“Shutting out your 25-to-40 year-olds?”

[rankandfile]

North County posted a link to a NY Times Magazine article on housing and urban development/decline. The article focused on a maverick urbanologist who had some interesting ideas on why urban areas sprout up and why they decline.

One primary idea stuck with me after reading this article: availability of educated worker resources of an urban population play a big role in determining whether the city will grow or decline. It mentioned that long-running urban centers such as New York, San Francisco, and Boston have a wealth of younger, educated workers from which to draw upon for ideas and entrepreneurialism (the entrepreneurs follow the talent pools). One particular quote really hit home:

“Shutting out your 25-to-40 year-olds? That feels like a bad strategy for urban innovation.”

It made me wonder how the dynamics of the massive home price increases in SoCal (which are still much too high), are affecting the availability of educated 25-40 year olds in the workforce.

My hypothesis is that SoCal is in a steady phase of decline of educated, talented workers. There are several dynamics at play here, such as housing prices, illegal immigration, growth of the internet/virtual offices, and outsourcing.

This begs the following questions:

Why pay such a high premium to live in a state that is so expensive? Yes, there is sunshine, coastline, and baseball franchises, but how valuable are those in the eyes of future homeowners?

What is the motivation for entrepreneurs, business owners, and developers to bring their businesses here considering a purported diminishing talent pool and extraordinary regulations and taxes?

What’s keeping me here in Southern California?

[LookoutBelow]

Its all planned I believe by the current administration’s desire to eliminate the middle class.

You ask: Why are you living here still ? Who knows ?
Just exactly how much is all of this good weather worth to someone? Thats the question.

[carlislematthew]

Just exactly how much is all of this good weather worth to someone? Thats the question.

You’ll never know until you leave and try the weather somewhere else, or if you’ve lived somewhere else before.

In my opinion, the weather is a huge factor and explains the general extra cost of real-estate in SoCal. It DOESN’T explain the insanity with current prices, but I do think that it’s part of the premium. In my experience, the prices in SoCal are around 50% higher than in Seattle, WA, regardless of the current state of affairs. When I moved here from Seattle, that was a premium I was willing to pay for an area in which I could actually *enjoy* the place more.

In Seattle, unless you’re really insane, you just don’t go mountain biking from November to May. Here in SD, you can pretty much go every day. In fact, I’ll be going in about 30 minutes! 🙂

[Anonymous]

I’ll give you my take. I am from SD and lived here 34 years. Sold near the top in fall 2004 and moved to the Atlanta area. I have now been transfered back after 2 years.

I think the weather is certainly a factor, but you do have to ask how much it is worth. Frankly I don’t think it is worth as much as everyone says it is.

Our house is for sale in Atlanta, it’s in a top neighborhood (private lake, golf, 5 pools, etc.) and will probably sell for around $95/sq. ft. It has granite, SubZero fridge, the works it is a very nice home full walkout basement, all brick, 3 separate heat/AC systems, 3/4 acre and over 5,000 st. ft.

As you know prices here are more like over $300/ft. and over $500/ft. in some areas. So you are paying 3-5x more here than there, and in many cases and neighborhoods are WORSE than the one we were in. But, you have that sunshine baking everything and turning your yard brown instead of green trees and thunderstorms every day. Take your pick. Obviously the economy has chosen no rain and dust over grass and humidity, so I guess I’m nuts to compare them.

Only you can decide what you want and what it is worth to you. Personally I feel San Diego is nice but way overvalued. I plan to rent and ultimately if prices never do go down I know I can move elsewhere and have a very nice life. I will have to give up the weather but think positively, the sun can give you cancer!

[picpoule]

I think the weather plays a role, but only if we’re talking about the the coastal areas of California. They offer practically perfect weather. Believe me, I’m sick of the winters in Denver and they’re not really bad winters, like in Michigan or Minnesota. On the other hand once you’ve left the coasts in California, you have god-awful hot, smoggy humid weather in so much of the state there for so much of the year. Endless hot, smoggy weather and having to put up with a relatively mild winter — it’s a toss up to me. The only area the high prices are justified out there are the coastal areas. That’s it.

[rankandfile]

I guess it would be nice if the majority of the younger generation could afford a coastal home (let alone raise a family) in SoCal, but that is just not very realistic right now. So, they end up moving to places like Temecula, Murietta, the Inland Empire, etc. These places are nothing more than dessert within a VERY rough commute of major cities like LA or San Diego.

What I think has happened to many is that they think if they are going to be moving to a dessert, or otherwise undesirable (non-coastal) location, why do it in California? Why not move to Arizona, Nevada, Colorado, Georgia, Florida, etc? They are having to put up with the hot weather anyways. Might as well have a nice home with a big yard, and fewer taxes/regulations.

Unless you can live within a few miles of the coast and enjoy the weather benefits there, why stay in California?

[powayseller]

I agree with rankandfile. When we came here from Phoenix in 1999, we were almost priced out of the market, so we started looking in Ramona in the spring of 1999.

It was so hot there, I asked my husband why we should pay double for a house in a place that is just as hot as Phoenix. No way… so we stopped looking there and turned out sights to Poway. It’s still too hot, but bearable.

[North County Jim]

It made me wonder how the dynamics of the massive home price increases in SoCal (which are still much too high), are affecting the availability of educated 25-40 year olds in the workforce.

High housing prices don’t seem to prevent Boston, New York and San Francisco from having a wealth of younger, educated workers.

The forces you mention (outsourcing, home prices, etc.) should be in play in the long-running urban centers, no?

According to reports I’ve read in the past, southern California gained younger residents while losing middle aged and older residents during the last downturn. Admittedly, this dynamic was the result of the collapse of one dominant industry.

Powayseller has mentioned an exodus of residents from San Diego. Wouldn’t it be safe to assume that a significant fraction of these are long-time residents with large equity stakes cashing in their chips? This group must be skewed older than the general population.

I’m sure there’s a lot more at play here than meets the eye. Thoughts?

[powayseller]

I know from talking with people that younger ones are leaving. In one store, two employees recently left, because of the high cost of living. One of them owned a home, one did not.

San Francisco, Boston, and New York have higher paying industries and law firms, mutual fund companies, etc. that pay much more than SD companies. That’s why their median income is higher there. I wouldn’t compare SD to them. Compare SD to Florida, Nevada, or Phoenix, in the mix of jobs and incomes.

[barnaby33]

Its totally anecdotal but of all my college friends, only one is left in SD. We all went to CSUSM. My best friend was born and raised in Escondido and just moved to SE Kansas. I admit thats a bit extreme, but on 40k no way was he going to have a kid and a wife that didn’t work.

Its not the young or the old that are making up the bulk of the people leaving. It’s those who have median(or less) household incomes and that are in danger. Its the dreaded Palm Spring scenario, which always leads to decay.

As to SF new York and Boston. Yes they have young professionals in droves but very few stay. I would bet far more stay in SD. Its a VERY transient place. You goto these places for a few years after college until the pressure cooker of career and low living standards forces you out.

Josh

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