Given my post regarding the issue AZCentral.com posed questioning whether Phoenix was actually shrinking slightly in population, I thought the following article on California timely and very relevant. From Associated Press, “Go East, young man? Californians look for the exit,”
“The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates.”
I grew up in Irvine and though most of my family is in Arizona, I still get out to the Orange County area each year. I have watched many changes over the years.
The first prominent change for me was the air. I recall as a kid seeing the brown haze way in the distance which I knew to be Los Angeles at the time. It wasn’t over us, or it just seemed that way. Over the years, I remember that haze steadily approaching or just accumulating in our own area.
I recall the development in Irvine taking off around our neighborhood with entire new master developments forming. Later, I noticed how the retail development began to eat up open space near the house. In my early 20s when I would visit, the change simply seemed to be the volume of people and cars on the road.
In more recent years, I have seen home values take off to a point that I believe the last nail was actually put in the coffin in terms of if I ever wanted to relocate back to the Orange County area. From the article:
“Financial adviser Barry Hartz lived in California for 60 years and once ran for state Assembly before relocating with his wife last year to Colorado Springs, Colo., where his son’s family had moved.
“The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community where they lived and grew up,” Hartz says. “Some people call that progress.”"
Like the example in the article where the children won’t be able to afford a home in the neighborhood where they grew up, I too wouldn’t be able to afford the home in my old neighborhood as it would likely be priced around $750,000.
This is okay though for me as I really consider the Valley home. For others who want to return to California and who didn’t own property prior to the run-up in valuations, they have to face a very real possibility that they can no longer afford to live there.
So, when I read the article, it rings very true to me. California has a lot of challenges ahead and there is no clear path out of them. When I consider any of the Valley’s challenges, I don’t see them as nearly so bad and in fact, I am optimistic for the Valley in general.
We can learn a lot from California’s current and long-standing woes and as the Phoenix area evolves, and how we might avoid them.
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{ 4 comments… read them below or add one }
David,
I also relocated from Rancho Cucaminga, California several years ago to my new home in Panama City Florida.
Prior to leaving we had been investing in our local market for several years for the simple fact that what we could afford to purchase as investment property in Panama City, we could not purchase anything even remotely similar for the same price.
We loved living in California (my husband having lived there for over 30 years) and we were sad to leave.
However, making the move and starting over has proved to be one of the best decisions we have made.
Thank you for providing this information as it provides a means for your customers to compare other markets and how they have progressed (good or bad) through the years.
Best of luck,
Jennifer Mackay
Jennifer-
Thanks for sharing your experience living in California. Glad to hear that the decision to move to Panama City was the best one you could have made.
I know I will continue to spend occasional time in California from year to year but I will always come back to my home here in Arizona.
Thanks again for the commment.
David Lorti
I guess many thing have caused the great growth the Califorinia to reverse. Taxes, congestion, cost of living, jobs.
What do you feel is doing it?
Richard,
Thanks for your post.
I think the causes are many including the ones you mentioned and illegal immigration, poor government management, cost of entitlements, and others. One element I believe is that you have a lot of Californians who have been there for decades who are looking at their livelihoods and realizing that they could sell and reestablish themselves elsewhere and live a higher standard of living. For instance, Colorado has seen many Californians moving there for years.
I do think Proposition 13 plays a big part in the whole mess in terms of state tax rolls. From what I know of Proposition 13, it nearly froze property taxes for homeowners at the time it was enacted. And if a homeowner has been in there home for 30 years, they still pay very little while someone who buys the home next door will pay a disproportionate amount of property taxes to the state.
If you think about anyone who pays very little property taxes who needs to upsize their home, they have to take into consideration a much heavier tax burden by doing so. California’s property taxes are relatively high compared to here and so they weigh in the decision more, especially since values are much greater there (.0075% vs. .00125%). On a $750,000 home, taxes are $9375 annually or $781 a month. That’s a substantial tax burden. Over a ten year ownership horizon, taxes would accumulate to $93,750!
Overall, the cost of living in California simply is too great and rising. The more expensive it gets to be there each year, there is a group of residents that will fall below the line of affordability and they will have to consider new choices. As well, for those residents that aren’t living in an ideal area or able to easily enjoy some of the positives about California (beaches, weather, etc.), then the burden becomes more difficult.