An often discussed topic here has always been the high cost of living in California versus the benefits it presents. I have often thought about moving out of state, anyone else entertaining the idea?
Now that the meltdown is in full force, are there still many reasons for leaving?
Here are a couple I can come up with:
1. Even with prices falling +30%, Southern California is still one of the more expensive places to live in the US.
2. The terrible economy means fewer jobs, the reason most of us came here in the first place.
3. Freeways are still clogged
4. Taxes are still high.
5. The state is undergoing a fiscal crisis, almost assured to mean even higher taxes
6. Maybe it’s my perception, but violent crime seems to be on the uptick
7. We still have the worst school system in the country.
8. Prop 13 ensures the rich a great tax subsidy.
On the flipside, I can think of some reasons to stay:
1. Cali is probably going to come back and have more jobs…
2. You can get a double double protien style with no onion pretty much any time, any where.
3. Housing prices are falling faster than the OC register and Lansner can report that we’ve hit a bottom.
4. The weather, you know. It’s not that bad.
5. Where else can you work for the state and get paid minimum wage?
Now that the housing bailout bill has been approved by congress and signed into law by the political pandering president, we have all agreed to accept the cold hard reality of covering someone else’s bad decisions and poor choices with our own hard work, sweat, and good choices. Indeed, it seems that excelling or even being of a marginally higher intellect than say, a brain slug is fit to be yoked and saddled with someone else’s mediocrity in this new era of America. It is the future of “no child left behind”, or as Brett Arends of the Wall Street Journal puts it, the Condo Flippers Do Over Act.
I remember a story that I read in grade school, Anthem by Ayn Rand. It was the first Ayn Rand book I ever read, and the only one I enjoyed. But, even in my youth, the message was chilling. The story was one of a man with extraordinary talent and physical prowess who lived in a society that believed in equality to an extreme. This society would place handicaps on those who could could see well, think better, or even walk better to the point that noone was better than anyone else in any way. Ironically, the main character I never in my life imagined that this kind of society would exist, much less under a republican president. However, it seems we have become this society:
Our name is Equality 7-2521, as it is written on the iron bracelet which all men wear on their left wrists with their names upon it. We are twenty-one years old. We are six feet tall, and this is a burden, for there are not many men who are six feet tall. Ever have the Teachers and the Leaders pointed to us and frowned and said: “There is evil in your bones, Equality 7-2521, for your body has grown beyond the bodies of your brothers.” But we cannot change our bones nor our body.
I have no flair for the dramatic, but I fear that we as a nation have allowed ourselves to become enslaved by our own political masters. We are therefore, destined for failure much more than if we had celebrated success AND failure as a means of building again something better. In our society, failure is only to include everyone, and everyone fails or succeeds together. It seems like only a little time ago that we were introducing “participation awards”, and now we are covering everyone’s losses. Except it seems that there is a conspiracy afoot.
I’m a died in the wool libertarian, but there is only so much nepotism that I can stand. I am disgusted beyond belief at what I see. What I see is that the only time that people are bailed out is when it affects big business. When the banks collectively went and did the stupidest stuff in the history of the world in the name of “financial innovation”, they get bailed out. When little investors went and did stupid stuff by buying dot coms… not a chance.
I’m mad as hell, but I don’t know what to do. In elections, I get to choose between a giant douche and a shit sandwich. Equally, everyone around me is too busy getting raped by the government to give a rat’s ass. The only thoughts that come to mind are treasonous and illegal, so I won’t write them down, but, I have to ask, at what point do politicians become responsible for their actions? Is it only when we get invaded and conquered do crimes against humanity get punished?
Unfortunately, with all of the absolutely stupid shite that happens in this country, I can’t think of a country where even more stupid shite happens, so there’s no escape. Maybe this is just what being middle class is all about. I’m too lucky to have the government wipe my butt for me, and I’m not lucky enough to not give a rip or find a way around paying for it. So, I’m stuck working for the government 50% of my income going to taxes and no say in the political process. Makes me want to stop paying taxes altogether. If I thought I could get away with it, I would.
I have to say, this housing bill, what a crock of absolute rubbish, and I’m ashamed to live in a country where politicians pander to everyone but their constituency. Everyone would be much better off if housing were cheap. Everyone complains when the prices of things rise… we call that inflation, but when it’s houses, it’s call an ownership society.
From the WSJ:
Anyone who invests in housing already gets a number of political subsidies. Your mortgage interest can be deducted from your income tax. Your capital gains, up to certain limits, can also be tax free. Taxpayers maintain the roads to and from your home. The new rescue package is just one more subsidy for the asset class of housing.
There was no rescue package for all those honest people who lost their savings in the dotcom crash. And there was no suggestion of any rescue package.
Meanwhile the majority Democratic party is agitating, with plenty of popular support, for a “windfall profits tax” on energy companies.
Such a tax, if it should pass, would by definition lower the returns from investment in oil and gas exploration. Inevitable consequence: Less investment in oil and gas exploration. But this is apparently an acceptable price to pay to ensure that…well, that investors in big energy companies don’t make too much money.
So, where does this all leave us?
Among the many ironies: The current economic crisis is largely the result of too much investment in housing, which led to a bubble and then a collapse, and too little investment in energy, leading to fuel shortages and skyrocketing prices. Yet the political class is acting, as far as I can see, to increase investment still further in housing and reduce investment in energy.
Where do our douche and shit sandwich stand on this?
This was the headline of some financial reasearch issued by Joseph Hargett of Schaeffer Research on March 27th, 2007.
I’ll let you decide how prudent that advice was by viewing the top homebuilders’ stocks from that date until today measured against the S&P 500.
I’m predicting that even with all of the price declines, I believe there’s still a lot more.
Here is what Joseph had to say:
It seems you can’t talk about the housing sector these days without mentioning the “S” word. Subprime, yes I said it, has even wormed its way into the vernacular of many Fed watchers and Fed members - not to mention the warning shots fired from the sidelines by former Federal Reserve chief Alan Greenspan every other week or so. This morning, the Fed sounded yet another gloom and doom note for the housing sector, as Sandra Braunstein, the director of the Fed’s division of consumer and community affairs, stated that borrowers could see “more difficulty” in the next one to two years. In particular, those borrowers with recently originated adjustable-rate mortgages are likely to experience more delinquencies and foreclosures, Braunstein said.
and
Admittedly, the situation is not very flattering for the U.S. housing market. However, I think that the hype over the popping of the so called “housing bubble” is being overplayed just a bit too much. Just take this quote from a March 18 New York Times article titled “On the Homefront”: “In many quarters, Greenspan was essentially accused of cheating the country out of the depression we deserved: instead of allowing the swooning Nasdaq to bring down the United States economy and punish us for our sins, he had rolled the tech bubble into a housing bubble and allowed the party to go on.”
Blaming Greenspan seems convenient at this point, especially with Bernanke’s Fed in a holding pattern. And comparing the “Dot-com” bust to the current situation in housing seems rather irresponsible. After all, betting on virtual real estate seems a far cry from betting on housing prices and “real” real estate. I mean, can you really compare the long defunct Pets.com and WebVan to Lennar ( LEN: sentiment, chart, options) and Hovnanian (HOV: sentiment, chart, options) ?
I have sat on this article for 5 months to see if my research was right on where they were headed… in an effort to dispel any myths. He was dead wrong, and worse than that, revealed poor research on the underlying fundamentals of the housing problem. It is and still is an affordability crisis. The decline in sales will not abate until that affordability standard is reachieved. At current course and speed, that won’t be for another 2 years at the minimum.
I believe that we will still see some of these builders declare bankruptcy (ch 11) before this bust is through.
DR Horton is doing what I have predicted builders would do: offset falling housing prices by building more, not less (as housing bulls suggested). Their reported earnings fell 85%. Not much of a surprise.
Unlike other home builders, Horton said it has no plans to weed out potential buyers who may not be able to qualify for a loan in order to bring down the cancellation rate.
“As I’ve said to all our salespeople, if a buyer is warm and has a pulse, we want to put them on paper,” he said.
You could tell the whole story in that single phrase.
Realtors predict a better year… for themselves, not for homeowners or home sellers.
The real estate market traditionally picks up in the spring, but Remax Gold Coast’s Virnig said waiting until then to put up a “For Sale” sign might not be the best strategy.
“I always think if you’re a seller, it doesn’t really matter. You can wait for a busier time,” he said, “but there are going to be more buyers and sellers out there. It’s not like there’s going to be a bunch more buyers out there and the same number of sellers.”
Nothing like a little common sense to shake up a seller. How many do you think are really thinking like this? Last year was the year of insane asking prices and a disconnect. This year seems to be the year of cognitive dissonance. Buyers are vanishing, and sellers are in deep, deep denial (except a few… I actually saw a home priced somewhat sanely in Mission Viejo the other day)
Last year, we had quite a few headlines about people leaving the state.
Anecdotally, 3 of my friends (all with families) announced this month that they will be moving once the school year is over in May/June. All of them just sold or are selling houses. One was a family with 4 kids, another with 3, and the last with 2. All of them are 30 to 40 year olds.
All of them cited the reason to leave was the inability to get a larger home (they had all outgrown their homes). What do you think this will do, and do you think it is as widespread as it seems to me?
sentiment
