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EconProf
ParticipantCA faces a $68 BILLION budget deficit, so is now considering a wealth tax. With an already sky-high state income tax, Gavin Newsom is now advocating a tax on your worth. So sdr, since you’ve bragged here about your wealth, prepare yourself to pay a tax on it.
Also under consideration is an “exit tax”. So those who escape to another state will pay to do so.
Part-time CA residents would pay based on what fraction of the year they reside in CA. Jeeze, if I vacation in CA will I have to pay?
But at least your taxes are going to a good cause….like complete medical care for illegals. The world’s sick need only walk across the Texas border and head straight for CA to get their medical care, including (I believe–not sure), sexual transition surgery.
Piggs of a certain age will remember the song Hotel California:
“You can check out any time, but you can’t leave.”
Cheers,
EconProf
Participantsdr: At least we agree on one thing: the shortage of buildable land in San Diego compared to the abundant land in southern Utah (and Phoenix and Las Vegas and Texas and….) strongly influences prices. Beyond that are many other factors propelling the exodus: utility costs, taxes, poor schools, homelessness, etc. You mention construction and seeing cranes everywhere. Yeah, we got them too. Anecdotes prove nothing. I prefer hard data, like US Census Bureau. CA, and lately San Diego, is losing population. Furthermore, the population leaving is now higher income, and, of course, businesses. Try renting a U-Haul truck in San Diego.
Demographics is destiny.
Participantsdr: I’m sure you have heard of the idea that supply and demand determine prices. San Diego house prices are high in comparison to other areas because of limited supply: terrain, high labor prices, an intrusive and expensive government, etc. People are fleeing to AZ, NV, Utah from CA (including San Diego) at increasing rates, and especially the high income people and firms.
In the rarefied atmosphere of La Jolla and coastal San Diego in which sdr operates, the old rich demographic will keep prices high. Where people are moving to tend to have abundant land for new developments (which are exploding here in St. George)–same for other nearby areas…thus the vastly lower prices. High prices may be a point of pride for sdr, but the average working family who must pay $3/4 million for a 45 year old Mira Mesa tract house with a one car garage….??? That amount will get you a house like mine: 3200 S.F., forever views, property taxes of under 1% of value, great schools, little crime or drugged out homeless, clean and lean government, utility rates 1/4 of San Diego’s, etc., etc.
Yes, interest rate hikes have softened our new home prices–mine fell from over $800,ooo to about $775,000 as a result (paid $550,000 3+ years ago). New developments are exploding to meet the population influx, so prices retreating slightly due to interest rates and the increase of supply. My three rental condos are still gaining in value, any vacancy is quickly filled, and I raise rents annually.
Participantsdr: a long time ago you made some smart decisions that continue to save you money even today.
Congratulations.
But that in no way represents the situation of the average San Diegan, or, most likely, the average Piggington reader. Which is why San Diegans are leaving, albeit at a slower pace than the other two big CA metropolitan areas (US Census data).
Perhaps other readers would like to weigh in on their property taxes, utility bills, state and local government policies, school quality, etc. Or is everyone afraid the ever-so-touchy sdr will jump on them?
Demographics is destiny.
ParticipantHere are a couple of stats relevant to this thread. BTW, I have not commented recently or kept up with Piggington forum subjects, thinking my subject would die a natural death after so long. Alas, it lives on!
US Census data released (I think) today, showed that in CA 871,000 people left in 2022. I assume that is the NET loss–outgoing minus incoming. A few days ago another news report said higher income people are moving out more so than lower income.
Then today I got my property tax bill for the year for my house for this year: $2,644.04. Zillow values it at $760,200, so the property tax represents about 1/3 of one percent. CA long ago enacted Proposition 13, knocking property taxes down to 1% of value (although I believe add-ons put it at about 1.2%).
For that we get clean government, far better schools (according to national standardized tests), and yes, worse weather. But I’ve heard from friends in San Diego that their water, sewer, and electric bills are several times higher than St. George.
ParticipantWell said, Svelte
To each his own…
ParticipantCorrect sdr. You know where temperatures are (slightly) hotter than St. George? Las Vegas and Phoenix. Which are also getting an influx of people fleeing CA.
Demographics is destiny.Participantsdr: Stay calm. Breath deeply. Everything will be all right.
I, probably like most Piggs, learned long ago to take with a grain of salt what realtors tell them. Their income depends upon convincing people to “Buy now…the data show…you are going to miss the boat…” C’mon man, as Biden would say.
Your recent posts, actually rants, simply do not correspond to a casual look at the charts shown by Rich at Piggington. Yes, SD prices are up and down, and generally up over the long term. But the PPSF and other indicators belie your rabid and angry accusations. And citing your own taxes, utilities, house appreciation, etc. has little to do with average San Diegans. Good for you… You scored. But then why is San Diego losing population as per latest Census data? People, and increasingly businesses, are looking at the long term trend before they make the big decision to move, and it is not looking good for CA and recently, San Diego.
You will undoubtedly respond childishly to this post with more cherry-picked data. But I’ll probably refrain from further postings. Feel free to declare victory 🙂
Participantsdr: In the rarefied world of Carlsbad and its environs in which you circulate, you are avoiding the picture of greater San Diego, and CA in general. You brag that your tiny slice of San Diego is going up in price, but what about the other 95% or so of San Diego? And what kind of physical house does one get for that $1,432,500 in Carlsbad? Perhaps the same structure that goes for half that here. An ocean view there (rare) will add to that price. Here mountain and red canyon views are a given with any luxury house. Add in the property tax at about 1% of value (mine), utility costs 1/3 of yours, and vastly better schools as measured by all the metrics of student achievement. Been to downtown San Diego lately? Ours is hopping with restaurants, theatres, students from our growing university, and tourists. Zion is a half-hour away, Brian Head for skiers about 3 hours away, Vegas under two hours away. And for ethnic foods, we have all sorts, with about ten Thai restaurants just for sdr to try.
The US is increasingly stratified by income, so the income-elite can afford Carlsbad, and I’m sure it gives them bragging rights with their friends and relatives nationwide. St. George…not so much. But for the other 95% of the population–the ones moving here from CA and San Diego, we will continue to get the influx, as will other similar locations.
You mention we have had 3.5% home appreciation in the last 3 or so years. This ignores the MIX of housing, since we have a lot of condos going up, and perhaps smaller houses which distorts the picture. And yes, the more than doubling in mortgage rates have hurt recent sales prices. Speaking only for myself, Zillow puts my house at $825,000 vs the $550,000 I paid for it 3 years ago. Probably falling lately due to mortgage rates.
ParticipantGood points sdr, and I accept all of your data. And yes, the unduly low interest rates of 3 years ago could be called a black swan event, which I had not thought of before. It was, of course, a misguided attempt to goose the economy by the Fed and it goosed prices everywhere. Glad I locked in a 3% fixed rate on my house. Now we are in the hangover stage.
A few observations: supply can increase where land is available and cheap, which is the case in St. George and similar locales. Coastal San Diego and Carlsbad…nada. Construction costs also far lower for the same product in the cities you cite. The far cheaper housing prices in the cities you list will continue to prompt the exodus from CA. More push/pull comes from the vast difference in taxes, utility costs, homelessness, and decent politicians. Ready to pay reparations?
BTW, many companies are also choosing to flee, not just people.
Demographics is destiny.
However
Participantsdr: Wow. Talk about cherry-picking the data! And something called “short-termism”. What do those dozen or so cities with the biggest price declines in recent months have in common? They have all doubled or tripled in value in recent years.
Imagine you long ago picked an occupation in great demand where the average salary has doubled in the most recent 5-6 years. Then a “black swan” event comes along, hurting your industry more than others. Your income is reduced by 10%. Did you make a mistake? Did those who moved to Idaho 5 years ago make a mistake?
The black swan event was, of course, the doubling or tripling of mortgage rates, which apparently most hurt the fastest growing areas of the country. But the exodus from California continues, and shows every sign of accelerating, even from beautiful San Diego.
Participantsdr: you want numbers instead of personal opinions? OK, let’s start with your numbers.
You claim that I live in a relatively ritzy neighborhood for St. George. Yes, a true statement. As I said previously, we paid $550,000 3 years ago and it is now worth about $825,000, which is below YOUR number of $1 million plus for a mediocre house in Mira Mesa. A million dollars here will get you a real luxury house with view far better than mine.
As for St. George having a lot of houses for sale, true, but let’s remember that St. George has a relatively young population with lot of children (2/3 Mormon) who move a lot into larger houses. And, you are correct that we have a lot of building going one here, thus the larger inventory of homes for sale.
Yes, the big cities you mention that have received the fleeing Californians are tapering off, I suspect because of the jump in interest rates. But please, Mr. numbers guy, clarify what your numbers are suggesting–certainly not a population decline.
ParticipantSvelte, sorry to hear about your accident. I hope it wasn’t with that St. George truck in your picture. No injuries I hope.
sdr, thanks for the lengthy response.
And I am not surprised with your data showing a lot of people moving to St. George from the Salt Lake City area. Probably motivated by our better winter weather and, like us, the small city ambience as opposed to big city atmosphere and costs. And, one can add to that their smog, a problem due to their terrain and prevailing winds.
When we meet newcomers, which is quite common in Brio, our new development, our first question is where are you from. The most common answer is usually a big CA coastal city. The second is somewhere in Utah. Seldom is it the Midwest, and never the big cities of the east coast, who are reportedly moving to Florida.
I have often said here that San Diego is the best west coast city if one wants to live near the ocean, which may be why SD gets so many people in your area from the LA and Bay area. When I taught economics long ago at SDSU, on the first day of class I would sometimes ask where the students were they were from. When I mentioned “the San Francisco area”, a third of the hands would shoot up. I suspect they wanted to get away from Mom and Dad, still pay in-state tuition, and party-on in Surf City, USA.
San Diego was quite liveable then, with decent schools, normal RE prices, good government, and Proposition 13 taxes. So we rode the growing RE appreciating rental market until landlording became more attractive than teaching. But age and CA’s deteriorating trends made us look elsewhere. (OK, sdr, the capital gains we enjoyed were a factor too).
What deteriorating trends? An increasingly expensive and dysfunctional government, crazy environmental rules, homelessness, poor schools, high taxes, traffic congestion, a stasi-like one-party government (reparations anyone?), and no likelihood these trends would change.
So moving to St. George which my son and family had also picked seemed like a natural. And given that CA was losing population and St. George growing exponentially, it seemed like a better location for my RE investments, a bet that has paid off.
sdr, you can point to the amenities of your ritzy neighborhood and count the cranes to predict the future of RE trends, but I am a numbers guy, and we all know CA has been losing population at an increasing rate, and cities like Phoenix, Vegas, Austin are gaining those people. Thus my prediction that RE prices will follow. And contrary to what you are seeing in your unique neighborhood, they are high-income, high tax-bracket techies who learned from COVID they can work from home and don’t have to endure the long commutes of previous years. As you know, AZ and UT have low income taxes, and NV and Texas have none.
So the flight from CA continues, and lately even San Diego has recently lost population. As for some high income LA and San Francisco choosing to move to a more attractive CA coastal city like SD, this is no surprise. It is the least dirty shirt in the closet.
ParticipantOK, so why are people leaving CA in droves? And increasingly in San Diego? And what does that portend for your RE values?
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