If Everyone Wants to Live Here, Where’s Everybody Going?
Chuck Ponzi April 23rd, 2007
The OC Register reports that which many of us in Southern California has already noticed:
In just three years, the enrollment in 19 Orange County school districts has dropped by a combined 17,725 students. That’s enough students to fill about 10 high schools, or 30 elementary schools.
And some educators, who attribute the trend to young families escaping the county’s high housing prices, are predicting even sharper declines in years to come.
Good thing everyone wants to live here, otherwise one might think people are leaving.
Realtors (whoever that is) have a great opportunity to tell us why it’s not a problem:
Meanwhile, realtors and other educators say this trend is part of a cycle, easily reversed by everything from increases in new housing developments to changes in birth rates.
Ah… that’s all. Just have more babies. Seems our new immigrants aren’t having enough is the real problem:
Michael Caruso, the president of the Orange County Realtors Association, said blaming the housing market for the loss of school enrollment might be a bit deceiving since the overall population in the county isn’t actually decreasing.
“We are not seeing any flight away from Orange County,” Caruso said. “It has more to do with our neighborhoods simply growing up.”
Caruso said that between 1988 and 1995, the county saw a boom in new housing developments, which attracted scores of young families. The children from those families are now grown up and about to leave high school or are already in college, Caruso said.
“This is a pretty normal cycle,” he said. “Soon, after the Orange County housing market improves, we should see another growth spurt.”
Good thing, we don’t need children. They’re just crybabies anyway.
I never cease to be amazed at the crap these realtors are willing to spew to support the ponzi scheme. I have yet to meet one who doesn’t make my skin crawl as they try to convince me that all is well in the market and it is a “great time to buy”. I hope Caruso and his ilk provide fodder for legislation to recognize that the profession a whole is morally corrupt and based solely on misinformation and collusion.
so are they mostly leaving the state, or are we just seeing off-setting increases in enrollment in the IE?
Both. From the article, they don’t illuminate exact numbers… not all districts report at the same time, nor is it consistent. Many districts do not want to give out bad press anyway, that makes parents unhappy.
That’s not a surprise. Who is replacing them is the big question. Overall, there are more people in California… we’re not losing pop yet, but certain areas are being reshuffled. We could have a geriatric community in some coastal areas pretty soon… much of OC is like that.
Chuck Ponzi
That’s not a surprise. Who is replacing them is the big question.
In two words:
“!VIVA MEHEEEEEEEEECO!”
It would be interesting to look at the actual distribution of population age.
If you look at OC/LA it has a lot of negatives to attract a family
1)Poor Schools
2)High Crime
3)High Costs
4)Small houses
5)Small yards
6)Recent history of civil unrest
7)Uneven tax base
The cost of that Prop 13 (uhhh. I can’t remember the number)… Basically it lowers property taxes for long term residents so much that old folks do not have the urge/ability to move.
Hence population gets older.
Looked at Rochester hills Mi… Nice houses… low crime… 225K 4br/2.5bth homes…
Actually, LA/OC is a pretty nice place, insane housing costs notwithstanding. If you look at the actual stats (try city-data or some such) you will see that OC and even LA have surprisingly low crime. In fact, Huntington Beach, Mission Viejo and Irvine are often in the 10 lowest crime cities for 100k+ population in the nation. Santa Ana is often second behind only San Jose for low crime for cities with 250k+ population. LA crime is actually lower than average for a large city… although Inglewood still isn’t that great.
That said, when I was in high school during the beginning of the last housing crash or 1990-1996 there was a very significant spike in crime in Oakland, where I lived. My high school became overrun with drugs and guns in just a couple of years. It was terrifying. This is one very salient negative of a housing crash. Crime WILL increase. Probably significantly.
Irvine Unified School District is selling off two of its elementary schools because of the declining enrollments. They plan on putting in high density housing on the former school sites, and they still don’t think it will make a difference to enrollments.
Shouldn’t our taxes be going down with so many less kids to educate?
LOL, taxes going down, ROFLOL.
Taxes probably should go down, but wait until you hear the local goverments cry about the decline in property tax revenues onces prices crater…
When California residents are moving here are paying CASH that was essentially the PROFIT the made off their CA home sale for homes here in the midwest….you know things are changing. I think the reason for the declining enrollment is single folks with high incomes or DINK’s are buying these whacko priced homes and have to work insane hours to make the mortgage payment and pay for the new Land Rover and have zero time for children or maybe even to have time or energy to actually procreate after that 100 work week.
The Realtor associations are going to have a hard time spinning this into anything positive when the media keeps reporting doom. I was watching CNBC this morning and one analyst said the housing sector is in horrible shape except for a couple areas.
So, like I said before- not everyone wants to live in SoCal. I do, but only because I like the weather and the scenery. The attitude jerkoffs can jump in the ocean…
The second I read the headline of this entry I knew I knew exactly the explanation and I see Chuck posted above more from the article that supports exactly what I was thinking. But below is the response anyway…since I already typed it out.
Young families are moving east in order to take advantage of cheaper bigger houses. Because real estate prices in Orange County are SO high, it’s very difficult to raise a family there, and why would you if you can purchase a cheaper, larger home in nearby counties to the east. Many people from Orange County move to Temecula, Riverside, Corona, Rancho Cucamonga, Fontana, and of course some move out of state. The Inland Empire has had such a growth in population not because of beautiful ocean views and San Diego like weather (note thet sarcasm) but because it’s cheaper alternative to living in high priced areas in California.
The people purchasing in Orange County are probably older nowadays due to high prices and potentially don’t have kids living with them anymore. Additionaly, there’s a possibility that young couples in Orange County are waiting longer to have children.
I’ve definitely experienced this effect. We bought into a very nice neighborhood in 2001 that was constructed in the late 70’s. It would seem to be a family neighborhood: big houses, nice yards, nice parks, nice schools. But given LA’s insane real estate prices, few young families can afford it, so once the original generation of kids grew up, they really haven’t been replaced. Kind of sucks for our kids, who don’t have the “density” of school-aged kids in the neighborhood to be friends with
Yep,
Huntington Beach sold off a few elementary schools due to lack of enrollment. Those places were being torn down and houses built. They’re going to be in a world of hurt once the next generation comes along and there’s no school to send the kids to.
They’ll have to eminent domain everyone (at astronomical cost) just to rebuild enough classrooms for all the new kids…
No thanks! I’ll home school my kids…
Andrew
http://www.InvestorReviewPodcast.com
That’s assuming families ever return.
Sometimes they don’t. Look at the “Valley” (San Fernando) Families galore in the 70’s and 80’s. (think Brady Bunch and Partridge family) It’s highly unlikely with the remaining housing stock that it’ll attract anyone other than poor immigrant families, and few at that. They’ll more likely be transient because they’ll go where the work is. No better in Santa Clarita (both parents work, even though schools have oodles of money. Very serious drug problems there with pot and meth.) Forget about Antelope Valley, that’s gang central. Where do you think all of the gangbangers going to Six Flags come from?
The wife used to work with the LAUSD. After what she saw, we swore none of our children would ever attend an LAUSD school… nothing personal to people whose kids are forced to go there. It is a nightmare of underqualified teachers and administration that would rather be collecting their paychecks and doing nothing. (can’t blame them, teachers’ unions allow them to)
In the end, success or failure for a school and district depends solely on the parents’ involvement. No amount of money, taxes, land, or buildings will fix that. When Mom AND Dad are required to work to support the family, the children suffer because parents cannot give their children the attention they need to be successful. This is exactly why you should all expect that if prices stay high, schools will continue to decline in performance. It’s already happened to places like Laguna Niguel and Aliso Viejo (public schools are scoring lower on average on standardized tests relative to their inland counterparts).
Anyway you look at it, the golden days are over for SoCal. Not being negative, just saying we need to seriously get down to business about fixing problems created by Prop 13 and boomer educational entitlement problems.
My question is, if we’re the 7th largest economy in the world, how come we have some of the worst educational performance? The answer’s simple… high prices distract families from concentrating on education.
I’m unclear as to how the decline of the student population relates to the headline.
If home prices are such that young families(the ones with children who attend schools) cannot afford to live in OC, how did home prices get that high unless people wanted to live there?
The same way they did everywhere else in California and the nation: lenders handed out loans with little regard for the borrower’s actual ability to repay!
Since the money wasn’t real (the borrower had no “skin” in the game) and the lenders suspended traditional prudent lending standards in a sea of seemingly ever-rising home appreciation, every buyer was essentially armed with more and more funny money to drive prices up, outbidding each other.
It was classic economic theory at work, AKA an asset bubble scheme…. That is, until it became clear that it was all a con game, real estate’s version of three-card Monte.
I think it had more to do with confidence in the housing market that drove up the housing prices as high as they went. Speculative buyers were purchasing second homes because they were confident in the housing market, others were moving up purchasing bigger and better homes with the gains that they had from the sale of their entry level house, and entry level homes were able to be purchased by sub prime borrowers who never before could get a loan with no money down. Demand was high because of confidence in the market and because money was available.
Is it all a con game…no. The capital existed because investors were confident as well. Ultimately it’s their capital that purchases the very loans that almost all lenders loan. If investors stopped purchasing that type of loan on the secondary the market, the loan would not have been given, unless a bank was going to portfolio the loan, which is not the norm.
Con game = confidence game
http://www.latimes.com/news/lo.....8254.flash
Click on the “County by County” button and note where people live in California.
Gab,
The fundamental mix of loans and borrowers is what caused the high prices, not desirability. Different Chris did a good job of explaining that for many people, it was an incremental change because rising prices allowed people to afford more. It was an incremental change for everyone who was not a first-time buyer, that is. First time buyers were primarily sub prime or Alt-A consumers. As Mr. Cote once put it, trade-ups were people trading in their $3000 cat for a $5000 one.
Of course you can always believe your local realtors and their soft “feel good” reasons for the runup. Basically, it amounts to this:
On the other hand, the fundamentals (income, non-housing wealth, migration, household formation) do not support even rising prices. The only remaining fundamental supports are jobs and financing of the mania. However, once that trend is entrenched, it can go far beyond what any of the fundamentals can support, which is where we are now. Now that financing has broken and real estate employment is on the downswing, the mania is over. Nothing left but to pick up the pieces and reestablish affordability based on income, non-housing wealth, migration, and household formation, none of which seems to fit the bill to continue the speculation.
There’s a saying that the rats leave the sinking ship first. In this case, it’s the families. Ever wonder what you get when the families leave an area? I’ve seen it. You may not like the result.
Chuck,
As I alluded to in my other post above, I have seen what happens when families leave an area too. And I got a knife in my gut for the pleasure. The realist in me says there is a brutally hard landing coming. The optimist in me hopes it is gentle, so we don’t have another early-90s-style explosion of gangs, drugs and violence.
Oh, here’s a funny video featuring comedian Kathleen Madigan that makes the point better than I, of how the sub-prime lenders made foolish loans to people who can’t repay, and now everyone expects a government bail-out:
http://tinyurl.com/2z9uls
Seems like all the trolls are near dead.
Nothing from the always goes up group…
Always fun to watch the clubbing of baby seals though.
I agree that it is a shuffle. Who with kids can afford the housing in the coastal areas now? Everyone that I know with kids has fled to new housing out in Rancho Cucamonga (and further) in search of bigger houses. Face facts, even with prices dropping, the coastal areas are probably out reach for families looking to move up for a loooonng Time. For all its flaws, coastal is still the most desirable housing. Proximity to water has always been a major price factor. Affordable (and I use that term loosely describing So.Cal pricing) housing for families is all inland at this point, so it makes sense that coastal areas will lose school enrollment. I would garner a bet that Orange County’s enrollment loss was the Inland Empire’s gain.
Wow, I never did understand the desire to live by CA’s oceans. They are dirty and nasty and overcrowded to boot. Living by the ocean just puts a fine layer of salt over everything (don’t park your car outside!) and the air is sticky and smelly. Nothing like Hawaii at all! It always boggled my mind as to what was so desireable about the Pacific Ocean on the Cali coast.
We did leave SoCal last year. The high prices of housing were the #1 reason, closely followed by the influx of illegal immigration and outrageous taxes. (Side note: We left California in March of last year. On this year’s tax return we got money back from both Federal and our new home state, but we OWED taxes to California for the reason that we did not live there long enough in 2006 to pay enough taxes!! I was floored.)
It’s very sad to see what has become of CA. I was born and raised there all my life, but we just couldn’t take it anymore. And the prospect of NEVER being able to own a home (cause there was no way in Hell we were feeding into that frenzy like every single one of our friends did!) was just too much to bear. Sure, I miss my friends and family, but overall, I think this was the best decision we ever made.
As an impartial observer of OC who lives out of state, let me inform your readers that no, not everyone wants to live there. And I am familiar with OC.
When I was a child I spent five great summers in the mid-1970s at my cousin’s house in Garden Grove. It was a great place - we could walk safely to Atlantis (is it still there?) and there was still some open space. Yes, in 1974 there was at least one dairy farm in Garden Grove.
When I go back now on business I realize that the OC of my youth is pretty much gone. It’s all super-expensive houses packed together and linked with massive traffic-clogged freeways. But the weather is still nice.
Garden Grove is a great place if you like roving bands of asian and hispanic gangs.
I hear the locals call it “Garbage Grove” now. That’s too bad. It used to be a nice place for a kid.
Your comments really hit home. I’m a 29 year old father of two who moved to San Diego last year, and it sucks that housing prices are so out of whack with incomes. I’ve no interest in buying a home, with prices being what they are. I’m in law school, so that doesn’t really bother me.
What does bother me is that high housing prices really push young families away. I had a terrific childhood growing up in Staten Island; plenty of friends and everyone pretty much knew each other. Now, families of ages similar to those of my family are far and few between. Most of the families I run into have much older parents with little in common with me.
I think Prop 13 and misguided anti-growth policies are largely to blame for this mess.