it for a few years. I want to get back, but the thought of getting into massive debt these days frightens me.

If houses were 300-400 k fine-that was the price in late 1990s when the market/jobs were booming and any one with a pulse could get a job . Rents too are way too high. Apparantely in the bay area, rents are back at boom highs-even exceeding the boom and it looks like housing is in another bubble.

New Renter   Mon, 24 Dec 2012, 1:51am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 4

bmwman91 says

Cost of living, it has to be #1. OK sure, you can EASILY pull $100k a year in the Silicon Valley. Couples pulling $250k are very common.

Here in the SFBA even car washers and carnies start at $85k. A good trained monkey can easily pull down $120k.

Strategic Renter   Mon, 24 Dec 2012, 2:17am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 5

I work from home and after 2 years in Huntington beach I have had enough it is an awful place to live. I paid 20k in State taxes this year and am no longer prepared to live in a shack that is valued at 600k which I am renting for $2500 a month. I have a incredible house in Vegas with a swimming pool and tennis court that I am buying cash and cannot wait to get out of this dump.

New Renter   Mon, 24 Dec 2012, 4:06am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 6

Strategic Renter says

I work from home and after 2 years in Huntington beach I have had enough it is an awful place to live. I paid 20k in State taxes this year and am no longer prepared to live in a shack that is valued at 600k which I am renting for $2500 a month. I have a incredible house in Vegas with a swimming pool and tennis court that I am buying cash and cannot wait to get out of this dump.

That $20k is better spent on blow and hookers - I'm surprised you stuck it out this long.

Kevin   Mon, 24 Dec 2012, 4:07am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 7

The thing that makes it possible to live in CA isn't the high incomes, it's the low family sizes.

You don't feel any pressure about where you live when you don't have any kids. A couple earning $60-70k a year can live comfortably in a 1 bedroom in SF or LA and will probably be happier than people living in suburbia elsewhere.

Once you have kids, though? $200k+ or GTFO.

If things keep going like this, in another generation or two there won't be any California natives. It'll be all immigrants from other countries and tech workers, film makers, and porn stars from other states.

New Renter   Mon, 24 Dec 2012, 5:21am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 8

Kevin says

The thing that makes it possible to live in CA isn't the high incomes, it's the low family sizes.

You don't feel any pressure about where you live when you don't have any kids. A couple earning $60-70k a year can live comfortably in a 1 bedroom in SF or LA and will probably be happier than people living in suburbia elsewhere.

Once you have kids, though? $200k+ or GTFO.

If things keep going like this, in another generation or two there won't be any California natives. It'll be all immigrants from other countries and tech workers, film makers, and porn stars from other states.

Sounds like a paradise for the sub-30 crowd. Come to CA when you're a 22-24 yr old fresh college graduate, make a bunch of money in tech or porn, find a mate and leave for greener (cheaper) pastures by 30.

Meccos   Mon, 24 Dec 2012, 6:37am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 9

Billybigrig says

What has caused California’s transformation from a “pull in” to a “push out” state? 

I'll start with ...

1) unsecured borders

2)

3)

2) high tax rates

dunnross   Mon, 24 Dec 2012, 6:44am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 10

E-man says

Things will only get more expensive in the Bay Area after each boom/bust cycle.

Remember trees don't grow to the sky. The higher they go, the more they fall. Another reason this bust isn't over yet - Bay Area hasn't really crashed, yet. What we've seen around here is just the beginning.

rooemoore   Mon, 24 Dec 2012, 7:01am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 11

dunnross says

E-man says

Things will only get more expensive in the Bay Area after each boom/bust cycle.

Remember trees don't grow to the sky. The higher they go, the more they fall. Another reason this bust isn't over yet - Bay Area hasn't really crashed, yet. What we've seen around here is just the beginning.

People have been saying this for a long time. My family has been in California since 1842 and first lived in San Francisco in 1870. My mother tells me that every generation has complained about San Francisco RE being too expensive.

IOW, don't get your hopes up...

New Renter   Mon, 24 Dec 2012, 7:35am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 12

rooemoore says

dunnross says

E-man says

Things will only get more expensive in the Bay Area after each boom/bust cycle.

Remember trees don't grow to the sky. The higher they go, the more they fall. Another reason this bust isn't over yet - Bay Area hasn't really crashed, yet. What we've seen around here is just the beginning.

People have been saying this for a long time. My family has been in California since 1842 and first lived in San Francisco in 1870. My mother tells me that every generation has complained about San Francisco RE being too expensive.

IOW, don't get your hopes up...

Sorry Dunross, I have to agree. I have been hearing about how overpriced the SFBA is and about the impending plunge since my family moved here in the late 70's. Such a plunge - like the long expected massive earthquakes - has yet to happen to any real extent. Sure it may happen someday but given recent history it looks like it'll take more than one act of God to do it.

New Renter   Mon, 24 Dec 2012, 7:36am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 13

E-man says

New Renter says

bmwman91 says

Cost of living, it has to be #1. OK sure, you can EASILY pull $100k a year in the Silicon Valley. Couples pulling $250k are very common.

Here in the Bay Area, A good trained monkey can easily pull down $120k.

I have to agree though. It seems like everyone is making in the $110k to $170k range. At least that's what I see when I go through the rental applications. The norm is around $110k to $120k.

Life is pretty tough for folks making $10-$20/hour in the Bay Area.

Not in my case, nor my wife's.

dunnross   Mon, 24 Dec 2012, 7:50am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 14

New Renter says

I have been hearing about how overpriced the SFBA is and about the impending plunge since my family moved here in the late 70's.

Bay Area wasn't too expensive in the 70's. Prices in the midwest cities like Chicago and Detroit were actually higher than in the Bay Area. I know this is very tough for you to swallow, having been brainwashed by the local hype, for so long.

New Renter   Mon, 24 Dec 2012, 8:09am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 15

dunnross says

New Renter says

I have been hearing about how overpriced the SFBA is and about the impending plunge since my family moved here in the late 70's.

Bay Area wasn't too expensive in the 70's. Prices in the midwest cities like Chicago and Detroit were actually higher than in the Bay Area. I know this is very tough for you to swallow, having been brainwashed by the local hype, for so long.

Sure, no kingdom lasts forever. All I'm saying is that the talk of the impending doom of the SFBA has been around a LONG time and despite crisis after crisis - aerospace bust, dot com bust, housing bust, etc - it hasn't happened yet.

I'd also love to see prices reset to levels where a mortal such as myself can buy a nice house without enduring a lifetime of two income slavery but it hasn't happened yet. I would have thought this last crisis would have been the final straw but no it was just an opportunity for housing bulls to jump in and buy profitable rentals on credit.

dunnross   Mon, 24 Dec 2012, 8:20am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 16

New Renter says

it was just an opportunity for housing bulls to jump in and buy profitable rentals on credit.

There aren't any profits to be made on rentals in most of the Bay Area, as these bulls will soon find out. These bulls are jumping in, once again, for the same reason, of perceived future appreciation. The Bay Area housing boom is now unwinding in reverse, and it will take some more time to complete this cycle.

New Renter   Mon, 24 Dec 2012, 8:55am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 17

dunnross says

New Renter says

it was just an opportunity for housing bulls to jump in and buy profitable rentals on credit.

There aren't any profits to be made on rentals in most of the Bay Area, as these bulls will soon find out. These bulls are jumping in, once again, for the same reason, of perceived future appreciation. The Bay Area housing boom is now unwinding in reverse, and it will take some more time to complete this cycle.

Yes but how much more time? I'd rather not have the settling take so long such that a mausoleum is the only practical option

dunnross   Mon, 24 Dec 2012, 9:06am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 18

New Renter says

Yes but how much more time? I'd rather not have the settling take so long such that a mausoleum is the only practical option

If the houses don't crash in terms of nominal dollars, they most certainly will, in terms of gold currency, which is the only true currency, not subject to any liabilities, or the whims of the FED to try to prop up the housing market. So, keeping all your money in gold, and calculating your house prices in terms of oz of gold, instead of dollars, will give you the peace of mind you need to wait this one out.

turtledove   Mon, 24 Dec 2012, 11:55am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 19

Many of you have said higher taxes are the problem. So why does California have higher taxes? What is it about what we do that requires a premium over what other states do? Yes, we have more people... but that should also mean a larger tax base. It's not like we're providing better services (if education spending and the like are indicators). We are paying more for things that other states offer at a lower price (taxes). There is something very wrong with that.

The thing that really gets me is the political effect of the migration. We have no balance. With every California conservative moving to more conservative states, we just perpetuate the liberal agenda here in California. Who are those people replaced with? Others who also want to perpetuate the liberal agenda.

Margaret Thatcher once said something to the effect that socialism works until to you run out of other people's money to spend. The California migration pattern isn't promising.

Vicente   Mon, 24 Dec 2012, 1:50pm PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 20

turtledove says

The California migration pattern isn't promising.

This is BS. Why do you assume it's only conservatives who move to other states? Why do you even believe this thinly-sourced gruel?

Migrations are for birds and buffalo. An entire herd picks up and moves and it's gone. Is the population of California increasing or decreasing? It would be a migration if it were decreasing.

Let's say I've got 5 kids and 2 of them move to other states. Maybe the ones that leave go off for military services, and will end up moving back someday. In any case in the interim still 2+3 remain in-state.

It's difficult to characterize the reasoning of thousands of people who after all aren't being directly surveyed about it.

New Renter   Mon, 24 Dec 2012, 2:27pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 21

dunnross says

New Renter says

Yes but how much more time? I'd rather not have the settling take so long such that a mausoleum is the only practical option

If the houses don't crash in terms of nominal dollars, they most certainly will, in terms of gold currency, which is the only true currency, not subject to any liabilities, or the whims of the FED to try to prop up the housing market. So, keeping all your money in gold, and calculating your house prices in terms of oz of gold, instead of dollars, will give you the peace of mind you need to wait this one out.

Gold? Isn't that in a bubble all its own?

Sure looks like a bubble to me

dunnross   Mon, 24 Dec 2012, 3:35pm PST   Share   Quote   Permalink   Like   Dislike (2)     Comment 22

No, gold is not in any bubble yet. In 1980 the price went up 35 times since the bottom of $25/oz. This time, it's only up a mere 6 times. Comparing against the CPI index is not a fare comparison. The govt CPI is not a true measure of inflation. The inflation since 1980 has been much higher than the gov't CPI of 2% is indicating. Besides, every bubble is always higher than the previous, so, according to your own graph, it should be at least $2400, but, this time, it would go much much higher. Look at the DOW/gold ratio on the graph, below. The ratio always goes to 1/1 or below. Now, it's still around 7/1, which means, that when the bubble is over, gold will be very close to the DJI index, most likely, around 5 or 6000.

bmwman91   Mon, 24 Dec 2012, 4:32pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 23

turtledove says

So why does California have higher taxes? What is it about what we do that requires a premium over what other states do?

Good question. The highways in the most affluent region in the United States are complete and utter shit. Even AFTER CalTrans finishes their work, the highways are still shitty half the time. Texas and Colorado both have MUCH higher quality highways, enough so that I actually notice and am impressed every time my employer sends me there.

lostand confused   Mon, 24 Dec 2012, 5:49pm PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 24

turtledove says

Many of you have said higher taxes are the problem

Well not exactly. TX may not have state taxes, but real estate taxes are high-sometimes triple that of here. Maybe that is what puts a lid on their prices. I think unless you reach 65 or some such age, there is no cap on taxes. There are somethings that money and savings can't compare to-like in socal, coming out in the dead of winter in your tees and shorts.

Plus if your average daily high in the winter is the low 30s -the high , not low- and the wind chill makes it even lower and your eyes water when you leave and the only thing you look forward to when you step outside, is to get back inside a heated building-money can have a little less meaning!

dunnross   Mon, 24 Dec 2012, 11:37pm PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 25

lostand confused says

TX may not have state taxes, but real estate taxes are high-sometimes triple that of here.

If you consider the valuation on the house in TX vs California (about 1 to 5, on the average), TX RE taxes are actually lower.

bob2356   Tue, 25 Dec 2012, 12:14am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 26

lostand confused says

TX may not have state taxes, but real estate taxes are high-sometimes triple that of here

Yes it's really terrible in Cameron County TX where I have to pay $2700 a year on a property assessed at 137k (3k sq ft house, 1/2 acre lot, great older area) and zero state income tax. Wow, that's a whopping 1.9% tax rate almost DOUBLE the Ca tax rate. I would much prefer to pay 1% on a 750k house in CA plus 9.3% income tax. That would be about 25k or 9 times as much. Such a bargain. Thanks for pointing that out.

lostand confused says

Plus if your average daily high in the winter is the low 30s -the high , not low- and the wind chill makes it even lower and your eyes water when you leave and the only thing you look forward to when you step outside, is to get back inside a heated building-money can have a little less meaning!

It's obviously not something that has occurred to you, but what people in the rest of the country do is buy a coat and hat. Then it's perfectly comfortable to be outside all day. I like winter and being outdoors in the winter even when I lived upstate NY.

Living in the brown state wouldn't do it for me. If it makes you happy then great, but that doesn't make it better, just better for you.

mmmarvel   Tue, 25 Dec 2012, 2:21am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 27

lostand confused says

Well not exactly. TX may not have state taxes, but real estate taxes are high-sometimes triple that of here. Maybe that is what puts a lid on their prices.

The tax rate may be high (and as a homeowner in Texas I agree it is) but my home is valued at $135K here (and is 2400 square feet) so while the tax rate is 1.17% my actual taxes maybe much lower than someone in California who has a lower tax rate BUT is living in a 1200 square foot home valued (taxed) at 350K.

Plus, we have a homestead act which keeps the tax rate on your primary residence lower. And yes, once you hit 65 your rate is also reduced.

As for water and utilities, I pay approximately $50 a month for water, sewer and garbage (which is picked up twice a week). As for your tee shirt and shorts, hmmmm, sounds like Houston, for the past two months we've had high 70's and low 80's for our day time high, with lows normally in the 60's. Just saying.

Vicente   Tue, 25 Dec 2012, 2:54am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 28

bmwman91 says

The highways in the most affluent region in the United States are complete and utter shit.

I don't think you can make a hard & fast rule about highways.

Been to West Virginia? Or South Carolina?

I've crossed from red-to-blue and blue-to-red boundaries where as SOON as you cross the state line it goes from smooth to bump-bump-BLAM-bump-thud-grrrrrrrrrrrrrrrrrr.

As a Georgian, I dreaded driving in Alabama.

drew_eckhardt   Tue, 25 Dec 2012, 2:55am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 29

bmwman91 says

Cost of living, it has to be #1. OK sure, you can EASILY pull $100k a year in the Silicon Valley. Couples pulling $250k are very common. At present, it will not get you anything more than a condo unless you have $200k+ in cash to support a $1M jumbo loan.

Only if you insist on living near the downtown of a nice walkable city (or perhaps the "right" public school; our kids have undergraduate degrees so that's not relevant).

$400K ($80K down for a conventional mortgage) will get a 1950s 3/2 ranch in Sunnyvale (Fremont High).

If you want to save your cash, $100K ($20K down) gets a 1990s 3/2 double wide mobile home in Sunnyvale with central air and double paned windows. You'll get a 20 year term, no options for a lower down-payment, and 7% interest rate. Slot rent, mortgage, insurance with earthquake and flood coverage, and property tax total about $1500 a month. A few of those properties will be Fremont although most aren't. With 2 bedroom apartments renting for $2-$3K/month having common walls, less space inside, and less yard/deck space that's not too reasonable

Either will make for a comfortable bicycle commute between Menlo Park on the north and San Jose in the south which is about right for software jobs which are centered somewhere either side of Mountain View.

If you do want to live within walking distance of a nice enough downtown, $1M is on the low end for a single family home.

Ceffer   Tue, 25 Dec 2012, 5:04am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 30

What's the future of taxation in CA if the present is so obnoxious?

Prop 13 gone

13 or 14 percent sales tax, gasoline tax double (covert green agenda there)

State Income tax bracket of 15-16 percent, bracket creep will definitely drop this into the high middle income to middle income earners as inflation erodes income.

Increasing masses of welfare rats, immigrants and prisons to hold their sperm doners until "furlough and knock up" parole.

Increasingly dangerous and crime ridden living with rotting infrastructures (unless really wealthy in enclave), as services are curtailed and public service pensions eat up increasing percentages of tax revenues. Welfare rats and prisoners off the reservation and in your back yard and open windows.

Increasing levels of toxic legal barratry and multiple, conflicting regulation, fees, fines and taxation making it even more impossible and masochistic to do business.

Rich people only keeping "second homes" in CA in guarded enclaves.

Even tech and start ups aren't completely stupid, they will continue to transfer their bases of operations elsewhere and just keep a few pampered, highly paid employees here, but for how long.

bmwman91   Tue, 25 Dec 2012, 8:16am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 31

drew_eckhardt says

Only if you insist on living near the downtown of a nice walkable city (or perhaps the "right" public school; our kids have undergraduate degrees so that's not relevant).

$400K ($80K down for a conventional mortgage) will get a 1950s 3/2 ranch in Sunnyvale (Fremont High).

I think that you need to browse Zillow and Redfin a little. $400k will not get you a single SFH in Sunnyvale. Nada. As of now, houses with a 1+ hour commute to the Tech Centers are pulling $500k, easily. The market is completely dysfunctional right now. I, personally, do not give a shit about school districts since Parochial school is a high quality education that does not require us to live anywhere specific. Kids are a few years away still anyway. I just want a decent sized lot (7000SF+) and a detached garage for a workshop. I can either leverage myself to the absolute limit now, or take my chances by waiting.

The mania has grown enough that a significant percentage of people are bought-into the "buy now or be priced out forever" mantra. I think that it is sensible to either buy now, or be ready for a 5+ year wait until the next bust in RE, although this boom will be driven by never-before seen market conditions and it may well be a permanent paradigm shift for America where Wall Street ushers in a new era of indentured servitude from the massive renter class.

If things blow up enough, it should give my wife the kick that she needs to consider living elsewhere. We are not the first in our group of friends to consider living in other states, and a couple of our friends have actually done it over the last few years (TX and CO). Yeah yeah we could buy to the max here now, sell in 40 years for a giant pile of cash and THEN move somewhere else and retire. That seems disagreeable though since, if I lived my whole adult life here I would not want to leave when I retire. It seems better to pay cash for a house in "flyover" country and spend a couple of decades making it our home so that we can easily retire on our savings in that same place. When the cost of living is 50% less elsewhere, you can maintain the same quality of life on 50% of the salary. Not having a house payment enables a lot of saving for the future. My wife and I could pay cash for a median-priced house in the US, but we'll continue to save as we see how the fiscal cliff and debt ceiling work out. Generally, I am not optimistic that CA will see middle-class-friendly house prices (dear god don't anyone bring the affordability BS in here, if houses were affordable we wouldn't need $730k loans on 3.5% down...houses are not middle-class affordable, MONTHLY PAYMENTS are middle-class affordable, and that smells a lot like renting to me).

lostand confused   Tue, 25 Dec 2012, 9:39am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 32

bob2356 says

Yes it's really terrible in Cameron County TX where I have to pay $2700 a year on a property assessed at 137k (3k sq ft house, 1/2 acre lot, great older area) and zero state income tax. Wow, that's a whopping 1.9% tax rate almost DOUBLE the Ca tax rate. I would much prefer to pay 1% on a 750k house in CA plus 9.3% income tax. That would be about 25k or 9 times as much. Such a bargain. Thanks for pointing that out.

As I said before, the house prices in TX are lower. So it is a wash, when you compare it-well you will be stuck with a bigger mortgage in CA. That is what I have been saying all along-I don't want to get into debt. But that does not negate the fact that taxes are higher in TX. You may be paying 1.9%, property taxes can reach close to 3% in some areas. The recent buyers in CA, will be hit badly, but back in the late 1990s 300-400k prices for a decent house was pretty common. Those folks still pay taxes on the old rates.

Again, as I said-the only reason I am not favoring CA is the high real estate and rents-thanks for repeating what I said. By the way, a couple of my friends just bought houses in Dallas for close to 300k-nice houses-1/4 acre lot 5br -the whole enchilida. property taxes are quite high. While I don't like high mortgage balances, if you lose your job, you don't pay income tax-but property taxes you gotta pay-no matter what.

Yeah CA state taxes are high. It is not 9.2% for all income, but the percentage icreases for every 10k or so.

bob2356 says

It's obviously not something that has occurred to you, but what people in the rest of the country do is buy a coat and hat. Then it's perfectly comfortable to be outside all day. I like winter and being outdoors in the winter even when I lived upstate NY.
Living in the brown state wouldn't do it for me. If it makes you happy then great, but that doesn't make it better, just better for you.

Sigh, I am sure you think I go out in zero wind chill wearing tees, shorts and flip flops? Just because you wear a coat/hat/layers does not mean you enjoy being outdoors or going to the office and coming back. What exactly do you mean by a brown state???

lostand confused   Tue, 25 Dec 2012, 10:02am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 33

mmmarvel says

As for water and utilities, I pay approximately $50 a month for water, sewer and garbage (which is picked up twice a week). As for your tee shirt and shorts, hmmmm, sounds like Houston, for the past two months we've had high 70's and low 80's for our day time high, with lows normally in the 60's. Just saying

Yeah my colleague who works with me on this project in the mid-west is from Houston. Originally from CA. He loves it there. He travels the country on IT projects , while wife and kids in Houston and works through another friend's IT company that is incorporated there. Best is he does not pay a dime in state taxes and of course he only pays 710 a month for a 2br in a gated complex with swimming pool. They sent him a rent increase notice with all kinds of reasons justifying the increase and raised the rent by a grand total of 5 dollars a month!!!!

But from what I heard Austin and Dallas are better for IT than Houston. If I wanted to continue contracting, I would move to TX-it would save me a ton in state taxes. But looking for a full time job now-so looking at the two that have moved into the final stages .

Quiet a lot of my friends moved from CA to TX and I have a cousin in Austin who has 3 houses there.

bob2356   Tue, 25 Dec 2012, 10:30am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 34

lostand confused says

What exactly do you mean by a brown state???

Brown as in mostly desert and/or brown 90% of the year vegetation. Aka the bottom 600 miles of Ca or the western 600 miles of Tx.

lostand confused   Tue, 25 Dec 2012, 10:57am PST   Share   Quote   Permalink   Like   Dislike     Comment 35

bob2356 says

lostand confused says



What exactly do you mean by a brown state???


Brown as in mostly desert and/or brown 90% of the year vegetation. Aka the bottom 600 miles of Ca or the western 600 miles of Tx.

Well, not all of socal is like that. San Diego is pretty and go east on 8, you hit alpine forests and lakes and then go downhill to deserts again as it goes to AZ. Then upto Santa Barbara, it is coastal desert, with the distance from the coast determining desert or not. But north of Santa Barbara, it becomes very green -drier away from the coast. Just go under the tunnel north of santa Barbara into Buellton and it is green-and also a CHP ticket hotspot! But the coast is beautiful with pine trees and thick vegetaion. Now the central valley is probably the most productive agricultural area in this nation. After moving here to the mid west, I keep wondering why they have so mujch fallow land here-with so much water-not much irrigation here.

Even Ventura county, just north of LA is prime agricultural land. North of Santa Barbara is defnitely not brown-so only 200 mi of coastal land can be designated as brown-north of that is very green and Pismo beach can get cold in the winter.

But yes the real interiors like Barstow etc can get brown/desert -but it is the high desert. Then north of that is the Sierra nevadas-east of which is the high desert bordering Nevada and west is very thick forest. Just about an hour and half north of Santa Monica is the Tejon Pass at 4000+ feet and it can be snowed out once or twice ayear. The mountains surrounding that have snow for a lot more days. Then in Palm Springs, you have the mtns with snow in winter. So it is not the same everywhere-a few hours out of L.A or S.F -everything changes. That part I really love and miss.

TX-. I have driven the entire stretch of Highway 10 , 40 and 90. I actually loved 90-saw a lot of pronghorn antelope! the north section of TX was somewhat boring-though I drove the bulk of it after evening-so not a fair statement. But I10 is just one long stretch-I drove pretty fast, didn't meet any cops. I hear they have a toll road near Dallas at 85mph?!!

drew_eckhardt   Wed, 26 Dec 2012, 12:55am PST   Share   Quote   Permalink   Like   Dislike     Comment 36

bmwman91 says

I think that you need to browse Zillow and Redfin a little. $400k will not get you a single SFH in Sunnyvale. Nada.

Although asking prices probably bottomed in Spring 2012, 3 bedroom 1000-1500 square foot 1950s ranches in the Lakewood Village neighborhood have been selling in the $400s since late 2011.

There's way less inventory now than earlier in the year.

For sale now for $399 (listed as a contractors special at 1468 square feet although records show 1100 suggesting the two car garage got used as a bedroom):

http://www.trulia.com/property/3096172114-1029-Lakehaven-Dr-Sunnyvale-CA-94089

5500 square foot lot. I haven't looked at zoning regulations, although one of the neighbors just built a decent sized out building in their back yard and I'd guess that you could build a workshop.

Closed 9-6-2012:
http://www.trulia.com/homes/California/Sunnyvale/sold/7529856-820-Lakehaven-Dr-Sunnyvale-CA-94089

there are other prices on the low side of $500.

As of now, houses with a 1+ hour commute to the Tech Centers are pulling $500k, easily. The market is completely dysfunctional right now. I, personally, do not give a shit about school districts since Parochial school is a high quality education that does not require us to live anywhere specific. Kids are a few years away still anyway. I just want a decent sized lot (7000SF+) and a detached garage for a workshop.

FWIW, the Techshop in San Jose does not suck (open 7 days a week until midnight) as a way to have access to large machines which you don't use much and don't fit in a small shop or budget. 3HP vertical mills, wood and metal lathes, 4x8' shop-bot CNC router, 12" helical head jointer/planer, CNC mill, Epilog laser, water jet, Sawstop cabinet saw, etc. They run membership specials - I picked up one which runs $67/month over thanksgiving.

There's also the sawdust shop in Sunnyvale which sells access by the hour (but is only open through 10pm). The highlights there would be the 22" thickness sander and decent bandsaw setup for resawing wide boards.

I can either leverage myself to the absolute limit now, or take my chances by waiting.

Starting compensation packages for new graduates at the big tech companies have broken $100K, 15 years of decent experience yields something in the $200s at large companies not including stock movement, and there are startups out there desperate enough to match that in cash for the right person. Add 50-100% for DINK couples.

While median wages shouldn't support higher prices, about 25% of Silicon Valley residents work in tech and there should be enough of them able and willing to pay a lot.

SiO2   Wed, 26 Dec 2012, 1:46am PST   Share   Quote   Permalink   Like   Dislike     Comment 37

dunnross says

Bay Area wasn't too expensive in the 70's. Prices in the midwest cities like Chicago and Detroit were actually higher than in the Bay Area.

A bit of Googling found this:
page 11 shows that in 1982, median price in Chicago was $73k. in Detroit, $47.5k. In SF, $124.9k. True, this is 1982, a little after the 70s. And it's SF, not SJ. Nonetheless it's pretty clear that the Bay Area was more expensive than the Midwest in the 1970s.

now, if you meant the 1870s, you are correct. SJ was farmland then, and Chicago was already an established city.

SiO2   Wed, 26 Dec 2012, 1:47am PST   Share   Quote   Permalink   Like   Dislike     Comment 38

forgot the link

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&cad=rja&ved=0CEgQFjAD&url=http%3A%2F%2Fwww.nber.org%2Fchapters%2Fc8820.pdf&ei=KDXbUNvzJIfxiwKnzoCgCA&usg=AFQjCNG4mcfAJRCCdMGrdfRO4WtBQUR4cA&sig2=RmVM0lKPqXmxqo09CeOOyA&bvm=bv.1355534169,d.cGE

drew_eckhardt   Wed, 26 Dec 2012, 1:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 39

donjumpsuit says

Beautifully "nestled" in between 237 and 101.

It is quieter than the Linfield Oaks neighborhood in Menlo Park and downtown Palo Alto where Caltrain is nearby and the same square footage comes with a $1-$2M price tag (but nicely updated interior).

For $400k you can get a contractors special directly on top of one of the countries most renown "Superfund" site.

http://iaspub.epa.gov/apex/cimc/f?p=255:41:2852475519780001::::P41_GEOSEARCH:37.3787%20-122.0225

Have fun starting your family off with some Thalidomide babies!

Superfund sites go with semi-conductor companies like peanut butter with jelly. Santa Clara has Siemens and Intel; Sunnyvale has AMD; Mountain View has NEC and Intel; and Palo Alto has HP.

In this case the nearest is over a mile away where $700K house prices predominate.

Lvenit1   Wed, 26 Dec 2012, 1:53am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 40

Is that it, turtledove ?

No hard figures. Only percentages. Give me real numbers.

It's in the ARITHMETIC.

The massive business exodus is mostly in your mind.

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