Prop 30 money sold as funds for schools - watchdog reveals something else

User Forum Topic
Submitted by ctr70 on January 13, 2013 - 9:10pm

http://www.utsandiego.com/news/2013/jan/...

What I thought. Prop 30 sold as funds for schools, but really really backdoor funds for state Gov employees.

But soon won't be my worry anymore. Just leased my condo and transferred my corp. to WA State, and moving up to Seattle which has ZERO state income tax. CA won't get their greedy little hands on 10% of my income anymore. Amazingly CA sales tax is higher than WA State too! I'll let all those few high income w-2 employees in CA continue to get skinned alive and get to pay everybody elses bills. Can't wait to blow out of this state forever in about a week!

Submitted by EconProf on January 13, 2013 - 9:29pm.

You and a lot of others are leaving CA, ctr70. The sad thing is we are losing the middle class taxpayers, the wealthy taxpayers now subject to a 13% state tax rate (even on their 2012 income), and attracting the tax users. CA has 33% of the nation's welfare recipients, yet only 12% of the population.
Keep us in touch with what you experience in WA as you settle in there.

Submitted by SK in CV on January 13, 2013 - 10:40pm.

EconProf wrote:
You and a lot of others are leaving CA, ctr70. The sad thing is we are losing the middle class taxpayers, the wealthy taxpayers now subject to a 13% state tax rate (even on their 2012 income), and attracting the tax users. CA has 33% of the nation's welfare recipients, yet only 12% of the population.
Keep us in touch with what you experience in WA as you settle in there.

Any evidence that wealthy taxpayers are leaving the state (the OP notwithstanding, who has never actually paid 10% of income in state tax, nor would he ever)? That has not happened when taxes increased in CA in the past, nor is there evidence it's happened in other states that have raised their top marginal rates.

Submitted by enron_by_the_sea on January 13, 2013 - 10:51pm.

SK in CV wrote:

Any evidence that wealthy taxpayers are leaving the state (the OP notwithstanding, who has never actually paid 10% of income in state tax, nor would he ever)? That has not happened when taxes increased in CA in the past, nor is there evidence it's happened in other states that have raised their top marginal rates.

I don't know the statistics, but at least one person I know is moving to Nevada.

He doesn't need to work for a company. Has no family ties to this state. I can understand why moving to Nevada becomes attractive to him. Most people affected by prop 30 won't move because they have a job, family, friends and roots that will keep them here.

Submitted by SK in CV on January 13, 2013 - 10:58pm.

enron_by_the_sea wrote:
I don't know the statistics, but at least one person I know is moving to Nevada.

He doesn't need to work for a company. Has no family ties to this state. I can understand why moving to Nevada becomes attractive to him. Most people affected by prop 30 won't move because they have a job, family, friends and roots that will keep them here.

In the past, both in CA and in other states, the statistics have been that there has been no material change in the number of high income taxpayers when rates go up. Not zero. But no material change.

http://www.stanford.edu/group/scspi/_med...

Submitted by EconProf on January 14, 2013 - 10:43am.

The study you cite came in for tons of criticism as soon as it came out, and has largely disappeared from view as a result. It was biased in who initiated it (State Franchise Tax Board), and who researched it.
Its main flaw was to draw a sweeping conclusion from too little data. To change the tax rate by 1% and then ascribe millionaires' moving pattern changes, or lack thereof, to the tax change is quite a leap. Many other factors weigh far more in the decision, particularly where we are in the business cycle. The dot-com boom of the 1990s and the RE boom and bust of the middle of the last decade affect moving decisions into or out of the state by the wealthy far more than tiny changes in taxes.
And the last change in marginal tax rates from about 10% to about 13% wasn't so tiny. It will likely be the last straw for many wealthy Californians. It will be interesting to see the results, which should be apparent in the very near future.

Submitted by bearishgurl on January 14, 2013 - 1:17pm.

Well, I think there is a "disconnect" in the mind when it comes to coastal RE (within coastal counties) in CA with ctr70 and several others on this board.

The properties they are seeing on the street along with their respective surrounding areas, what these properties sold for in the trough of three years ago AS WELL AS what they are selling for now have not been up to these individuals' "standards" and never will be. This problem is not fixable.

Based upon his prior posts, I think the OP HAS purchased investment property here but cannot, for whatever reason, actually see himself settling here for the long term.

There is actually nothing wrong with this mindset. Buying in CA coastal county locations, whether for a personal residence or an investment is not for everyone.

I see today that (expensive) Boulder, CO (which I "pushed" on this OP on several occasions) has the WORST employee satisfaction of any region in the country, acc to Forbes:

Heading the list of the unhappiest U.S. cities to work in is Boulder, Colo., with an index score of 3.45. Boulder workers expressed the most pessimism in the Growth Opportunities and Compensation categories, which scored 2.81 and 3.29, respectively.

http://www.forbes.com/sites/jacquelynsmi...

The Boulder region is lowest on `available growth opportunities' of anywhere in the nation and home to several large tech companies. This is likely due to the sunshine/ski/mtn biking/camping/river rafting/hiking and hot-air ballooning "tax" there :=]

In other words, "We won't be promoting you and we don't give raises - just 'bonuses.'" If you don't like it here, you are free to leave."

I thought SD County was bad in this regard but it apparently didn't make the bottom ten OR the top ten "happiest places to work in."

That's not to say Boulder isn't a good "retirement area," and since the OP is not an "employee," per se, he might still like it, but Boulder is no doubt is MUCH more expensive to live in than Seattle.

I've never been to Seattle, ctr70. You just so happen to be moving in the middle of its renowned "rainy, dreary season." Keep us Piggs posted as to how you like living and doing biz there!

Submitted by NeetaT on January 15, 2013 - 12:20pm.

I say "good for you" if you leave CA to move to a business friendly state. I will eventually do the same thing. The Sacramento "Gravy Train" will inevitably fall just like the Roman Empire. CA is such a nice place to live with the exception of the welfare government. What a shame it is to be subject to Sacramento's extortion.

Submitted by mike92104 on January 15, 2013 - 7:53pm.

SK in CV wrote:
enron_by_the_sea wrote:
I don't know the statistics, but at least one person I know is moving to Nevada.

He doesn't need to work for a company. Has no family ties to this state. I can understand why moving to Nevada becomes attractive to him. Most people affected by prop 30 won't move because they have a job, family, friends and roots that will keep them here.

In the past, both in CA and in other states, the statistics have been that there has been no material change in the number of high income taxpayers when rates go up. Not zero. But no material change.

http://www.stanford.edu/group/scspi/_media/working_papers/Varner-Young_Millionaire_Migration_in_CA.pdf

I think the real worry should be on the middle income taxpayers. I know of 7 individual or couple that have moved out of the state in the last 2 years. All went to lower tax burden states. Washington, Arizona, and Texas.

Submitted by bearishgurl on January 15, 2013 - 11:05pm.

mike92104 wrote:
SK in CV wrote:
enron_by_the_sea wrote:
I don't know the statistics, but at least one person I know is moving to Nevada.

He doesn't need to work for a company. Has no family ties to this state. I can understand why moving to Nevada becomes attractive to him. Most people affected by prop 30 won't move because they have a job, family, friends and roots that will keep them here.

In the past, both in CA and in other states, the statistics have been that there has been no material change in the number of high income taxpayers when rates go up. Not zero. But no material change.

http://www.stanford.edu/group/scspi/_media/working_papers/Varner-Young_Millionaire_Migration_in_CA.pdf

I think the real worry should be on the middle income taxpayers. I know of 7 individual or couple that have moved out of the state in the last 2 years. All went to lower tax burden states. Washington, Arizona, and Texas.

Uhhh, Mike? Hello?? Your "friends" haven't been gone long enough to crawl back to SD broke and desperate to "start over" after asking to "rent a room" from you "for just six months."

If they bought homes in their new locale, did they (or you) actually think they could get out with their heads above water in ~3 years?

Think again.

They are going to end up telling you that they will do anything to get outta there and back to SD.

Give it another year-plus.

Submitted by paramount on January 15, 2013 - 11:28pm.

NeetaT wrote:
I say "good for you" if you leave CA to move to a business friendly state. I will eventually do the same thing. The Sacramento "Gravy Train" will inevitably fall just like the Roman Empire. CA is such a nice place to live with the exception of the welfare government. What a shame it is to be subject to Sacramento's extortion.

Very well said, my plan - rather than move - is severely reduce my expenditures. No discretionary spending at all - no eating out, no new cars or BMW's.

Nothing. Staples only.

Submitted by bearishgurl on January 15, 2013 - 11:39pm.

paramount wrote:
NeetaT wrote:
I say "good for you" if you leave CA to move to a business friendly state. I will eventually do the same thing. The Sacramento "Gravy Train" will inevitably fall just like the Roman Empire. CA is such a nice place to live with the exception of the welfare government. What a shame it is to be subject to Sacramento's extortion.

Very well said, my plan - rather than move - is severely reduce my expenditures. No discretionary spending at all - no eating out, no new cars or BMW's.

Nothing. Staples only.

paramount, you are not alone. What you describe here is actually what most homeowners in SD County do to stay afloat and still raise a family and save for college/retirement simultaneously.

The beauty of this plan is, SD is NOT Kansas City. You can feel like you're on "vacation" in your off-hours without leaving home :=]

It is only when their house is paid off that their discretionary income level goes up, whether they are still working ... or not.

Submitted by no_such_reality on January 16, 2013 - 9:25am.

bearishgurl wrote:

Uhhh, Mike? Hello?? Your "friends" haven't been gone long enough to crawl back to SD broke and desperate to "start over" after asking to "rent a room" from you "for just six months."

Hmm, let's see.

Friends #1, moved to Phoenix 5 years ago. Happier than a bikini watcher on main beach in August. They were shaking their heads at the taxes we past over Christmas.

Friend #2, moved to Austin 6 years ago. No longer stressed, feeling broke and living in a nice house on an acre instead of scraping by in a one bedroom apartment in beach town.

Friends #3, went St Louis 6 years ago. Happy, job is good, lots of opportunity. Has a 15 minute commute instead of an hour plus from the IE to the coast.

Friend #4, went to Atlanta 4 years ago. Happy, started her own business, less stressed now.

Friend #5, Vegas 5 years ago. Came back 3 years ago. Not happy there, not all that happy here.

That's an 80/20 success rate.

Submitted by SK in CV on January 16, 2013 - 9:59am.

no_such_reality wrote:
bearishgurl wrote:

Uhhh, Mike? Hello?? Your "friends" haven't been gone long enough to crawl back to SD broke and desperate to "start over" after asking to "rent a room" from you "for just six months."

Hmm, let's see.

Friends #1, moved to Phoenix 5 years ago. Happier than a bikini watcher on main beach in August. They were shaking their heads at the taxes we past over Christmas.

Friend #2, moved to Austin 6 years ago. No longer stressed, feeling broke and living in a nice house on an acre instead of scraping by in a one bedroom apartment in beach town.

Friends #3, went St Louis 6 years ago. Happy, job is good, lots of opportunity. Has a 15 minute commute instead of an hour plus from the IE to the coast.

Friend #4, went to Atlanta 4 years ago. Happy, started her own business, less stressed now.

Friend #5, Vegas 5 years ago. Came back 3 years ago. Not happy there, not all that happy here.

That's an 80/20 success rate.

So none of them actually left because of the tax increase on very high income taxpayers.

Submitted by no_such_reality on January 16, 2013 - 10:16am.

SK in CV wrote:

So none of them actually left because of the tax increase on very high income taxpayers.

They left because of high taxes on them!

And perceived better opportunities elsewhere.

Your prior link to the Stanford study is very good. It really highlights the problem of California's current tax paradigm. When the group you're relying on to generate the bulk of your taxes can shift due to economic reasons by 50% in two years, you're going to have continual problems.

However, my point was to counter the 'everybody will come crawling back to SD meme'

Submitted by SK in CV on January 16, 2013 - 10:20am.

no_such_reality wrote:
However, my point was to counter the 'everybody will come crawling back to SD meme'

Point taken. People leave for a lot of reasons. I left and it had nothing to do with taxes. I'm quite content but still expect I'll be back some day.

Submitted by no_such_reality on January 16, 2013 - 10:28am.

SK in CV wrote:
no_such_reality wrote:
However, my point was to counter the 'everybody will come crawling back to SD meme'

Point taken. People leave for a lot of reasons. I left and it had nothing to do with taxes. I'm quite content but still expect I'll be back some day.

Probably when you retire and have amassed a nicer nest egg than is possible in California.

As someone else said, California's real problem is the out migration of the $75K-$200K crowd. The people that make lots of bank but in Coastal California are just getting by.

Submitted by bearishgurl on January 16, 2013 - 10:48am.

no_such_reality wrote:
...Friend #2, moved to Austin 6 years ago. No longer stressed, feeling broke and living in a nice house on an acre instead of scraping by in a one bedroom apartment in beach town.

Friends #3, went St Louis 6 years ago. Happy, job is good, lots of opportunity. Has a 15 minute commute instead of an hour plus from the IE to the coast...

NSR, based upon the info you gave us, I'm going to take "umbrage" with the "not-so-hidden" but nonetheless "real" reasons your "friends #2 and #3" defected from SoCal.

Reread my previous post on this thread about the "disconnect in the mind" about what particular properties "should sell for" in CA coastal counties and what they actually sell for. Those transplants that can't get a grip on this phenomenon more often than not leave 1-5 years after arrival.

I've posted this several times on this forum and even stated a few times that the "housing expectations" of most transplants (even if assisted with their move by an employer) have to be carefully "managed" by their agent/broker assisting them in their search or hundreds of hours will be wasted by all with no sale.

Friend's #2 and #3's REAL issue was that they couldn't obtain the "lifestyle" (read: size and/or location of housing) in So Cal that they saw others own and fantasized about owning themselves. Perhaps it was because they entered SoCal at a time when they watched a lot of "pretend" homeowners who used "funny money" to purchase their properties and home "equity" to live off of live the life they wanted.

The truth is, Friend #2 didn't want to leave his/her "beach area" OR was renting a luxury apt/condo elsewhere in SD. They didn't want to pay LESS rent and save MORE for a downpayment for a house because they couldn't stomach leaving their beach locale or luxury unit for lesser local digs while they saved. Why am I saying this? Because they managed to purchase a house on an acre in Austin ($275K - $375K). So that person moved to Austin in 2006 and then purchased a property which may or may not (more likely not) be worth any more today or even tomorrow.

Friend #3's housing disconnect is even MORE pronounced. They bought/rented in the IE all the while knowing they were working "on the coast." Therefore, they never really assimilated into the coastal area where they were working (SD County?). All during their residence in the IE until the time they left in 2006, they likely coveted a home closer to work but refused to pay the price (they could have rented). Their self-imposed road warrior lifestyle was entirely their choice. They didn't like what was on offer to rent or buy in the area of or an adjacent area to their employment so moved out of county and commuted daily.

Had either Friend #2 or #3 just "hung on" in SoCal three more years (to 2009), they would have very likely been able to buy better (and closer) digs then what they were living in. Instead, they sought employment elsewhere and left when a job was offered to them.

I don't buy that your "friends" were taxed out of CA. All five of them don't sound like they were in a "category" to pay very much in taxes.

They just suffered from good old "CA housing disconnect" which is incurable. In CA coastal counties, RE buyers must accept what is on offer, rent or leave.

It's ALWAYS been this way and will never change.

Submitted by bearishgurl on January 16, 2013 - 11:23am.

no_such_reality wrote:
SK in CV wrote:
no_such_reality wrote:
However, my point was to counter the 'everybody will come crawling back to SD meme'

Point taken. People leave for a lot of reasons. I left and it had nothing to do with taxes. I'm quite content but still expect I'll be back some day.

Probably when you retire and have amassed a nicer nest egg than is possible in California.

As someone else said, California's real problem is the out migration of the $75K-$200K crowd. The people that make lots of bank but in Coastal California are just getting by.

What about all the Asian and East Indian immigrants who came to CA to go to school, graduated and then got jobs here in tech, medicine and law? They make "bank" and aren't hankering to move to St Louis ... that is, unless a random headhunter taps them with a more lucrative job offer elsewhere in the country.

They're paying massive payroll taxes and not leaving by choice or because they have a "housing disconnect."

The "housing disconnect" occurs primarily in American citizens who can't accept that the calibur of the house they grew up in will never be theirs, likely because their parents sacrificed far more than they are willing to in order to keep it while they were growing up. It also occurs in the transferred-in employee who is "used" to more space and a newer, larger home out of state. It is very, very hard for these incoming transferees from the flyover states (ESP for their spouses) to "envision" themselves living in a circa 1961 remodeled 2150 sf 4/2/2 in Clairemont (92111) on a 6500 sf lot in order to be close to their new job in LJ.

These are the ones who tend to defect to lizardland and the IE to even get a semblance of the housing that they and their families were "used-to" in less-populous, less-desirable states, turning the transferee into a "road warrior." The whole family tires of his/her "road-warrior" lifestyle and transfers out within five years instead of finding a place closer in.

Submitted by sdduuuude on January 16, 2013 - 11:37am.

no_such_reality wrote:
SK in CV wrote:

So none of them actually left because of the tax increase on very high income taxpayers.

They left because of high taxes on them!

That's a great answer.

Submitted by no_such_reality on January 16, 2013 - 11:46am.

BG, I know plenty of those Asian and East Indian immigrants. Many are in debt up to their eyeballs. And that's inspite of both of them being highly educated, highly employed and frankly, they're wondering how to get off the financial treadmill too.

I also know plenty that are working their backsides off scraping to build wealth and get enough capital to open that 2nd franchise or buy the next rental.

BTW, have been to fly-over land lately? Asian and East Indian immigrants are common.

Negative connotations aside of your post, you make our point, you need to down-grade your material lifestyle or make $200K plus to be in the good parts of Cali. And unless someone left you a house, $100K in Cali is lower middle income existence and it just gets worse as you go down from there. And I'm OC/LA where the housing and expense issue is even more pronounced than SD.

Regarding friends #2 & #3, yes, friend #2, was single making $100K+ and basically feeling poor. To get a house he'd have to stretch to buy crappy and in a crappy hood.

Friends #3 same, she was making $100K and hubby another $50Kish. Ironically, making more now in St. Louis.

the 8% plus sales taxes, the 9.3% income tax, just extra kicks in the shins.

And yes, all five of them where in the $100-$300K range. Elsewhere, that's really good money. In SoCal, that's comfy with trade offs.

Submitted by SK in CV on January 16, 2013 - 11:59am.

no_such_reality wrote:
BG, I know plenty of those Asian and East Indian immigrants. Many are in debt up to their eyeballs. And that's inspite of both of them being highly educated, highly employed and frankly, they're wondering how to get off the financial treadmill too.

I also know plenty that are working their backsides off scraping to build wealth and get enough capital to open that 2nd franchise or buy the next rental.

BTW, have been to fly-over land lately? Asian and East Indian immigrants are common.

Negative connotations aside of your post, you make our point, you need to down-grade your material lifestyle or make $200K plus to be in the good parts of Cali. And unless someone left you a house, $100K in Cali is lower middle income existence and it just gets worse as you go down from there. And I'm OC/LA where the housing and expense issue is even more pronounced than SD.

Regarding friends #2 & #3, yes, friend #2, was single making $100K+ and basically feeling poor. To get a house he'd have to stretch to buy crappy and in a crappy hood.

Friends #3 same, she was making $100K and hubby another $50Kish. Ironically, making more now in St. Louis.

the 8% plus sales taxes, the 9.3% income tax, just extra kicks in the shins.

And yes, all five of them where in the $100-$300K range. Elsewhere, that's really good money. In SoCal, that's comfy with trade offs.

The guy making $100K wasnt paying 9.3% if he was married. Even if was single, his taxes would have been closer to 6%.

When I left CA, i was living in Carmel Valley (I think that's a pretty good part of CA). I lived pretty well, in fact very well, spending no more than if I was making $150K a year AND I had two kids in college I was paying for out of that money. I really wonder sometimes what people think a middle-income lifestyle should look like.

Submitted by bearishgurl on January 16, 2013 - 12:22pm.

no_such_reality wrote:
BG, I know plenty of those Asian and East Indian immigrants. Many are in debt up to their eyeballs. And that's inspite of both of them being highly educated, highly employed and frankly, they're wondering how to get off the financial treadmill too.

I also know plenty that are working their backsides off scraping to build wealth and get enough capital to open that 2nd franchise or buy the next rental.

BTW, have been to fly-over land lately? Asian and East Indian immigrants are common.

Negative connotations aside of your post, you make our point, you need to down-grade your material lifestyle or make $200K plus to be in the good parts of Cali. And unless someone left you a house, $100K in Cali is lower middle income existence and it just gets worse as you go down from there.

Yes, I've been to several hospitals in "flyover land" in recent years visiting relatives and noticed that nearly all the new resident/interns as well as many physicians and PAs are of Eastern Indian descent.

And when I was researching the effects of fracking on water quality here a few weeks back, I noticed that most of the petroleum engineering students (and some teachers) at OU were of East Indian descent.

I don't think most of these immigrants grew up with a "silver spoon." And many of their parents obviously sacrificed mightily to send them to college in the US. They will go wherever the best opportunities for themselves are. They don't have a "need" to live close to a coast. Any place in America is better than their homeland, due to the better economic opportunities they present. Economic opportunity is the only reason most of these immigrants sought permanent residency in the US after graduation, IMHO.

Contrast the immigrants to an American Gen X/Y who had their own horses in TX ... while growing up in a 4400 sf home on daddy's ranch (that their dad and other relatives built on land long-owned by family members). That individual (even if only a HS Grad) is NOT going to be happy with what they can "afford" to live in in SD, no matter HOW much they and/or their spouses make. Even as a military spouse stuck in SD Navy Housing or Camp Pendleton, my experience was that these "silver-spoon types" typically hate the lifestyle here, whether living in military quarters ... or not.

The CA coastal housing disconnect is not fixable because it is part of the transplanted resident (or soon-to-be transplant who may or may not take the transfer on offer due to this "disconnect"). It is psychological but I will stop short of saying it's a "problem." It's only a "problem" for those who are chronically disenchanted with the tradeoffs they must make to live in a particular locale. Since it's a "free country," they are free to leave (as the OP is finally doing here). And agents/brokers are free to see thru this "disconnect" early on and fire these "buyer" clients, freeing them up to find someone else to help them find what they are looking for in their price range, lol.

Submitted by earlyretirement on January 16, 2013 - 12:26pm.

SK in CV wrote:

So none of them actually left because of the tax increase on very high income taxpayers.

I know many people that have moved out of San Diego. Most of them were former college classmates. But quite honestly none of them moved out of California due to the high taxes. They moved out because they couldn't find a good job where they could make as much as other places. I'm quite sure they would have stayed had they been able to find decent jobs for their experience/education.

And I have to say that most of them were living way above their means for many years. Many of them took out equity of their homes (using them as a virtual ATM machine) and eventually lost their houses.

But high taxes didn't have anything to do with it.

Submitted by bearishgurl on January 16, 2013 - 12:29pm.

earlyretirement wrote:
SK in CV wrote:

So none of them actually left because of the tax increase on very high income taxpayers.

I know many people that have moved out of San Diego. Most of them were former college classmates. But quite honestly none of them moved out of California due to the high taxes. They moved out because they couldn't find a good job where they could make as much as other places. I'm quite sure they would have stayed had they been able to find decent jobs for their experience/education.

And I have to say that most of them were living way above their means for many years. Many of them took out equity of their homes (using them as a virtual ATM machine) and eventually lost their houses.

But high taxes didn't have anything to do with it.

I agree with you than pay scales in SD are an issue when compared with other large cities in CA and elsewhere.

ER, are you originally from SD or another part of CA?

Submitted by scaredyclassic on January 16, 2013 - 1:05pm.

Managing exPectations is vital for all areas of life.

Submitted by bearishgurl on January 16, 2013 - 1:35pm.

no_such_reality wrote:
....Negative connotations aside of your post, you make our point, you need to down-grade your material lifestyle or make $200K plus to be in the good parts of Cali. And unless someone left you a house, $100K in Cali is lower middle income existence and it just gets worse as you go down from there. And I'm OC/LA where the housing and expense issue is even more pronounced than SD....

IIRC, you are a SD North County resident, NSR. Let's assume your grandmother on your mom's side with whom you spent many weekends swinging on her tree swing as a child enjoying the view and good family times and remember them fondly, has recently died. She was widowed at 44 and you just found out she has left you her home and adjacent lot, free and clear with Prop 13 "protection" on it. Taxes are currently $505 annually, per SD Assessor.

http://www.sdlookup.com/MLS-120046895-93...

Would YOU live in it? Would YOU move your family into it? Would you do repairs/improvements on it? Would YOU live there for the rest of your life in order to pay NO MORTGAGE and LOW TAXES and live "stress-free" in Cali (with lots of discretionary income)? OR would you immediately mortgage it and invest in the stock market or buy another rental and/or vehicles and bling. Would you rent it out and keep paying your current mortgage? OR would you immediately sell it and lose the Prop 13 "protection" on it forever?

The truth is that the vast majority of these "heirs" who were fortunate enough to be "left a house" in CA moved into it before or shortly after the death of the owner and will live out the rest of their lives in residence and perhaps even pass it on to their children. They weren't "picky" about anything regarding the property, i.e. location, size, condition, etc. They simply did as much work they could afford to do on it when they took title of it (or did NO work if they couldn't afford to at the time) and moved in. They don't have a "glamorous lifestyle" but can live, eat and pay for their utilites (often at "lifeline rates").

MOST of these heirs didn't mortgage their "inherited" properties to death to buy vehicles and bling. And many of the ones who did lost their longtime family homes to foreclosure.

So, what would YOU do, NSR??

And where do you consider to be the "good parts of Cali?"

Submitted by flu on January 16, 2013 - 1:45pm.

Gotta pay to play...

Submitted by no_such_reality on January 16, 2013 - 2:27pm.

BG, again, you're missing the point. Taxes are high and are one component of the high expenses it takes to live here. Meanwhile opportunities are falling and the Gen-Y you like to rail against in Cali has lower expectations than their parents. We've had that discussion before, areas where the up coming generations have lower expectations than the current generation stagnate and decline.

Housing and other expenses attribute greatly to the housing disconnect and the general dissatisfaction with SoCal once people are done with their single years.

There is a continued pressure on the upper middle class that influences out migration of that critical tax and consumer base. As people begin to look elsewhere, they are seeing more opportunity, less government interference, less expenditures and equal quality of life issues.

California, through tax policy, regulation and good fortune is accelerating the income divide between the haves and the have nots with the the middle ground disappearing. We as society in California will not survive the continued drain on quality jobs and lowered quality of life expectations for middle income $50K-$150K people and people starting out from college.

When I say good areas, I mean desirable. IOW, coastal. In LA/OC that's west of the 405. In OC, almost all SFRs sub-$400K are in neighborhoods that are either bad as in dangerous or have a high concentration of one ethnicity. OC is fairly self segregated. As you move inland, particularly, the IE, I see no reason not to move to Phoenix, SLC, Denver, Texas. You've got the same climate and you're two hours from the beach anyway.

Here's a nice little house. Only $380,000 for 1100sf and 3/1.75.

To buy it you need what? A $100K income if doing a 3% FHA loan, PITI will then be about 27% of your gross.

That neighborhood? Not horrible, not great. Renting though, is even more expensive. And that's now, it was even worse over the last decade.

As for the Escondido house, think about the economic advantage of not having rent, what's that? $1400-$2200 a month they're not forking over? That's if they could live in Escondido. If not rent it. As for fixing, well, rent to repairs is a pretty solid repair schedule. Imagine how poor their life would be if they weren't left the house.

Submitted by PeteDude on January 16, 2013 - 3:34pm.

Ya know, I've noticed fewer large companies running headquarters in CA. It wouldn't surprise me if higher-income folks were to flee, as well.

It's not only getting too expensive to live here, but it's becoming too expensive to do business as well.

Submitted by bearishgurl on January 16, 2013 - 4:01pm.

no_such_reality wrote:
BG, again, you're missing the point. Taxes are high and are one component of the high expenses it takes to live here. Meanwhile opportunities are falling and the Gen-Y you like to rail against in Cali has lower expectations than their parents. We've had that discussion before, areas where the up coming generations have lower expectations than the current generation stagnate and decline.

Housing and other expenses attribute greatly to the housing disconnect and the general dissatisfaction with SoCal once people are done with their single years.

There is a continued pressure on the upper middle class that influences out migration of that critical tax and consumer base. As people begin to look elsewhere, they are seeing more opportunity, less government interference, less expenditures and equal quality of life issues.

California, through tax policy, regulation and good fortune is accelerating the income divide between the haves and the have nots with the the middle ground disappearing. We as society in California will not survive the continued drain on quality jobs and lowered quality of life expectations for middle income $50K-$150K people and people starting out from college.

When I say good areas, I mean desirable. IOW, coastal. In LA/OC that's west of the 405. In OC, almost all SFRs sub-$400K are in neighborhoods that are either bad as in dangerous or have a high concentration of one ethnicity. OC is fairly self segregated. As you move inland, particularly, the IE, I see no reason not to move to Phoenix, SLC, Denver, Texas. You've got the same climate and you're two hours from the beach anyway.

Here's a nice little house. Only $380,000 for 1100sf and 3/1.75.

To buy it you need what? A $100K income if doing a 3% FHA loan, PITI will then be about 27% of your gross.

That neighborhood? Not horrible, not great. Renting though, is even more expensive. And that's now, it was even worse over the last decade.

As for the Escondido house, think about the economic advantage of not having rent, what's that? $1400-$2200 a month they're not forking over? That's if they could live in Escondido. If not rent it. As for fixing, well, rent to repairs is a pretty solid repair schedule. Imagine how poor their life would be if they weren't left the house.

A few things here, NSR.

First, Gen Y DOES have much higher expectations than generations prior, in working conditions, living conditions and in the material gadgets they can't live without. It doesn't matter where they live. These preferences are generational.

I KNOW this TV show is staged, but House Hunters (HGTV) was touring with FTB's in Michigan, Wisconsin and Alabama over the weekend. All were in the $200K range and wanted to be close to work (had mostly established urban choices) but I couldn't believe the (lame) reasons these buyers gave their agent for "rejecting" a property:

"It has Formica countertops."

"These (newish) appliances aren't stainless steel."

"This parquet flooring (in good cond) needs to be replaced before I would move in."

And most incredulous of all, "I don't like the `flow'."

Jeez, how can they complain about "flow" in their respective price ranges? Am I missing something? With everything else they have to deal with, is a middle-income FTB supposed to be concerned about "flow?"

And how picky do you think a FT FHA or VA buyer should be and still be able to consummate a deal with a "real" equity seller?

In my mind, these are all RIDICULOUS reasons for rejecting a property located in the area a buyer needs to live in.

All of the buyers were lured further out by their agents due to their "complaints" about dated features and two made a deal outside of their stated location parameters and chose to "commute." Or at least the one who was going to do the "commuting" did so to make his spouse "happy."

And the one whose spouse hated the color of the appls bought that property and replaced the perfectly good white appls with SS models prior to move in :=0

I don't think the depiction of Gen Y buyers on HGTV is too far off from reality.

***

I DO believe SD salaries are not as proportionate to the cost of living here as are salaries in other major cities, both in and out of CA.

I don't understand what you mean by the phrase "... once people are done with their single years."

Of course, one can't easily raise a family in the studio apt they lived in their college years but why is there such a "housing disconnect" here if one went to college in SD or other part of SoCal and are already familiar with the local area? They (and their new spouse) are both making good salaries now, no? Those salaries are MUCH bigger than generations past made at the same age. Are you saying that SD is fine for Gen Y to live in as long as they are single?

***

Regarding your "coastal parameters" being "a good area of Cali," do you think past generations typically bought their first (or second) homes within those parameters? If they couldn't, why do you think YOU should be able to?

***

Sorry, but SLC and Denver are much, MUCH colder than the IE. When the last time you've been in either city in the winter, NSR? Phoenix is MUCH hotter than the IE at least 7 months per year. Most of TX is VERY flat and is subject to high humidity, high winds, chiggers and ice storms.

All the above are actually good places to live. And Denver, CO RE is more expensive than all of those places (as well as the IE) for many reasons other than cold weather. All I'm saying here is that you get what you pay for in life. If you want to leave So Cal, just know what you are getting into first.

***

Your "nice little house" sample in Buena Park is conveniently located ... yes. But it can be beat hands-down in price and build quality in many urban and close-in suburban areas of SD. The FHA allows at least a 38% back-end ratio, IIRC.

***

From your comments here, I still don't understand how YOU, as an heir, would deal with or dispose of the Escondido home you just inherited. And exactly what is wrong with Escondido? Would whatever was seemingly wrong with Esco be somewhat mitigated if you got the property for "free?" Would it be too much work for you to fix up to rent out? If not, would you lease it out? And don't forget that it has an adjacent parcel that grandma never did anything with ...

I'm curious as to your responses re: a "free" house given to you so you can have a "stress free" life in Cali.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.