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BostonAndOC_RE_perspective
ParticipantI can speak with some context here. I moved my family to New England from OC a few years back due to a job promotion. While folks may think that Boston RE is as expensive as SD, it is much easier here to find great, upscale areas where you can buy at 3.5:1 salary/homeprice. Now the Boston job market pays substantially more than SD, OC, LA or Dallas. Check the recent BLS statistics on average weekly wages in 2006 by county, for every county in the nation. The avg wage-earener in Suffolk County MA earns $1228/week. That is the average, not the median. SD was something like $900/week. Dallas was lower. The only counties higher were NY and Santa Clara.
So affordability was my trigger. I did some research and discovered some amazing deals. So we made the move. 4 years later, how has it been? Summary:
1. We bought in a town that has a pop. of roughly 30K people. Median household income is $100K. We bought right around 3.5:1 price:median hh income. Our household income is higher than the median, so we bought for much less than 3.5:1. 50 percent of the adults age 25 or older have a minimum of a Bachelor’s degree (this was the most telling statistic for what sort of a community we were buying in). This is all per US Census data. The town is even nicer than we could have hoped for, and my total RE nut incl property taxes is $2K/month. Score 1 for the move.2. The job has been a bonanza. Boston is the #2 tech and money center after SJC and NY, respectively. Lots of 6, and even 7 figure jobs here. Lots of educated people as well, so competition is fierce, but if you’re skilled and possess solid academic credentials, you’ll make on average way more here than SD. Score 1 more for the move.
3. New England is like Texas, with colder winters, better summers and closer proximity to the ocean. But compared to SoCal the people here are redneck. They’re just better educated and wealthier than the stereotype. Instead of youth football here it’s hockey. Every guy from New England is a frustrated hockey player. The Adam Sandler character in Happy Gilmore really does a great job caricaturizing this image. The only other guy I know here who surfs also moved here from OC. Score zero here – weather sucks related to SoCal but is much better than someplace like TX or MI.
So culturally we are fish out of water, but my financial situation is dramatically stronger than it would likely have been had we stayed in SoCal. Looking at current comps, we’re even up ~35 percent over the purchase price, and even then anyone making our town’s median could afford the house without stretching too badly.
I now might have a chance to repeat this same model again. I’m in discussions that could enable me to take a new position that would double my salary while depositing me in an area of CA that has housing prices that would enable a less than 3:1 homeprice to salary ratio (within 2.5 hours of SF). While I miss the heck out of OC and SD, I will NEVER indebt myself to the level I would need to in order to buy a nice home in a decent area there. I have come to fully subscribe to the notion of putting family financial health over personal indulgence – which is what a move back to SoCal would be for me given the current price environment and where the high paying jobs are. I like to fully fund my 401K, stock purchase plan, and have some left over for 529s, money market savings and taxable investements.
Does anyone else on this board share similar views?
ParticipantJG,
I would wager that the life sciences salaries at the hot startups and established firms in Cambridge and vicinity are mich higher than SD. For christ sakes MA General and Harvard Medical School are here! Boston is THE place anywhere in the world for life sciences. Why isn’t your firm here, recruiting all the hot talent from Harvard and MIT????My home is worth maybe 20%-30% more (baked into the range I gave) than when I bought it 4 yrs ago, looking at recent comp sales. The bubble happened in very low income areas and the super snooty inside 128 suburbs ($1M-up). I live in a more “modest” area that still sports 65% of all residents 25 and older with a minimum of a Bachelor’s degree, so it’s a commuter suburb for professionals. And you know what? I laugh to the bank every month with my $1500 mortgage payment. Guess what salary/price ratio I used when buying it? A lot less than the average SD/OC/LA’er. The damn house could go to zero and I’d be fine, as it is a cheap, nice place to live that puts me squarely within the third best job market (after NYC and SF/SJC) in the country. That is my point. And I don’t need to worry about selling it; my company has a gold-plated relocation package.
Tongue in cheek comments aside, SD is the place that looks economically distressed given the RE bubble bursting. The Boston job market is sizzling currently, and I’ve never known it to have much of a percentage dedicated to RE, especially compared to SoCal.
It looks like you were able to escape the grind of a Big 5 accounting career and land a CFO role. Good for you. Accounting is a crappy career. I know other guys that did that – some had to get the MBA, some not, but all of them couldn’t wait to get out of public accounting. I am very fortunate that my job is a blast.
I’m no Pats fan, but it was damn funny watching the Charger faithful’s looks of disbelief in that game. I grew up in L.A. and have always been a Raider fan, which means that both of our teams got screwed by New England and Brady in recent years (the Tuck rule?)
So I’ll enjoy my time here. It’s been great professionally and fiscally. Sadly my next gig will likely take me to the Bay Area, where you’ll still struggle to find anything decent for under $1M in a nice town.
ParticipantHey JG,
That figure combines LA, OC, and SD. The NE figure is just the city of Boston and suburbs. So it took this long for the 15 Million-person strong SoCal region to finally surpass 1 Million-person Boston in VC$$ investment. Congrats.The SoCal figure still pales in comparison to the Bay Area ($8 Billion in 2006). Also, the majority of the investment in SoCal is medical/biotech. These are lab type jobs, not software or silicon architects who make way more.
What do you do? I’m in sales, and Boston is a much richer Fortune 500 high tech sales environment than SoCal will ever be. Besides, where else can you make $250K and buy a house in an upscale area for $500K-600K?
Sorry, but high tech salaries in Boston and the Bay area will always be higher than SoCal. No one moves to SoCal for the money. Ask anyone in high tech.
ParticipantAsianautica,
Sure, I understand. I guess my real thesis statement here is that due to the higher upper bound for salaries in the aforementioned metro areas compared to SD (borne out by avg weeekly earnings data from BLS) combined with lower housing costs, it is easier to attain personal balance sheet growth. This is largely due to the more rational 3-4:1 ratio of salaries/home prices. The Bay area may be an exception, but most dual income couples I know there are older and combine for at least $300K.ParticipantAsianautica,
A senior (7-10 yr exp) sw engineer at my company probably makes $100K salary, more including bonuses etc. A SW eng mgr could make $150K easily.A crackerjack SW guy at Fidelity in downtown Boston could make $150K, maybe more.
Participantsdr,
Yes, I agree. You can count me amongst the folks who used to think that we in SoCal were the wealthiest folks anywhere. Now my big dilemma is what happens to my career if I move back to OC. I’m in high-tech, and compared to SF, BOS or SJC, SoCal is a tech backwater with virtually zero VC $$$ flowing into it.Boston is also the #2 money center in the US after NYC. Where else in the country can you make $250K and find a nice house in a great area within a 1 hour driving commute for $500K-$800K?
The only negative aside from weather if you have a family is the dearth of good state universities in the east. In CA one forgets how lucky one is to have UCB and UCLA as state school options. UMass, UNH, UVT, UMaine, OConn all suck – 3rd rate state schools dwarfed by Harvard/Tufts/Dartmouth/Yale/MIT/Princeton/Amherst etc etc etc. If you live in the NE, prepare to save big $$$ and hope your kids get into good private schools.
ParticipantNo_Such_Reality,
check your figures. Look at the link here (http://blogs.ocregister.com/lansner/archives/2007/01/oc_wages_growing_at_63.html#comments) in Lansner’s blog for the recent Bureau of Labor Statistics avg weekly wages.Summary:
SD County: $850, $44K/yr
Santa Clara County: $1386, $72K/yr
OC: $916, $47K/yr
NY County: $1453, $75K/yr
Suffolk MA (Boston): $1228, $64K/yr
SF County: $1231, $64K/yrBased on these figures, the avg SD wage earner is a service sector employee, likely lacking a 4 yr degree. Concerning affordability, one can see that the resident of NY, BOS, SF, or San Jose make significantly more $$$ and dedicate less of it to housing than in SD or OC. In the 4 years since I moved to New England from SoCal (LA native), I’ve doubled my salary, largely due to the incredibly hot job market here for skilled professionals. The weather may suck, but if you want to make serious money working for large banks or corporations, NY, BOS, SF and SJC are really the only places where you can do it. You can lump in Northern VA too but the summer weather there is so bad I’ll leave it off the list.
ParticipantFor anyone that has kids, there was an article by Ben Stein in the NY Times business section a few months ago I would recommend you look up and read. The topic was the old “90% of the wealth is controlled by 1% of the population,” and helping your child make their career choices with that in mind. Many pursuits are noble, but if money is what ends up mattering to an individual, Ben then goes on to illustrate how one might educate a child on choosing the right path that will land them in that 1%. Guess what? It involves education – lots of it. For every self made entrepreneur there’s 1000 guys that went to Yale and made Managing Director at 36, pulling down 2-comma salaries.
If you have kids, and truly love them, you will drive them like a racehorse to excel academically so that they can have a chance at attending an elite college. It’s a proven method for success.
ParticipantRaybyrnes,
Check a little closer. UCLA, UC Berkeley and USC give out hundreds, if not thousands, of partial to full tuition scholarships/year, purely merit-based. I know – I got one when I went to one of those schools that was 50% tuition, and my parents were (and still are) loaded. This is a very effective tactic for luring kids away from the Ivies and Stanford (who both give out ZERO merit-based aid). Maybe this is the reason that USC’s newly admitted freshman class of ~4K students has an average SAT of 1376, indexed to the old scale (2100 on the new scale).I even had Occidental (prestigious liberal arts school in L.A.) offer me a full-ride back in the day. I had a buddy who went to CalTech and he got major scholarship $$$. The key is that you need to be a heavy hitter academically and have some other quality that makes you stand out from the other 4.0’s/1500’s, especially the ones coming over from India and China.
Bottom line: if you have a household income of greater than $60K, you will get zero need-based aid outside of loans. I personally save like a madman becuase I don’t want to bank on a scholarship, and I want my children to feel free to aspire to any college they choose.
ParticipantJG,
Many thanks for the stats. Pretty impressive, don’t you think? I mean in that they come close to supporting my thesis. 20% of the population (a big chunk) are 5:1 for housing. That is much saner than SoCal. BTW, its not just the Peninsula. I have friends that live in Piedmont (tony East Bay area) that modestly take home huge $$$ from the money game. SF is still the west coast money center.You can buy a mid century 3/2 on a 5-7K sq ft lot for $1M. The really cool thing for a family is to live within walking distance of Stanford. Great atmosphere and opportunities for kids.
Can you find a SoCal town of at least 67K residents that has greater than or equal stats?
PS – glad to be back. I’m a constant lurker.
ParticipantHeavyd,
Great point re: Cabo.How are the Boyz (I couldn’t resist)? Iloved you guys back in the day.
ParticipantCONCHO,
Why is that surprising? $100K is entry level in the Bay area. Any degreed professional in their mid-30’s or older working in finance or high tech up there makes at least $150K. I know that just from my own company’s salary scale (which applies a double digit % salary differential adder based on the higher cost of labor up there. No adder for SD or OC).My non-company friends who round out this decidedly un-scientific survey are very close friends, whom I trust. They’re a little older than me also, so I have the benefit of their counsel. Their salaries are really not that out of line. In one friend’s neighborhood in the East Bay, he mentioned entry level qualufying income to buy in his neighborhood (~$2M) is $500K. 4:1 ratio is a little high, but nothing like we’ve seen down here over the last few years. Bottom line: more high-paying jobs and less inventory in nice areas proportionally in the BA relative to LA and OC, and a huge disparity for SD.
ParticipantJG,
Not sure if you’re aware, but the Bay area (Silicon Valley up to San Fran) has a much higher concentration of F500 companies and high paying jobs than SD, LA or OC. Menlo Park may not appear to be anything special, but that place is dripping in money (and right next to Stanford and Palo Alto). Ever heard of Sand Hill Road? That’s the VC nerve center of the world. Almost $8 billion of VC money flowed to Bay area companies in 2005, more than the next 11 US tech hubs COMBINED.The average Bay area household with 2 degreed professionals brings home $300-$750K annually, juding anecdotally from the folks I know who live there. Next to Manhattan, it’s the highest paying region in the US. There is a much higher floor under the prices up there as they’re supported by high wages (and very plentiful jobs – more jobs than qualified applicants).
Do a spin through Zip Realty on the nicer Bay area towns, and then comapre to SD or OC. It is eye-opening. Example: Palo Alto currently has ~30 listings, while Newport beach has more than 700.
ParticipantJonze,
Go and check out the Poway shools – visually. Excellent stats and reputation, but visit the prospective campuses your children will attend. You will see horrible overcrowding. No one in SD will vote for any sort of bond measure that can help build new schools. The legacy of prop 13 is that CA public schools are overcrowded and underfunded.You might want to check out private schools.
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