this is an interesting thread, and has meandered about in an interesting way.
I am always struck by the arguments for staying in CA cuz of the weather and the idea that this is a place people come to vacation, or stay (this was the case for florida, but that trend is slowing down). Similar arguments could be made about the outer banks, or the coast of Maine, or NYC (and each with a negative (humidity, proximity to new jersey, and long winters, respectively)), each of which have their own draws for individuals (muggy nights and mosquitos was good reasons to leave chapel hill though!). I personally think that the weather here is dreadfully boring, it sucks that May to June is cloudy at the beach, and I hate the 50 degree water, but that is me and not the other 1million people here.
I wouldnt be here except for an incredible job that only exists in san diego, and that makes everything else bearable for me. What I find incredible here though is that there is an assumption that because historically californians have been willing to pay more than 4X their gross salary on a starter house, that they continue to believe that being house poor is a financially smart decision (those that got in and out before the crash excluded).
Look at the data for prime houses in coronado and la jolla, more than 550 SFRs for sale, but just 45 in UTC.
One could argue that spending 1million for an SFR in La Jolla might be OK (but look at the perceived appreciation there), spending the same for a place in UTC is hard to believe (although right now there are fewer 1 million homes for sale there) on economics grounds. Rationality in the market here does not really exist because of the historical fact that there is always a sucker to by the next house. By buying a house here, we all deep down believe this to be the case, even if we want to stay for a long time.
The fact ultimately is that right now the sweet spot is between 550 to 750 because relative to the peak the number looks smaller, people could have saved between 100 and 200K if they were smart over the last 5 years, and so there should be some desire for houses in this range because of history, mental fatigue, and irrationality.
I hope that prices continue to fall, they need to, the fact that flippers are putting out houses that are in the sweet spot means that the price point is what the public may be looking at, regardless of the quality of the properties offered. Good for them, bad for us, but with 10.5% unemployment whose going to by the houses when people start spending their down payments.
As for the shallowness of NJ peeps you wont get any argument from me, but southern california historically is a big mirror, so careful with stones anywhere!
ps. if you can find me a third of an acre with trees that lose their leaves in SD proper for the sweet spot price, I might decide I like southern california ;>
I think though that your argument that lower income people can pick up and move as easily as many of the piggies here, is flawed. Most lower income people, I believe (no data, sorry), will truly make a a decision based on opportunity cost, hence the big fence a bit further south.
The next 6-12 months could be really interesting.
If the prices are still to high they will eventually come down, but it may time to think of a nice retirement community.. somewhere warm all year, no bugs, boring weather… anyone have any ideas!
