Farls,
You make good points, and as a first time poster I respect the feedback.
Believe it or not, people are incredibly risk-averse out here. The majority of my peers and managers have 15 year mortgages and are on track to pay them off early. I am an oddity in that I moved here. Most everyone else is from here, and would never leave. Mostly Irish guys, firmly rooted. Comparing this group to my peer group in OC, the difference in spending habits with similar income are striking. Its not fair to chalk it all up to education, but perhaps lack of exposure to the accoutrements of the “good life” that we all enjoy(ed) so much in OC is an education unto iself 😉 Incidentally, the areas in Boston that are seeing rising inventory and price cuts are in marginal areas that appealed to marginal buyers that were marginally qualified. You could compare these areas to an Inland Empire or Lancaster/Palmdale from a relative desirability perspective.
Lastly, I understand your comments regarding stating income and education. I did this to baseline my “demographic”, and then frame the comparison. I lived in South OC before we moved, and while the neighborhood was nice and mostly families, I believe that less than 25% of my neighbors had jobs that required a degree. Many of them sold for large cap gains, and aspired to move to Coto etc. So they make $400K on their home, keep $100, and put $300K down on a new $1 million home in Ladera Ranch. Now they have an exotically financed $700K mortage to service, but still on their relative OC median income of ~80K (or $160K if dual income). How will they do it? They have no idea. No knowledge of fixed income markets, no knowledge of the Carry Trade, blindly believing they will experience double digit appreciation annually, allowing them to perpetually pull cash out at low rates and postpone their day of reckoning. I feel for these folks, but they’re mostly uneducated and more likely to be caught up in a mania.
To do sales at my company, you are required to have a minimum of a BSEE/BSCS/BSCE. We are required to manage executive relationships, hit quotas for sales and demand creation, and directly and forcefully challenge our executives when they make decisions adversely affecting our customers. It takes a lot of confidence to demand accountability from a guy running a $1 billion P&L. I constantly try to get colleagues that work in marekting, business development etc to come out and experience field sales, but most people don’t have the stomach for it. So I guess you could say its not a whole lot different from RE, except that it requires a formal education and likely provides a more secure career path – and the chance to work around some incredibly smart people that serve to remind me that I am nowhere near as smart as I think I am sometimes.
I have a wide variety of friends, both childhood and college, that are in various aspects of real estate. One was a high school dropout and is now a successful residential agent, two others went to USC with me and are mortage brokers, and the most successful ones are in commercial RE. Their career earning patterns look like a volatile stock’s chart. The big difference between us is my pay goes up every year, guaranteed (barring a huge meltdown in semis or my inexplicable shift to a life of crime), and I control my own destiny. I’m also fairly young, and can expect some huge capital gains from my stock options and restricted stock grants over the next 20 years I plan to work. Retiring any earlier would be cheating myslef out of a bigger pension.
So I don’t doubt at all that you know many folks with no education making more than my stated income. But in OC and SD, the percentage of them that derive that income from a stable source (i.e. not fully commissioned) is small, much smaller as a percentage than Metro Boston, which is both Silicon Valley East and the #2 financial center after NYC (Fidelity and many other huge mutual funds are HQd in BOS). At the end of the day, its all about jobs, and OC and SD are sorely lacking in high paying professional job creation.
I look forward to the lively exchange of information on this blog.
