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EconProf
ParticipantCA voters have spoken, so Newsom is in for 2, or maybe 6 more years. Now, as writer H. L. Mencken once said, they are going to get what they voted for, good and hard.
The exodus from CA of businesses and people will accelerate, as the “push factors” continue to grow. Can San Diego RE be far behind?ParticipantLots of fun anecdotes here about skateboarding, baseball cards, and relocations of rich people to San Diego’s coastal areas. But yesterday a factoid came out from the Hoover Institute of Stanford University that is more relevant to RE trends. CA has lost more businesses to other states so far this year than all of last year: 74 so far in 2021 vs. 62 in all of 2020. So the exodus of people (as per Census Bureau) and businesses is accelerating.
San Diego’s advantages for the wealthy elite will always make it a destination for the refugees from LA and the Bay area, pushing up prices in desirable neighborhoods. But it is still in CA, where governmental policies continue to drive away businesses and people.Participant[quote=sdrealtor][quote=EconProf]sdr, thanks for making my point. Working from home means people are choosing to live away from the big cities and are moving into exurban areas, or entirely different states. Thus the move out of CA to neighboring states while keeping their job and “checking in” at the home office weekly or monthly.
Your comment that people moving “says nothing about politics”…? For many people,it might be fully explained by politics of the two areas.
Here in St. George are two trends that prove that. Direct flights from LA to little St. George were recently introduced to accommodate such workers. Housing developments near our airport are exploding. And if they spend 51% of their days here, they escape CA taxes. Second, many Californians have second homes here, and due to the COVID lockdowns in CA are spending more of their time in Utah where our schools and universities stayed largely open. Enrollment in the local university during COVID jumped about 10% while CA universities went to useless distance “learning”.[/quote]St George is over 300 miles from salt lake city and is in the middle of nowhere. It has no industry to speak of, a college that is more comparable to a community college here than a research university and a population significantly smaller than Carlsbad. A few hundred or even thousand people going there isn’t even a rounding error vis a vis the CA population. CA still is the Golden State and more wealth is created in SD County than the entire state of Utah. SD companies received more venture funding this quarter then the entire State of Utah does for a full year. That won’t change. You’ll dominate the bingo halls[/quote]
sdr: OK, you have convinced me. You are right, I am wrong. So I’ll stop our exchanges here.
After all, the Census Bureau is just lying about people leaving CA for neighboring states in increasing numbers. And people don’t care about cost of living and housing and taxes when they decide where they live. They want good Thai restaurants. And CA schools are better because of high per-pupil spending. And roads too. And people don’t mind high taxes because bigger government is good for everyone, especially the homeless, who now come not just from the rest of the US, but now from the world. Diversity, you know. And then there’s the ocean.
So I give up. This site is all yours.Participant[quote=sdrealtor]So here is some data for EP.
My hometown of Cherry Hill NJ has a median HH income of $105K. It has demographics similar to Carlsbad, top rated schools and healthcare. Its an easy one hour drive to lovely Jersey Shore towns. Its an easy 15 minute drive to Philadephia with great jobs, multiple teaching hospitals some of which rank among the best in the country and Ivy League schools nearby. They have professional sports and world class musuems and theatre in Philly. School funding is among the highest in the country. The median home price is $336K.
The median HH income in St George is under $50K. It has none of that. School funding is among the lowest in the country. The only university was recentlya two year associate degree college. No theatre, no international airport, no teaching hospitals, no major industries, no pro sports, no beaches, no culture or diversity. The median home price is $430K.
And you dont think you just bought into one big time bubble that will come crashing down as soon as the economy turns? You have bought into Hemet circa 2005.[/quote]
sdr: for starters, New Jersey is losing population. Why would that be? And if you think Philly is good for culture, the arts, and theatre, check out their crime rate before going downtown.
St. George/Washington City is exploding with growth because of its culture, broadly defined. Theatre, museums, concerts, a rapidly expanding 4-year university, lauded health care, year-around outdoor activities such as hiking, biking trails, parks (minus the homeless in tents), and numerous gyms. The people are young, healthy, and fully employed–unemployment rate 2.9%. Because the cost of living is so low, average income means little. True, the average household income is slightly under the US average. But adjusted for COL is what counts. For example, my total utilities for last month were $181.10–gas and electric, water and sewer. That’s with our hotter weather and the AC on constantly in a 2500 SF house. My friend in Scripps Ranch recently told me his total was over $1,000.
Educational quality has little to do with spending. In NYC the per pupil spending is over $20,000 per year, and their educational attainment is dreadful. CA is notorious for high government spending in most every category and abysmal results. San Diego is the best of the big cities, but it is still in CA.Participant[quote=XBoxBoy][quote=EconProf]Given recent inflation numbers, this cannot last, as history sadly shows. The parallels between Biden and Fed chairman Powell and President Carter and Fed Chairman Arthur Burns are uncanny. The stagflation that followed those two lasted for years.[/quote]
Haha! What a clown comment! And from someone who uses EconProf as their handle.
Let’s get a couple facts straight. Arthur Burns first major govt office was Counselor to the President in 1969. And was that for President Carter? NOPE! That was for President Nixon! Then in 1970 Arthur Burns became Chairman of the Fed. Again while Nixon was president.
As inflation started to heat up, Nixon and Burns (Not Carter and Burns) imposed wage and price controls in 1971. This didn’t work so well but undeterred Nixon engaged in lots of deficit spending and then took the dollar off the gold standard. And then Nixon pressured Burns to loosen the money supply so that the economy would boom and Nixon would get reelected. In 1973 inflation had reached 8%. This wasn’t it’s peak, but keep in mind Carter is only the Governor of Georgia at this time.
Things only get worse re inflation for the next several years reaching 12% in 1974. (And worse for Nixon too as he is forced to resign leaving Gerald Ford president.)
January 20, 1977 Jimmy Carter takes over the presidency. A little more than a year later Arthur Burns is out at the fed. Replaced by William Miller, and thus ending any partnership between Carter and Burns. Another year later (Aug. 6, 1979) Paul Volker takes over as Chairman of the Fed Reserve.
So, let’s get this straight:
1970: Nixon appoints Arther Burns Chairman of Fed Reserver
1970-1974: Inflation starts to heat up under Nixon/Burns partnership that includes deficit spending, price and wage controls and taking the dollar off the gold standard.
1974-1976: Ford is president with Arthur Burns still the Fed Chairman. During this time inflation first rises to 12% but falls to 5% by late 1976
1977: Carter becomes president and Arthur Burns remains Chairman of the federal reserve. This partnership you want to blame everything on lasts only 14 months.
1979: Carter nominates Paul Volker to be new Chairman of Federal Reserve. (Volker is generally considered to be the man who tamed the 1970’s inflation)
Given all the above, it is stunning, yes absolutely stunning that someone who claims to be an economics professor would make such a misleading claim that inflation in the 1970s was largely the result of Carter and Burns. If anything you should be blaming Nixon and Burns. Nixon is the one who nominated Burns and had a long partnership with him. Carter should be paired with Volker who he nominated.
Of course that doesn’t fit with your completely delusional political views so I guess we shouldn’t be surprised. But really, it’s time to stop making shit up and stop spreading misinformation.[/quote]
XBoxBoy:
Your history is largely correct, but it does not relate to what I said.
The parallels of that period to today in terms of policy and resulting inflation and all that it entailed are strikingly similar. Yes, we had big deficit spending combined with rapid increases in the money supply (M2). Inflation skyrocketed and so did interest rates. Stagflation (recession combined with inflation) resulted.
Today deficit spending relative to GNP and the total federal debt is unprecedentedly high, even higher than during the previous period, and is not needed to stimulate the economy. The Fed is accommodative with ultra loose money supply and low interest rates, just like Arthur Burns was. Like today’s Fed Chairman Powell, Burns said the inflation was only “temporary”, and due largely to oil prices.
I suspect this is the consensus opinion of most economists today, of whatever political stripe. Rich T. feel free to weigh in here.Participantsdr: I bring facts to the table, you bring snark. You need to get out more. Especially regarding future trends affecting RE, not irrelevant comments that denigrate people and RE opportunities that are not in San Diego.
Scaredyclassic: You stated “…if you really believed this is Carter redux, you’d be all in gold…are you? No, you are not.”
Actually, I have $36,000 in gold, since last January. It is down from what I bought it at.ParticipantThanks Flyer for the thoughtful and well-reasoned comments.
I think we can all agree that the real estate price boom occurring most everywhere is due largely to the artificially, and I might add, temporarily low interest rates. Given recent inflation numbers, this cannot last, as history sadly shows. The parallels between Biden and Fed chairman Powell and President Carter and Fed Chairman Arthur Burns are uncanny. The stagflation that followed those two lasted for years.Participantsdr, one additional point. You often accuse me of ungratefully criticizing SD, the place where I made my money. When I came to San Diego and invested there, it was indeed the golden state: two-party government, reasonable taxes and regulations, good schools, etc. Now I’m supposed to feel guilty because I see better opportunities elsewhere? I fully appreciate the advantages of San Diego, especially for the uber-rich. But for an increasing number of people, the exodus from CA is real, and I expect it will eventually happen in San Diego, which, as you have pointed out, is benefiting from people fleeing the LA and Bay area.
Participantsdr, thanks for making my point. Working from home means people are choosing to live away from the big cities and are moving into exurban areas, or entirely different states. Thus the move out of CA to neighboring states while keeping their job and “checking in” at the home office weekly or monthly.
Your comment that people moving “says nothing about politics”…? For many people,it might be fully explained by politics of the two areas.
Here in St. George are two trends that prove that. Direct flights from LA to little St. George were recently introduced to accommodate such workers. Housing developments near our airport are exploding. And if they spend 51% of their days here, they escape CA taxes. Second, many Californians have second homes here, and due to the COVID lockdowns in CA are spending more of their time in Utah where our schools and universities stayed largely open. Enrollment in the local university during COVID jumped about 10% while CA universities went to useless distance “learning”.ParticipantAllow me to get back to the original theme of this thread: rent trends in various US cities, in which San Diego fares better than LA or the Bay area.
A closer look at the location of the the cities with the biggest rent growth shows them to be immediately outside of the three west coast states: Phoenix, Tucson, Las Vegas, the various cities of Idaho, Utah, Montana. One odd exception to this rule is Santa Ana. Another is Spokane, perhaps escapees from Seattle who want to stay in a zero income tax state.
Is this not more evidence that people are leaving the high cost, poorly governed locations for a lower cost of housing (and everything else), lower taxes, and, dare I say it, lifestyle?
The fact that San Diego rents are doing better than LA and San Francisco may simply mean that we are the lease crappy CA city left.Participant[quote=sdrealtor]Of course no regrets but stop with the CA bashing. He probably owes everything he has to this great place. Take your money and quit whining[/quote]
Once again sdr, you misinterpret my message. In comparing housing costs, living expenses, quality of government vs. taxes paid in CA vs. the states people are moving toward is, in your words, “California bashing”, I call it bringing facts to the table. Sorry if that offends you.
Based on your Piggington entries, you move in a fairly select group of buyers and sellers of mostly high-end, coastal properties. The wealthy will usually pick a La Jolla over a Scottsdale, but the working class, those with growing families, children they want in school, renters who want their own house and yard, etc., will increasingly learn the facts and make the move.July 10, 2021 at 10:00 AM in reply to: San Diego drastically outperforms Bay and LA on rents #822426Participantsdr, I totally agree with you. Regarding lifestyle, it is totally different in St. George, which is what is attracting people from CA. So it is not only the cost of living (perhaps half or two-thirds that of San Diego), it is the lifestyle as well.
And those darned mountains to look at. Always the same. Except they are snow-capped in the winter. So boring.
BTW, why did your friend move from NYC to Dallas (your previous post)?Participant[quote=gzz]Metro Dallas prices are up 25% YoY and inventory down 67%.
https://ntreis.net/download/may-2021-monthly-market-indicators/?wpdmdl=8305
While a big outperformance of national prices would feel good, a national boom is more sustainable and lets our prices grow without hurting our competitiveness.
Longer term, I think Prop 13 and the lack of developable land make SD a better investment than places like Dallas and St George. At some point construction parts and labor will get more reasonable and housing prices there will decline to marginal cost + a fairly small location premium.[/quote]
I agree with you that the lack of developable land in San Diego raises prices and rents. Add to that the influx of people from the even worse-run cities in the Bay area and LA, and San Diego prices and rent will benefit. But San Diego is tied to CA, which competes for worst-run state with the likes of New York, Illinois, New Jersey, etc. For years, CA ranks as most business-unfriendly, highest percentage of people in poverty (despite lavish welfare programs), and is tied with NY for highest taxes. Example: We have, by far, the highest gas tax and are tied with Rhode Island for worst roads in the US.
So as the new exodus from CA (Census Bureau) continues, San Diego will always have its ocean, mountains, and weather to benefit real estate investors. But these benefits could be outweighed by other factors. People can vote with their feet.ParticipantMy detractors here disagree with me mainly because I am looking at long-term trends in demographics, governmental policies by state, and COVID-influences on changing workplace choices by businesses and individuals. The current and recent bounce in SD prices and rents are due to its haven for escapees from the Bay area and LA, the sugar-high of temporarily low interest rates, its everlasting shortage of buildable land combined with nimbyism, and the ongoing appeal of San Diego for its weather and amenities. In future years these advantages will be offset by the differing governmental policies among the states. The exodus from blue states and cities to red will continue and likely accelerate. COVID-induced changes in the workplace has pushed people to outlying suburbs of all the big cities, but also prompted the high-earners to pick low-cost, low-tax areas and “check in” at the home office in the big city only when necessary.
These likely future trends are well-documented, and it is not surprising that many do not agree. -
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