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

[bearishgurl]

[quote=no_such_reality]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.[/quote]

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.

[EconProf]

As we debate whether high CA income taxes do or do not explain the current net outflow of Californians to other states, let’s keep the bigger picture in mind.
What we conservatives resent more is that our high taxes don’t buy us much. We have about the worst education results in the nation–generally tied with Mississippi or Louisiana on performance tests and graduation rates–yet we have the highest paid teachers in the nation. Our prison costs per prisoner per year are twice as high as Texas and three times as high as Montana. Yet Texas has a far lower recidivism rate. In short, taxpayers don’t get much for their money in this state.
Those high taxes in turn push up the cost of living here. Businesses HAVE to charge us more here in order to pay their heavily taxed workers more and deal with the regulations, 50% higher utility rates, and business taxes.
One would think that with all this big spending and liberal policies we would be helping the poor. Yet days ago a new Census Bureau study showed CA to have the biggest divergence between poor and rich when cost of living is included.
Some earler posts claim that CA’s high cost of living is a bigger factor in prompting the move-outs than taxes. My point here is that the high taxes and what little we get from them drive up our cost of living, thus providing another motivation to move.

[no_such_reality]

As I said previously, rent it, sell it or live it. It all depends. It is RE, and location, location, location. If you don’t have a job or business in the area, rent it or sell it.

The even bigger thing is when was it given.

Either way, it’s a $300,000 windfall. It’s inheritance that smokes 99% of the population’s inheritances.

It is a silver spoon.

Do you know why? I’d sell it, take all but about $50K the proceeds pay my house down to a really low conforming loan and refi into a 15 yr fixed. I’d than make an extra principal payment while saving about $300/month for five years, then take the $50K rainy day money, along with another little rainy day pile and just pay it off. Provided I haven’t had great misfortune requiring me to hit the funds.

Again, I’m in OC, my business is in OC. Many people, live in OC. Hence, that little gem in Buena Park is reality for many. Just like the house in Escondido is reality in SD. The job markets are slightly different, commutes different, but economic realities are the same.

[SK in CV]

[quote=EconProf]As we debate whether high CA income taxes do or do not explain the current net outflow of Californians to other states, let’s keep the bigger picture in mind.
What we conservatives resent more is that our high taxes don’t buy us much. We have about the worst education results in the nation–generally tied with Mississippi or Louisiana on performance tests and graduation rates–yet we have the highest paid teachers in the nation. Our prison costs per prisoner per year are twice as high as Texas and three times as high as Montana. Yet Texas has a far lower recidivism rate. In short, taxpayers don’t get much for their money in this state.
Those high taxes in turn push up the cost of living here. Businesses HAVE to charge us more here in order to pay their heavily taxed workers more and deal with the regulations, 50% higher utility rates, and business taxes.
One would think that with all this big spending and liberal policies we would be helping the poor. Yet days ago a new Census Bureau study showed CA to have the biggest divergence between poor and rich when cost of living is included.
Some earler posts claim that CA’s high cost of living is a bigger factor in prompting the move-outs than taxes. My point here is that the high taxes and what little we get from them drive up our cost of living, thus providing another motivation to move.[/quote]

Would your conclusions change any if you learned that CA schools are not the worst (not close to true) and CA teachers are not the highest paid (not true either)?

[EconProf]

Yes, if you could show I am hugely wrong.
But if your evidence only moves the needle a little, then no.
For example, CA teachers are not literally the highest paid if you count D.C. And maybe another state or two…but if our teachers are the second highest paid, or third, or fifth…
(Google Teacher Pay by State, or some similar label to see details of many studies. All show our teachers to be very highly compensated. Don’t forget to add retirement benefits, medical, other fringe benefits in to get total compensation.)
As to educaton results…another slippery item to measure. So feel free to cherry pick your study. But you have no case unless you discover our expensive schools give us remotely commensurate results.

[SK in CV]

[quote=EconProf]Yes, if you could show I am hugely wrong.
But if your evidence only moves the needle a little, then no.
For example, CA teachers are not literally the highest paid if you count D.C. And maybe another state or two…but if our teachers are the second highest paid, or third, or fifth…
(Google Teacher Pay by State, or some similar label to see details of many studies. All show our teachers to be very highly compensated. Don’t forget to add retirement benefits, medical, other fringe benefits in to get total compensation.)
As to educaton results…another slippery item to measure. So feel free to cherry pick your study. But you have no case unless you discover our expensive schools give us remotely commensurate results.[/quote]

California per student spending is among the lowest in the country, despite the teacher salaries being among the highest. Class size is among the largest. (some justfication for higher teacher salaries?)

I cherry picked the most recent study I could find. Maybe I’m biased because I think my kids got a great education in public schools in CA. I got my money’s worth.

http://www.edweek.org/ew/qc/2012/16src.h31.html

[scaredyclassic]

My public school education in NYC sucked largely because I was primarily focused on trying to touch girls.

[EconProf]

[quote=SK in CV][quote=EconProf]Yes, if you could show I am hugely wrong.
But if your evidence only moves the needle a little, then no.
For example, CA teachers are not literally the highest paid if you count D.C. And maybe another state or two…but if our teachers are the second highest paid, or third, or fifth…
(Google Teacher Pay by State, or some similar label to see details of many studies. All show our teachers to be very highly compensated. Don’t forget to add retirement benefits, medical, other fringe benefits in to get total compensation.)
As to educaton results…another slippery item to measure. So feel free to cherry pick your study. But you have no case unless you discover our expensive schools give us remotely commensurate results.[/quote]

California per student spending is among the lowest in the country, despite the teacher salaries being among the highest. Class size is among the largest. (some justfication for higher teacher salaries?)

I cherry picked the most recent study I could find. Maybe I’m biased because I think my kids got a great education in public schools in CA. I got my money’s worth.

http://www.edweek.org/ew/qc/2012/16src.h31.html%5B/quote%5D
The chart you show put CA about in the middle compared to other states, but I could not tell what it was measuring/comparing. Maybe you can explain it to us, although I tend to distrust studies from the education establishment.
But yes, it showed CA to be far from the worst in the nation. I still maintain that we are not getting our money’s worth, and your comment about per pupil spending being low for CA is indeed colaborated by other studies. So how can CA teachers be highest paid (or nearly so), while per pupil spending is far from highest? Big classes are one answer (as you point out), but also wasteful layers of bureaucracy in school administrators, nonsensical rules, high building costs (unionized labor), and countless other inefficiencies unique to California.
Administrative bloat is a valid complaint of teachers. Administrators are wildly overpaid, and have their own unions to fight for their piece of the pie.

[SK in CV]

[quote=EconProf]The chart you show put CA about in the middle compared to other states, but I could not tell what it was measuring/comparing. Maybe you can explain it to us, although I tend to distrust studies from the education establishment.
But yes, it showed CA to be far from the worst in the nation. I still maintain that we are not getting our money’s worth, and your comment about per pupil spending being low for CA is indeed colaborated by other studies. So how can CA teachers be highest paid (or nearly so), while per pupil spending is far from highest? Big classes are one answer (as you point out), but also wasteful layers of bureaucracy in school administrators, nonsensical rules, high building costs (unionized labor), and countless other inefficiencies unique to California.
Administrative bloat is a valid complaint of teachers. Administrators are wildly overpaid, and have their own unions to fight for their piece of the pie.[/quote]

Click on the state, and it shows what it’s measuring. A couple dozen different items.

I think a more likely conclusion on how CA can pay among the highest teacher salaries with among the lowest per capita total spending is that CA public education does not have bloated admin costs. A bigger percentage of education dollars are going to pay teachers, not all those other things. If all those other costs were high, then per capita spending would also be high. It’s not.

[CA renter]

[quote=bearishgurl][quote-no_such_reality]….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….[/quote]

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-120046895-932_W_2nd_Ave_Escondido_CA_92025

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?”[/quote]

BG,

You keep forgetting that there are multiple heirs in most cases. In most of the cases I’m familiar with, they need to sell the house(s) in order to settle the estate.

All too often, none of the heirs want to live in mom and dad’s house which might be located hundreds or thousands of miles away from where they’ve made their own lives. Most heirs that I’ve known over the years have no desire to be long-distance landlords, especially with a house that would require tens of thousands of dollars in order to make it rentable. This is despite the fact that many of these houses really are excellent investments as rentals; they just don’t want to deal with the hassles.

In the example you’ve given, it would be difficult to find tenants who would ALWAYS pay on time and not destroy the house. That neighborhood does not attract highly educated, high-income renters with stellar credit scores. It would be okay as a rental if one lived nearby and didn’t care much about how the tenants treated the house. It might be a good investment if the buyer could get it for a lower price, along with the extra lot, and then build a duplex (More? Zoning?) on the additional lot.

[CA renter]

[quote=earlyretirement][quote=SK in CV]
So none of them actually left because of the tax increase on very high income taxpayers.[/quote]

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.[/quote]

Ditto. I’ve known many, many people who’ve left California, but not a single one who left because of taxes. The #1 reason people leave this state is the cost of housing, whether renting or purchasing. The pay here is not much higher (oftentimes, California jobs pay LESS!) than comparable jobs in other states. With the same or higher wages in other states, and (much) lower housing prices, one can significantly boost their quality of life by moving to these lower-cost states. It has nothing at all to do with taxes.

[Coronita]

1. Adopt or die…

2. Can’t cut it? Move out…

(#1 is copyrighted from another pigg).

[no_such_reality]

[quote=flu]1. Adopt or die…

2. Can’t cut it? Move out…

(#1 is copyrighted from another pigg).[/quote]

LOL, the California blindness. Anybody moving out ‘can’t cut it’.

Taxes are just one more straw on the camels back. Anybody moving purely for tax reasons, IMHO, is misguided.

They may be moving because of the impacts of those high taxes, our workers comp environment, our ADA lawsuit environment, our environmental regulatory environment, the AMQD requirements, the CARB requirements, our expense environment or the out migration of large corporate jobs, but solely taxes, no.

But in general, it’s the slow degradation in quality of life for otherwise rather successful and capable people that just not stellarly so.

The true irony is that most of the large out migration States (Washington, Arizona, Texas) really which most of the Californians would just go home. They move there and then want the same government oversight they’re fleeing.

And that’s the true disconnect. Which brings us back to econprof’s point. Are we getting the value. Or are we starting to disproportionately rely on a few to pay for us all.

IMHO, our value received is in the bottom 1/3rd and our disporportionateness is rather high.

[UCGal]

As someone who was born here, went to school here, and left here…. Then came back a decade later, I can say that finances were why I left… Specifically job opportunities and cost of housing.

And quality of life and family is why I came back.

Back in 1990 when I left, the defense industry was totally collapsing. That impacted engineering jobs. Qualcomm had like 100 employees – it was a start up. There were more jobs elsewhere.

And back in 1990 – a starter condo in mission valley was starting to hit closer to $150k… And salaries were pretty low – so that was a stretch. I wondered if I’d ever be able to buy.

Taxes were not on my radar. Jobs and home prices were totally the driving factors.

Fast forward more than a decade and I’d built up equity elsewhere. I had sticker shock on house prices when I moved back in 2001 – but not enough to keep me from moving back. Quality of life was a driving factor. Wanting my kids to grow up going to the beach, having year round outdoor activity, being close to my side of the family.

Taxes were not on my radar returning either. Things are a trade off. Taxes are a little higher here – but medical insurance is SIGNIFICANTLY cheaper here than Pennsylvania. Childcare is more expensive here, but I can roll more of my PTO per year here. Lots of pros and cons. Taxes were not in the mix.

[bearishgurl]

[quote=no_such_reality]As I said previously, rent it, sell it or live it. It all depends. It is RE, and location, location, location. If you don’t have a job or business in the area, rent it or sell it.

The even bigger thing is when was it given.

Either way, it’s a $300,000 windfall. It’s inheritance that smokes 99% of the population’s inheritances.

It is a silver spoon.

Do you know why? I’d sell it, take all but about $50K the proceeds pay my house down to a really low conforming loan and refi into a 15 yr fixed. I’d than make an extra principal payment while saving about $300/month for five years, then take the $50K rainy day money, along with another little rainy day pile and just pay it off. Provided I haven’t had great misfortune requiring me to hit the funds.

Again, I’m in OC, my business is in OC. Many people, live in OC. Hence, that little gem in Buena Park is reality for many. Just like the house in Escondido is reality in SD. The job markets are slightly different, commutes different, but economic realities are the same.[/quote]

NSR, since you are now stating and previously stated below (and I didn’t catch it) that you are an OC resident, I’m changing my offer. Your grandmother just left you her “nice little house” in Buena Park where she cooked Christmas dinner for you and your family every year when you were a child.

[quote=no_such_reality]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.[/quote]

What are you going to do with it, NSR? I’m going to go out on a limb here and say you wouldn’t move your dog into it. Even though it’s a great rental area, you don’t like dealing with tenants who would live there so you would sell it and lose its low tax basis forever. You will apply the “windfall” sales proceeds to your gargantuan mortgage on your principal residence which you have *hopefully* taken out on a property west of the 405 fwy (in a good part of Cali).

[quote-CA renter][quote=no_such_reality][quote-bearishgurl]
http://www.sdlookup.com/MLS-120046895-932_W_2nd_Ave_Escondido_CA_92025
[/quote]…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[/quote]….In the example you’ve given, it would be difficult to find tenants who would ALWAYS pay on time and not destroy the house. That neighborhood does not attract highly educated, high-income renters with stellar credit scores. It would be okay as a rental if one lived nearby and didn’t care much about how the tenants treated the house. It might be a good investment if the buyer could get it for a lower price, along with the extra lot, and then build a duplex (More? Zoning?) on the additional lot.[/quote]

If I understand your posts correctly, you and CAR wouldn’t want to rent out this property even if you inherited it free and clear because it doesn’t attract W-2 high wage earners with stellar credit. I’m sure you’re both aware that the type of house which would attract such a tenant costs nearly twice as much (or more) than the two properties above and its high carrying costs wouldn’t make renting it pencil out.

NSR, the reality is, you actually really like your “stressful lifestyle” in having to produce X amt of thousands every month to survive and even if push came to shove, you wouldn’t change a thing about your life.

There’s really nothing wrong with this, but you sort of lamented here that those who were “given a house” in Cali were living a fabulous, carefree life filled with “discretionary income” falling from trees to do whatever they wanted with.

[quote=no_such_reality]….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….[/quote]

Based on your posts, NSR, I don’t think you’re interested in living the “stress-free life” of an “heir-occupant” on even $100K per year! You might be surprised to learn that all of the “heir-occupants” I am acquainted with live on small pensions, disability checks, UI, worker’s comp and SS (or a combination of the above). Two are still working (as a tow-truck driver and maintenance worker) and thus ALL of these “heirs” likely have annual incomes between $14K and $35K! “Humble” boomers in jeans, these people are only children, surviving children (their sibling[s] died) and usually took care of their surviving parent until they died and maybe both of them at one time.

CAR is correct that there are often multiple “heirs” on CA estates leaving behind long-owned RE. But sometimes the more “well-heeled” siblings living out of county are okay with giving their disabled sibling a “life estate” in the property if they promise to maintain it and pay the taxes and insurance premiums, especially if that sibling has taken care of their infirm parents for several (or many) years of their lives. That “heir-occupant” cannot borrow off the property without the signatures of the other owner(s) so it is kept free and clear for the life of the disabled sibling/former caregiver. Sometimes a elder parent with more than one child expressly leaves their house to the child who has taken care of them (who most needs it) and has other assets to distribute to other children.

The typical “heir-occupant” under age 65 living in a $250K to $450K neighborhood in CA usually qualifies for “lifeline” utility rates and some qualify for Medi-Cal or CMS. They pick and eat their own fruit from their backyard and shop at Grocery Outlet, the Navy Commissary, local produce stands, swap meets and thrift stores. They don’t have any credit cards. They still use their parents’ old TV, furniture, carpet, flooring and even their vehicle and have basic cable or rabbit ears. Those who have cell phones have prepaid plans and basic phones with voice only. Some are still taking care of their deceased parent’s pets.

Some of them are physically unable to maintain their landscaping and house properly and have to get help from friends, relatives and neighbors.

Without their parents’ home to live in, most of them would no doubt be homeless and their more highly-educated, non-disabled sibling(s) realize this.

Are these “heir-occupants” happy and “stress-free?” I don’t know. They likely have their problems too and some are in poor health. I’m sure they are aware, however, that this is as good as life gets for them :=]

[Author]

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