[joec]

That’s what I’d do if I won lotto. With the cost of maintaining and running a track/race car, I’d just get something cheap like a miata and join in those scca races and have fun. No need to buy an expensive porsche or other 100k+ car to learn/practice.

[joec]

I think this is all too common for these “numbers” moves. It’s not really about innovation or the founders making a legacy play…

Anyhow, another reason to move companies out of CA is that people who studied in Austin or Texas Universities may want to stay near their college town where they all went to school so the labor is there and it’ll be very hard to convince a decent/good programmer from another state to come to CA with our extreme housing costs and other taxes/fees…

Unless you are the superstar performer, you’re just not going to get that relocation package or salary.

I think companies actually don’t care if you move or not since they are doing it to save money…Saw this back 10-15 years ago with India as well.

I actually think “most” engineers are pretty replaceable. The tough thing as some of the coders here will relate to is that not a lot of work is done by people who need to be truly creative/innovative. Correct me if I’m off though since I was more on the backend side (data centers/IT/servers/networks/security).

[joec]

[quote=spdrun]^^^

So buy a 2 or 3 bedroom condo. It’s not the end of the world to live in an apartment, American snobbery notwithstanding.

BTW – 1.1% of purchase price is low by national standards. In some parts of the East Coast, you’ll be paying $10-20 grand a year on a $700k house, not approx $7700.[/quote]

My point is that people are moving because they don’t WANT to rent a 2 bedroom condo after renting for the past 12 years+ since college…I don’t know if you’ve lived or visited other parts of the country, maybe it’s not SD or CA, but it’s just not as bad IMO as some people make it to be…especially for the price to live here.

We purchased in 2009 so we’re stuck now, but honestly, I could live in a tokyo coffin since I really don’t care about housing much, but tell that to a lot of families w/kids, moms/wives, etc…and they would probably agree that paying large amounts for what you get in terms of housing feels bad.

I have a relative that left the bay area for that exact reason. Felt poor with the mortgage and so much money was going there and didn’t want to put up with it so moved. And this wasn’t even in the most/desirable areas.

[joec]

[quote=spdrun]^^^

Then again, California has low property taxes, relatively low food costs for good quality food, and a climate amenable to solar energy. Coastal areas also have a climate that promotes low energy usage, so even if electricity is expensive, cost of living is kept under control.

It’s not all bad. Also betting that for every person leaving, there’s another coming in either from further east or from abroad. Same deal with people whinging being people leaving NYC or NJ. The replacement rate (mostly from abroad) is good enough to not cause a population loss.[/quote]

The problem is you only have low property taxes IF you bought a long time ago. This is why all my family/relatives have no incentive/plans to move since their highest expense (housing) is locked in at a very low rate with property tax rates from the 70s/80s…

However, take a look at it as a young professional recently graduated and working for 5 years making, say 60k or even 120k dual professional income in the bay area…

I don’t know prices anymore so I am guessing and someone can correct me, but ANY house in a good school district with say a mere 1000 sqft is probably well over 700k. That’s hard for someone making 200k+, let along a younger professional who has worked for say 5 years or so, who wants to get married, start a family, etc…to get into. I think these are the people who should/will leave IMO since their taxes are high, can’t get a house to start a family in a good school district, and is the “middle-class” of old (the middle class now making household 45k are sorta in poverty IMO).

CA generally does have a lot of migration and second home purchases from people in China and Asia in general I think (asians like to live with other asians) so this helps with housing prices.

Some places in LA and UC Irvine I think is heavily at or near 50% asian already (which many people who aren’t asian tend to not like so more reasons to move).

[joec]

I don’t think this is true…Knowing people who have actually left CA for TX, NV as well…it’s actually upper middle class people who move since the tax hit affects them far more. You can only deduct so much with a mortgage and if you’re making upwards of 200-300k or 500k+, that 30k or more per year is pretty much “free” housing as well as your retirement all done…probably.

As great as CA is, I feel unless you had to be here (mostly for tech to try to be a millionaire fast), it’s just not worth it. I know plenty of people who didn’t move as well being from the bay area, but ALL those people I knew had family who helped them buy a home (all 1 mil+)…and with their parents and everyone they know in the same boat, they don’t really need to move since they own homes already.

Affordable housing in a decent area with good schools is the number 1 killer for people wanting to stay and as people start families and have kids, CA (especially bay area/LA) makes very little sense. If you lived in silicon valley, making 150k probably puts you in the “poor” category honestly. SD is a bit more affordable for what you get, but it’s still pricey.

I’d recommend anyone who is starting their career to consider building a base/career/network in places where there is good job growth and companies are hiring, but is more affordable.

I’m still in CA cause I’m actually poor and get the handouts and pay little/no CA tax at all so they can raise taxes to 50% for all I care, but people are leaving I think, and these are people who actually are paying the high tax bill.

[joec]

I think selling now is nice since the tax free gains are guaranteed and it’s hard to know what will happen in the future. Having a large amount of cash in the bank is more flexible.

Lastly, without knowing where your family is, reason for move, why you’d even want to come back here, etc…it’s really going to depend on you and your spouses personal details as to if/why you’d move back to CA.

It’s also hard to put a price on the hassle of having to manage a rental far away.

Another thing for people to consider is that as great as CA is (it’s over-rated unless you are part of the 1% working in an industry that can net you millions/billions I feel and you have to be here), places like TX has no income tax so if you’re high income, saving that 10% could net 20-30k or more a year. Prop taxes are higher, but properties are typically lower in places like TX and NV.

Family/friends are probably also a bigger factor than pure $$ as well.

Knowing people who has left CA, they all seem happy enough and come back whenever they please to visit if they want.

[joec]

With the mass media reporting more crashes, I guess the stock market will now recover and continue to hit all time highs this year…

I guess no 20% correction 🙁

[joec]

#1 was already being supported by everyone else and younger people with jobs anyways. Young people who are poor or don’t work get the same poor person benefits.

It isn’t a matter of young or old, but like it was mentioned many times, people with no money already get free healthcare…and a lot of other “free” stuff.

I’d say if being “poor” was that great, more people should try it . Overall, I’d guess it still sucks majorly and no one is getting “rich” from using social benefits.

So do not so poor farmers who get guaranteed payments from the Farm Bill, etc…

You, me, everyone else who has a job and taxes already are paying in this “great” system we currently have.

The more you read with all our strange laws and you realize it’s all royally f*cked all over imo .

[joec]

As expected, some people are leaving jobs that they never even wanted with ACA moving forward. Also, stated, some people who don’t have any job may take some of these “decent/crappy” jobs with healthcare from people who didn’t want them to begin with or wanted to retire, etc… A more proper alignment and better use of work resources overall to have people working who actually wants to be there.

The ACA: Losing Jobs vs. Choosing Not to Work

[joec]

All true and good for him, but again, housing purchases tend to be pushed/dictated by young families (wives a lot) and schools so it’s easy to see why a middle-aged SINGLE man wants to rent…

If I was single, I’d also have no problem literally renting one of those funeral beds/shacks in Japan honestly. I don’t need square footage, I could use the public baths, etc etc etc…I could live in a BAD area of town, you name it…

Bottom line is do what’s best for your situation/family and run the numbers…The numbers aren’t that out of whack…yet…IMO…

…but again, I don’t think single/middle-aged dudes are who home sellers are trying to reach. I wouldn’t even try honestly.

[joec]

The problem I have with these articles is that housing is always local at the end of the day…and these articles tend to generalize so much.

I REALLY don’t think “middle-class” people, making say 60k-80k total household income are meant to buy a home with how tough it is to get a loan now, especially not in the markets we care about in CA with our prop 13 taxes and great sunny living.

If we look at places in the coast (which is relevant to us in San Diego) and places like LA and the bay area…unemployment is incredibly low and inventory is non-existent. Prices in San Francisco is crazy and some of the places my parents own are well past the 2007/08 bubble price. With non-existent supply, wealthy twitter/facebook/google millionaires, I again say and doubt there is any real bubble in these markets.

Yes, the places in unlimited land maybe different (TX, AZ, NV), but again, real estate is local and I can care less about those areas since it doesn’t affect me nor many of the people on this forum…Even San Diego which tends to lead the housing market isn’t showing crazy bubbles …. yet of course…

Also, people who bought in the past 5 years were all pretty well capitalized to get a loan so it’s unlikely they will panic or sell at a price they don’t want. They can easily, again keep the property and RENT for more than their carrying cost…I see it in a few places around where I’m at already with people renting out places lower than their loan since they can.

Again, this doesn’t mean we don’t have bubble areas, but for the places we care about and for people here, I don’t think these alarmist articles do anyone that good since it’s not what’s happening in your local market and some of these folks were saying the same thing 5 years ago (at the low)…

Lastly, maybe more like Japan, we might not see interest rates jump as much as people think…

Europe is concerned with deflation now…

I think interest rates will stay low for a long time since there is absolutely no wage inflation to begin with.

[joec]

Yes, I’m aware that only interest and prop tax can be deducted and some others aren’t…Even then, for a new 30 year loan, the bulk of the new loan payment is interest initially. After about 15 years, it starts to balance out, this is when a homeowner could possibly refinance to a new 15 year to continue getting a large tax write off to sorta reset the clock or refinance to another 30 for cash flow reasons…

The whole MR being debated as tax deductible was debated in another thread and has been a closed case for now according to the FTB following the fed decision that it was deductible.

That said, my numbers above have about a 1k buffer already for nearly anyone who can buy and a 2k buffer for super wealthy people so if you take away the non-financial benefits of owning a home, you still have some buffer depending on income, as well as the general benefits of home ownership.

Again, I’m not a housing bull at all and don’t really care where the market goes since I can’t sell (need a place to live/schools/etc), but I am just giving data proof that the area doesn’t look like to me a bubble (at least not yet).

We’re not in bubble territory NOW with current interest rates and what rents are since these places are still easily being rented out.

The MAIN problem, and I keep saying this is a person/family tends to HAVE to live somewhere. Some people maybe willing to live in a crap hole for 1k/month (me, not the wife though)…but when you have kids, those people sorta now needs/want better schools and are stuck with paying these insane rents.

Some people here have waited to buy and kept saying it would go lower, etc etc etc for years and have “missed out” now. If you need a place to live for your family, buying is such a time saver and a load off your mind to be more settled and not worry really what housing costs, what interest rates does, etc…I even come here less since it doesn’t affect me much at all now and this is true for a lot of the other posters who also bought.

Everyone just needs to run their own numbers, but as Rich mentioned in the front page post, it’s still not crashing at this time/yet…if it does and you still need a place to live, well, no skin off your back since you can’t sell anyways and you aren’t moving neither…It’s just all paper money for those young families.

[joec]

Yeah, still waiting for more crashes…There hasn’t been a 10% correction in a few years and they were “supposed” to happen almost yearly…

Wouldn’t mind seeing 20-40% off personally. Hope I got the stomach to buy when it collapses more.

Picked up 1 thing so far.

[joec]

I agree with CAR on this one…If it was me, I wouldn’t want a playhouse looking in my house/backyard/windows/etc…too…I think reading this earlier, I didn’t know it was high up on a slope so if you could move it down, the neighbor maybe more receptive to that.

Also, it’s easy to look at it from just one side and that’s why these disputes happen since people have a tendency (everyone) looks just at it from their angle…Maybe it’s no “big” deal to you, but I know I’d probably fight it as well if it was me…

That said, yes, there are curtains and all that, but if I’m just sitting back having a BBQ or sitting and staring in space, I really don’t want to see kids or neighbors or anyone really checking me out or just watching me.

Course, I generally don’t like people to begin with and aren’t one of the friendly neighborly types so it could be just me…

Lastly, I’ve noticed that in terms of kids playing together, it’s more important at the younger ages that the parents actually like each other vs. the kids liking each other…

I doubt they care whether the kids get along since they don’t really like this playhouse thing and don’t really want to do much with you unfortunately.

Also, people don’t want to ALWAYS use curtains in their kitchen, while watching TV, etc etc…

You feel like a fish bowl and these houses now are so darn close already…

[joec]

Hey, thanks for taking all the time to write this up and all the calculations. It does put the numbers in perspective as to who can/will buy and if it’s worth it or if we’re in a bubble.

I really think if we put ourselves in the minds of a current buyer in general…they always include the tax deduction in their calculations since it’s just too big to ignore.

Also, for a lot of folks who make “good” incomes with a standard W-2 job, the downside is you really have very little ways to deduct taxes and this is sorta why the tax breaks on home loan interest sorta favor the rich since the higher their income, the bigger the deduction since it’s taken off their marginal tax rate.

From your monthly numbers and a standard buyer in the 37-42% (again, this is someone who’s Married Filing Jointly):

10% on taxable income from $0 to $18,150, plus
15% on taxable income over $18,150 to $73,800, plus
25% on taxable income over $73,800 to $148,850, plus
28% on taxable income over $148,850 to $226,850, plus
33% on taxable income over $226,850 to $405,100, plus
35% on taxable income over $405,100 to $457,600, plus
39.6% on taxable income over $457,600

37.3 – 42.3% tax bracket means these become after the tax deduction:
Del Sur: $4,900/month (3077.20 – 2827.30/month).
North 4S: $4,817/month (3025.08 – 2779.41/month).
South 4S: $4,450/month (2790.15 – 2567.65/month).

I think there are plenty of people making these incomes in the area since the home loan process is pretty much impossible without that high income and debt/income ratio levels to make it work. Note that for even HIGHER income people, they would be paying close to 49% in state and federal taxes so for doctors with private practices, tech millionaires, partnered law firm people, they would be paying even less that what you posted as the tax deduction is about 10% more…

I think one of the craigslist links I posted was in Del Sur and was close or over 4k / month so that would be at/more depending on your income. If you’re in south 4s, the numbers are even easier since pretty much all of the larger 4s ranch houses seem to rent for 3.6k+ or so.

I used to debate all the time about the MR fees, but the thing is with MR, you tend to pay less for the home overall so I just see it as balancing out.

Some people get all bent out of shape about MR, but at the end of the day, I think most people who buy shop for what the monthly nut is compared to renting and from the data, at least from all my calculations (and I believe yours as well), we’re not in a bubble right now based on current interest rates, what the rent is going for in the area, and prices being charged. I’d assume most of the buyers also aren’t looking to flip unlike the no-money down days of 2005…

http://sandiego.craigslist.org/search/hhh?zoomToPosting=&catAbb=hhh&query=4s+ranch+rent&minAsk=&maxAsk=&bedrooms=4&housing_type=6&excats=

Rent ranges from $4695 (4450 sqft – large in 4s) to
$3100 (2188 sqft (small in 4s)) so the 4.6k rent place is well cheaper to buy possibly.

Lastly, I think it’s overstated about the “cost” of owning a home. YES, there is a cost to fix stuff, landscaping for new homes, and all that, and people need to go in eyes wide open to those costs, etc

…but there is also a “cost” (maybe not as much monetarily) of renting such as getting rent raised, being forced to move and find a new place, total lack of control in whether rent goes up, limited options to customize, no tax deduction and paying “market” rates ALL the time since the landlord tends to charge market prices…you also “still have” a tax free option to sell the primary residence and move (one of the few tax frees still)…

We bought back in 2009 so things are up a lot from where we bought, but the price we are paying is still 2009 prices…Yes, prices can and do go down as well, but you can wait if the numbers don’t make sense financially and that was why I posted.

At the end, I guess it really depends on your situation, but knowing your housing cost for the next 30 years is very powerful as your income hopefully goes up and the mortgage stays the same…You also get a house after that 30 assuming you don’t cash it out and can live for relatively less (minus prop tax)…

[Author]

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