Is the middle class dream an illusion for Californians? What we can learn from domestic and foreign migration patterns.
One of the more common e-mails that I get regards middle class families trying to purchase homes in California. To the point, many look at their budgets and sky high home prices and wonder what is going on. Over the last decade if we look at the data, it is clear that living what people would think is a “middle class†lifestyle in California is nearly impossible for those that are middle class. Yet I would also question what they include in this middle class lifestyle (i.e., expensive private schools, SUVs, etc). When we examine certain areas home prices are back to peak levels while household incomes remain stagnant. You have inland regions of California with more affordable housing yet employment sectors that are weak. Someone sent over a recent study examining migration patterns for the state and the results are very telling. Many Californians have left the state to pursue what they feel are better opportunities. Fewer people from other states are also coming over.
The California balance of migration
From the 1960s all the way through the early 1990s, California had a healthy dose of both domestic and foreign migration. In the 1990s the balance shifted heavily to foreign migration and has remained the case ever since:
Source:Â Â Â MIPR
You notice that with the tech boom, domestic migration also increased and many companies were bringing high level talent from abroad. Keep in mind this was pre 9/11 so immigration laws were much more open especially for talented people around the world many flocking into the tech sector. Today, the net population growth through migration is nearly zero. Californians on the other hand have been migrating out on a net basis:
The above examines three states where Californians were moving to. All have much lower home prices. An interesting point to examine is that both Nevada and Arizona with their busted housing markets are seeing very little migration from Californians today. However, Texas is still seeing a good amount of Californians but this number has moved lower. Many are taking their chances elsewhere and it is likely those aspiring to be in the middle class. If you want to own a home in a nice area at a minimum you need a household making $100,000 in California. Even though California has higher incomes, overall the state hasn’t seen dramatic wage growth over the decade:
Nationwide the typical family makes around $50,000 and in California it is roughly $54,000. Yet home prices are much more expensive in the state. I think what you are seeing is really the bifurcation of the state. That is, you have a high income subsection fighting for certain cities (with no new housing development) and a growing number of lower income Californians in areas that are seeing very challenging economic times.
How do you define middle class in California?
I think people have it somewhat twisted in terms of what they consider middle class. In the US, it is very clear. Look at the median household income. That is $50,000. If we go by math, the middle class household income in California is $54,000. But what does that buy you? Say you want a nice home in Pasadena or Irvine, and you are looking at $600,000. The typical US home will cost about $180,000 and it is doable on a $50,000 household income especially with current low rates. This issue isn’t only happening in California but areas like New York City:
So what you have is a group of people being strained by housing costs. This is why in Texas, even though incomes are lower adjusting for cost of living many more people “feel†like they are in the middle class. After all, everything is relative. Psychology studies highlight this phenomenon over and over. This is why that family that now moves into say an elite Pasadena area, will now want to compete with their neighbors by upgrading their car, home renovations, furniture, and also will want to send their kids to the best private schools (and eventually a very expensive university). All of that costs lots of additional money beyond the already expensive mortgage.
Home prices are on the rise for a variety reasons. You have flippers in key markets, foreign money flowing in, and low interest rates. Because of the lower supply of inventory and distressed properties being a smaller section of sales, the median price is up 23 percent in California:
But wait, didn’t you say household incomes are stagnant? Of course. Look at the above chart carefully. What you have is inventory dropping by an amazing 43 percent in the last year. Home sales are up by 10 percent. Interest rates are down to a record low 3.38 percent. All you need is a tiny amount to go in with an FHA insured loan. So those that think they are middle class are simply leveraging up with low interest rates and tiny down payment loans to make up for the lack in income growth. You have Wall Street investors buying up lower priced property inland but also in many higher priced areas. Foreign money is flowing in to select areas of Orange County and Los Angeles.
The total outcome
Over the last decade, the migration numbers are telling:
California has lost about 1.4 million domestic residents to other states. I think many people that make middle class incomes for the country have decided that it is too hard to make a middle class lifestyle in California and have moved out. These kinds of studies are interesting because they show what people are really doing. Many that do stay will either dive in with sizeable leverage or rent. It is a simple choice but what people are feeling is really a squeeze on middle class families in higher priced metro areas. I always point out the multiple lower priced counties but many people have their focus on certain areas. The truth is, those areas are no longer middle class for domestic Californians. They require a high income. And budget cuts are having an impact. And there is a cost when budgets run out of control. A lower price area is San Bernardino County and this is what the city attorney said recently:
“(PE) San Bernardino City Attorney Jim Penman told a town hall meeting that residents should lock their doors and load their guns because the bankrupt city’s police department would be unable to protect them.â€
Will prices move higher? According to the CAR they are projecting higher prices into 2013:
Yet where will the household income growth come from? Of course this is coming from tight supply and outside money pushing prices even higher. Much of this is also contingent on mortgage rates staying low. So is the middle class dream an illusion for Californians? Not in all areas, that is for sure. California is a massive state and has many areas that do provide the opportunity for people to purchase reasonably priced real estate. Yet even those areas are being squeezed by investors pushing prices up. Many once perceived middle class areas are simply not middle class anymore. They are now upper-income areas (or suck in middle class families that are now living up to their eyeballs in debt).
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148 Responses to “Is the middle class dream an illusion for Californians? What we can learn from domestic and foreign migration patterns.”
Cue multiple comments from California Elite; beautiful, smarter, superior to the rest of humanity, chortling how all who leave CA are very sorry, wish to return, everyone else subpar wannabes, bike to beach, weather, surf and ski, never mind 1/3 of the nation’s welfare cases call Cali home, others struggle paycheck to paycheck to live 500K CA Dream of tract house with tiny yard in subpar school district; graffiti festooned on perimeter block wall of tract by a tagger (aka “street artist”) reinforces culture Cali vibe.
Surely those who left CA all miserable, swatting bugs, overheating/freezing in some hellhole; the favorite pastime to constantly tell the new neighbors how superior CA is, how the new state should be more like CA, how they want to return to CA because this new state sucks; ponder why ignorant people elsewhere tend to hate Californians? Yeah.
That’s actually kinda funny.
In 2011 while on a bus in Rome, the guys from SC, TN, TX, NE and I started laughing at the Californians about
living in the “Golden State”.
Interesting to see the reaction when southerners are telling them they are chumps.
the only way to live in CA is to be born rich. I was. so sorry for the rest of you. stephen e. hansen, portola valley, CA
I left California in 1985. I left because I wanted to start a family. I moved to the Oregon coast and bought 90 acres with an old farmhouse. Cost. $100,000 with a seller carry back with 50k down. I have 5 kids. 2 were valedictorian and received full ride scholarships. 1 Salutatorian and partial scholarships. All are well adjusted having grown up in a very clean small town. The air is fresh a sweet off the Pacific, the winters are wet but mild. We raised the kids with wood heat only and have many great memories of their childhood. I moved out at the right time. I was a 4th generation Californian but cannot imagine myself moving back. It seems to me that California will suffer the same disaster as some of it’s cities and will have to raise taxes again and again while cutting services. Your housing situation is another bubble in progress. Get out and into a rural area where food can be raised or grown and fuel (wood) is free or very near free. The water is sweet and soft and the people are mostly other California transplants happy to be here. You still have time.
The Oregon Coast sounds lovely. But how would one make a living there??
I have live in CA my whole life. It is sad to see it ruined by illegals and the leaders are at fault. Not sure what to do. Thank you.
I hope they enjoy the 110 degree summers in Arizona and Central Texas. Has to be tough moving from perfect weather to intense heat.
I’ve lived in the northern Central Valley of CA for my entire life. We regularly have heat over 110 degrees in summer. That’s why they call it summer. It’s hot.
People deal with it and make trade offs. Moving to AZ or TX is what you make of it.
But, staying in CA is what the state govt, public employee unions and boatloads of “activists” make of it.
110 is cool here. I actually have gotten goosebumps when it is 115 …
Must be tough waiting for that big earthquake this IS coming. LOL
Actually it gets pretty hot here in LA/OC as well, 95 in the summer is what i’ve measured. And what difference does it make if it’s 95 or 110? For both situations you’re going to be uncomfortable without the A/C.
The weather in CA was nice, but the people really weren’t, and there was no way I would ever be able to have my own place.
That and the governance is so poor that most of the gas lines in the SF area are probably unsafe. If you want gray hairs, go read the NTSB report on the San Bruno gas line explosion.
You oldsters are hilarious! A little heat and you’re ready for the Grim Reaper. Put your Beach Boy 45s on and tank up while you lay your aching bones in the sun. The only people who are going to remain in what’s left of the state the military-industrial complex built are the old and infirm who can’t take life anywhere else and don’t have the energy to get up and go. Richard Nixon, Ronald Reagan, Arnold Whatshisname–yeah, what a bunch of smart people to produce the biggest political jerks of the postwar era.
What an insecure comment! I tell you, I’m from CO and it does suck compared to CA and yes, I suppose I do live “paycheck to paycheck” here but I don’t spend my time drunk in bars or surfing porn which is how most of the flyover zone spends their time. CA has always been boom bust and it will come back from this. Do you know you could die tomorrow? I’d rather live my life then counting pennies. See ya!!
Have absolutely no interest whatsoever to surrender my liberties to the people’s republic of cullifornia! The state employees, unions and the tree huggers have destroyed it beyond any repair. There is no common sense at all there. Can’t mine resources, can’t build homes without dealing with the impossible regulations, gubment constantly screwing up the environment. And THEN when they fail with their miserable social experiments they expect the rest of the country to bail their dumbasses out!
It depends on the location and environment that people relocate to after leaving California. There are is a quality life after California. The only negatives would be the hurricanes and tornadoes.
I moved out here in 1982 to work in Aerospace, and I’ve seen several boom-to-bust bubbles.
My wife grew up out here, and is more “used to it” than I am.
And we’ve decided to get out of this screwed up state as soon as she retires. I’ll be 62 this summer, but I’ll keep working a while longer to pile up some cash. Our house is almost paid for, and will be by the time she hits retirement age in a few years.
After that, adios to the People’s Republik of Kaliforniastan!
Good riddance, then!
Is that supposed to be some kind of coherent response, or is this a parody of the kind of reaction that was outlined in the first comment?
Relax, honey. Why do Californians get so angry and rude when people choose to do what they want and follow their own destinies? Very close minded.
How dare this likely productive, educated, homeowner/taxpayer have the audacity to criticize California, threaten to leave? Good riddance, indeed! (insert sarcasm)
Who will replace him? Somewhere on an interstate, an old van heads West. Mom, Dad, three kids. Dad hasn’t worked in years due to “stress” but dreams of becoming a full time musician; Mom quits her retail job (prolonged standing a problem as she’s seven months pregnant with twins)…a few beat suitcases, $800 in life savings, Cali, here they come! Maybe they’ll get a reality show! Maybe one kid will become a pro skateboarder! Public assistance only temporary! Mom can get a Green Job! Taxpayers happy to help!
Says the person who is gaming the California system…
Don’t wish for all the makers to leave just yet or you’ll finally end up paying your fair share!
wish i was going with you….I’m 7 yrs from retirement. But this state has gone to shit, spearheaded by major influx of dont give a shit about anyone but myself foreigners.
California’s problems are directly tied to a lack of taxation and gov’t.
The state should increase taxes markedly to grow gov’t employment and compensation.
Next they need to make welfare benefits much more lucrative so more recipients can live the “California lifestyle”.
That’s how you increase the middle class.
I hear that, in Kookafornia at least, unemployment benefits stimulate the economy. Therefore, the state should outlaw employment. Think of the booming economy then! Everybody will be able to afford a nice house!
Dude, That’s how California has dug it’s hole…. doing more of the same and expecting things to be better, just not going to happen…
And I have to sit back and wonder if your comments are a joke? They are to me, but you sound very convincing? That too is how we ended up with BO for Dictator for four more….
God Bless America, and do what He wants for California…..
m
California is in this hole because it didn’t dig deep enough. California should dig more and then….viola’….out the other side.
Ever been to Greece?
Better weather, food, scenery, and people.
Haha—man, you should write for The Onion. You’re hilarious!
Oh wait, you’re serious? So the highest taxes in the nation and 1/3 of the country’s welfare recipients isn’t good enough for you? Don’t forget about half a trillion in unfunded pension liabilities for state workers. But you will likely get your wish, as the last election saw Democrats win 2/3 in the State Assembly. Now they can even overwrite the protections of Prop 13. Happy days are here to stay!
Will you be hear all week? This snark was excellent.
In Glendale, many of us are in the underground economy with our “businesses” and also claim the many wonderful government benefits and we are able to afford the homes on the hill and drive the BMW’s and MB. California is a wonderful country.
And of course, all the wealthy Hollywood hypocrites and the like have ample ways to hide their income while they cry for higher taxes to support the mess the politicians make (wonder why most politicians are also rich?) Seems like the only people who are screwed are the honest ones and the ones who are paid on the books via W-2s and 1099s.
But be careful you don’t upset the local commissar who then decides to sic the State Tax Dogs on you in retribution and they discover (or manufacture) evidence that you have been doing business off the books for years. That’s how it is in crypto-totalitarian states – you never know when the state is gonna decide one is an enemy of it and decide to enforce the laws that it didn’t bother with in better days. As they said in the old USSR, “Trust no one.”
Really?? I have friends who legitimatley need food stamps and assistance and cannot get it.
Feed and house your friends yourself.
Compassion is unique to California.Don’t just limit this compassion to other people’s money.
Said the Armo receiving welfare & food stamps despite pulling in a 6 figure annual salary. I’m Armenian so I can get away with saying this: None of you Glendale trash have a patriotic bone in your body. None of you have had the balls to bleed for the America that you call home. None of your kind takes pride in being an English-speaking American citizen. You want all the freedom but don’t want to pay the price for it. You all just take, take, take and give nothing back to the community. Your kind makes me ashamed to be Armenian veteran of this great nation.
Actually, CA. is a great place to live if you are retired and have a government pension. In our neighborhood, we have several retired firefighters, a married couple(both retired teachers), and several retired city employees.
Starting salary for a fireman in Alameda, CA. is over $90,000., which translates to a very generous pension after 30 years.
$90K for a starting fireman is obscene. sorry, but that explains a lot of the probs in CA
90K does not go very far here.
Firemen are fearless, selfless, public servants. Just like the DMV types.
Ditto teachers.
I think the police chief in Alameda makes over $400K in annual compensation.
Ultimately the markets regress to the mean — interest rates, house prices, etc. Gonna be interesting.
Of course, the people paying for those pensions are the ones leaving the state…
Bingo. People taking CA government jobs for the lucrative pensions should think again, and those planning on that pension for retirement should plan otherwise, just in case. If the pattern continues (working people moving out, non-working people moving in) those pensions will never be paid in full.
Indeed. You can retire in your 50s and then get another job to supplement that pension if you choose!
Also, don’t forget here in LA the lifeguards make over $100k, with some exceeding $200k. If the state wasn’t so pretty and the climate so temperate, we would look like Detroit, where gov’t policy drove the businesses out.
The comments above in regards too lifeguards by kristian is out of line. Huntington beach lifeguards will rescue over 250 humans in a single day when there are large wave events. Would you like too risk your life for a measely 90 K a year? In kalifornia, that appears too be. Chump change!
You do realize that somebody has to pay that stupid salary you are promoting? $90,000? Not to mention constantly having to upgrade the equipment to meet all the new “green rules” that are proposed (read: pullout of the CARB butthole)
I was so awestruck and wide eyed at that 90,000.00 starting salary I had to see it for myself. Here is the starting pay per the City of Alameda, published date of 2007. Now it may be higher via cost of living and, heaven forbid, union negotiation but I doubt seriously that it more than tripled: $29,232.
Faux news and it’s drones will not die apparently.
Oops, egg on my face. The starting salary is biweekly. I thought it was monthly. So according to the site the starting salary is $63,336. However My Indeed lists the firefighter recruit in Alameda at 52,000, 28% above the average. I’d hazard the national average will buy a bit more house with their salary tho. Still this is well off the claim of $90,000 +. That’s probably the senior firefighter rate and or a rate that includes overtime.
“Base Salary” is a figure horribly loaded toward the low side. I would be surprised if bonuses and OT boost that up 75-100%, and when considering the cost of the medical and retirement programs available to “first responders” (I find it interesting they don’t like the term “public servant” anymore. It shows the shift in attitude toward the fllecing they’ve been doing the past 10-15 years), the actual compensation package is likely closer to $250-300 thousand per firefighter.
*wouldn’t be surprised
you are wrong again about Alameda firefighter pay, what you offered was firefighter recruit pay, pay for a firefighter EMT is $82,044-$99,768 – pay for firefighter paramedic is about 6K more. On top of that firefighters retire after 30 years at 90% of their pay. I support unions, but first responder pay has gone completely crazy over the last 15 years or so. My son is a degreed accountant working for a county in California and after almost 3 years he grosses around 50k and will retire with less than 50%. That pay is less than half of what a deputy with a high school diploma gets in the same county. For the most part, non-public safety salaries and benefits have remained the same or decreased over the past 4 years while police and fire have continued to receive pay increases. Even Vallejo after cutting pay and benefits for nearly all employees have continued to give annual pay raises to Police post bankruptcy. Public safety unions are starting to look like Mafia extortion schemes – give us everything you want or your house will burn down and your children will get killed on their way to school.
I guess there is no end to new bubble potential in LA, LA, LAnd. Here is a house in a sketchy part of mid cities LA. Scroll down to price history for an interesting story. Would enjoy hearing any comments on this.
Sold in 2007 for $800K then sold in 2011 for $355K now on the market again for $650K ! wow
http://www.zillow.com/homedetails/1658-5th-Ave-Los-Angeles-CA-90019/20602441_zpid/
Followed your link to the house on 5th Ave.
It’s a great old house in good condition with a lot of space, beautiful vintage millwork, and a lot of charm.
Looks like this “sketchy” area will be gentrifying and I wonder why it hasn’t happened already with the price pressures in that part of the country. Terrible for large, beautiful old houses to deteriorate while people pay more money for tiny shanties in “prime” neighborhoods.
“From the mid-1980s to 2005, California’s population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000”.
If you want to understand the California of today, this is the statistic that explains it all. and in my opinion is the proverbial “smoking gun”.
This fact bears repeating: “since 1985 California added 10 million people, yet income tax payers rose by only 150,000”.
Who were the seven million newly added medicaid recipients, and the millions of non tax payers? The vast majority of that 10 million that moved to California were foreign immigrants both legal and illegal. Tax takers not tax payers.
The tax payers are leaving.
http://www.hoover.org/news/daily-report/110946
You really thought about this comment. It’s very good, but unfortunately it’s racist.
And yes I am kidding and wish more people would pay attention to your comment. You have the right diagnosis, but unfortunately the state is governed by children posing as adults.
The state is governed by children YOU elected. People cannot grasp their responsibility in voting for this corrupt system. You voted them in, blame yourself, don’t blame your neighbor. Talk about a complete LACK of personal responsibility….there it is, voting for corruption, and then complaining about it and blaming “other” people.
The real tragedy is $8 an hour. Yup, unions are bad, Wal-Mart saved america and no one is worth more than $20 an hour. Sounds like a plan to save america alright. Knuckleheads.
@swiller: elected by a pluraility of votes? Yes. Elected by readers here? Not likely. And since all you need is a name and address of a registered voter to vote (no proof of identity), it is trivially easy to stuff the ballot box to tip a marginal district one way or the other.
And isn’t the dream act wonderful. You don’t have to be a citizen and you can get your collegt tuition paid for free housing food and medical all at the tax payers expense while the tax payers cannot afford to send their children to college.
I am sorry that you feel that way Greg. In the meantime, me and my extended family will take the government for all we can get. You would do it if you could. Everybody is doing it in my neighborhood. I don’t want to look odd, so we do it too. This is really the American way. Look at the big banks.
All you need do is do a google search for “percentage of walmart employees on Medicaid”…..or “public aid’.
I won’t go into the fact that Walmart is one of the wealthiest corporations in the world, it has 4 family members that have a total wealth of the bottom 39% of the population. Nor will I mention the dozens of studys that show Walmart need only raise prices 1.5% to provide a living wage job to all of its employees. If Costco can treat employees like humans and make good money, Walmart could also.
Add in all the workers from McDonald’s and 7-11, both Corporations doing quite nicely, and you will find Medicaid is really a supplemental insurance plan for low paying multinationals like Walmart and McDonalds.
Sure there are people working the system, but the Corporations “working the system” are by far the costliest culprit. Yet, for some unknown reason, God loving Republicans pretty much put the blame in the lap of the guy taking the bus to work, earning 8.00 an hour, who would love to get a higher paying job that simply is not there.
70% of the 10 million individuals who “migrated†to California in the last 20 years went on Medicaid, and 98.5% of those 10 million people paid no income tax.
What else do you need to know, if you want to understand why California is bankrupt.
The question you should be asking yourself is who profited from immigration polices that allowed this to happen.
The people who profited from those 10 million legal and illegal immigrants that moved to California were the businesses that were more than happy to undercut the wages of Americans with cheaper immigrant labor, much of which was illegal. It was also the real estate industry which happily profited from the increased demand for housing, and the Democrat party which collected the votes of the vast majority of the millions of immigrants who received the Medicaid benefits and paid no income tax.
If you want to solve a problem, you first have to understand what’s causing it.
http://www.hoover.org/news/daily-report/110946
So if WalMart doesn’t pay a “living wage”…..how are their employees alive?
What you should do is go to WalMart find an employee and give them health insurance.
You need a real lesson in compassion.
Who can you blame for spiraling health care costs? One party would love to adopt the German style health care system that insures EVERYONE, for 55% of the cost of what we spend for insurance on our population.
The other party insists we will all die a horrible death if we adopt a one payer system that can save so much money and demands we keep the current system in place.
The end result is a patchwork of overpriced insurance that should have collapsed in upon itself years ago.
Sure, Democrats are willing to spend money we don’t have to make sure the least of us gets proper medical care (WWJD?) but it is only because the system of health care that would cost 50% less is off the table. The question must be asked, why is it really off the table? Could it possibly be about the money? Are lobbyists suddenly Angels when it comes to health care?
patsfaninpittsburgh
I would love to counter your point but I don’t have a chance against an intellectual such as yourself.
Martin
Thank you for admitting what is completely and obviously obvious.
The data presented here is indicative of what is going on in this country as a whole. Part of the American Dream WAS the ideal that each successive generation would be more prosperous than the one before; that they would enjoy a higher standard of living. I guess its appropriate to call that the American Dream because that is all it is: A Dream!
The reality of the American Dream. By George Carlin
http://www.youtube.com/watch?v=acLW1vFO-2Q
Expect the American dream to get a lot hotter in the coming decades – along with the rest of the world. The consequences will go well beyond our sad frustration at the impossibility of buying the house of our dreams in California. But perhaps the heat will result in a glut of housing. Of course California wild fires may have something to say about that.
Heck yeah it’s gonna get hot around here. Here’s UCLA’s climatologist with a paper explaining just that (see link and quote below). We’re probably gonna start seeing migration to places less effected by climate change: Places where one can grow some of their own food (prices will double by 2030 in real terms), where water won’t be too expensive, where a/c bills won’t be too expensive, etc…
http://c-change.la/pdf/LARC-web.pdf
‘For the business-as-usual scenario, we find that by the mid-21st century, the most likely warming is roughly 4.6°F averaged over the region’s land areas, with a 95% confidence that the warming lies between 1.7 and 7.5°F. The high resolution of the projections reveals a pronounced spatial pattern in the warming: High elevations and inland areas separated from the coast by at least one mountain complex warm 20 to 50% more than the areas near the coast or within the Los Angeles basin. This warming pattern is especially apparent in summertime. The summertime warming contrast between the inland and coastal zones has a large effect on the most likely expected number of extremely hot days per year. Coastal locations and areas within the Los Angeles basin see roughly two to three times the number of extremely hot days, while high elevations and inland areas typically experience approximately three to five times the number of extremely hot days. Under the mitigation emissions scenario, the most likely warming and increase in heat extremes are somewhat smaller. However, the majority of the warming seen in the business-as-usual scenario still occurs at all locations in the most likely case under the mitigation scenario, and heat extremes still increase significantly. Therefore adaptation to a changing climate over the next few decades is likely to be inevitable in the Los Angeles region.’
I realize the weather is nice & all that but what is it about the sunshine the makes people lose their minds? $600k for an ugly ranch house? What’s the point of all the stress involved in holding down a $100k per year job when you have to live like a pauper? I live in Raleigh NC & when buying a car last year, the salesman was a native tar heel who moved to Costa Mesa but came back. He said it was brutal trying to make it there. It’s great if you are really rich or really poor. I guess he could have added work for the State.
Re: Middle class. Tossing the manufacturing sector in the dumpster didn’t help. And agri-business? You’re next. You folks in the big cities, don’t forget to wash your veggies.
Manufacturing in the dump? Do some research buddy L.A is still the number one manufacturing center in the united states.
Housing is attainable based on time of purchase. I bought a house after getting a job offer 10 years ago in 2002 in a middle class neighborhood before the rapid increase in prices. Prices are constantly fluxuating. I bought at $360K. It went as high as $650 at peak of bubble in 2006. Went down to $450K at bottom of recession in 2009, and is now at $490 from most recent appraisal for refinance.
During this whole time of owning a home, my income has increased 30% higher. I’m earning in the upper $80K.
Many people are like me. They buy when the housing market is distressed and many take advantage of double incomes. They also buy a cheap house and trade up. They leaverage buying power. They refinance constantly with cheaper interest rates. Eventually, it does catch up with you with foreclosures, but you have to know how to not cash out, but simply refinance to get the lower monthly payment.
My monthly payment is now $1300 for a home worth almost $500K.
According to your numbers, your income in 2002 was around $60,000 and with this you purchased a $360,000 house?
Yes, with a 20% down payment and interest rates at the time is around 6%.
Unless he’s omitting a similar salary pulled in by his wifely unit, there’s no way 6x annual income loan would’ve been approved in, say, a NON-corrupt state (IA, NE, OK, etc.), or a NON-corrupt era of REAL oversight of bankstering… but PRKali, during the already steepening bubble slope of 2002?… guess so.
I assume your salary when you bought was around $60k based on the fact that you said it’s 30% higher now. Does this mean you bought a $360k home on a $60k salary? You went for a home priced at 6x your income?
“You went for a home priced at 6x your income?”
What do you think is reasonable? Your assertion should be based on ability to pay rather than income and house multiple.
I put down $80,000 downpayment (rounded off). Financed $280,000 at 6% interest rate, and 30 year loan. Is $1678.74 so hard to pay? After refinancing several times since, I now pay $1300 a month.
Good for you Jimbo. The only number that matters is the amount borrowed vs. annual income. In your case, the ratio 4.7. That is totally normal for any decent part of California. And your $1300/month mortgage today is icing on the cake. You’ll be hard pressed to find a one bedroom apartment for that amount in any decent area. I’m still amazed at the people who think houses are still way overpriced when the monthly payment is so low. Borrowing 400K for 30 years is ~$1800/month. As long as this number remains relatively unchanged, we will have the same housing market you have ssen for the last year. I finally accepted reality, others here need to do the same!
A ratio of 4.7 with a monthly payment at or below rent parity on a 30 year fixed is a pretty good bet. Perfect? No. But not bad either. Especially if you have a reliable income stream and like where you live.
@ LordBlankfein
You are leaving out one important number. Jim put down 20%, $80,000, on a $360,000. That is what puts his ration at 4.7. With a 3% down payment, that would be 6. Very few people have 20% down payments and if it were required, like it should be, housing sales would drop 80%.
@Jeff: Focus on monthly payment, not the house/income multiple. It is true the downpayment is important. It is harder to get a loan with 3% down. Banks are less likely to loan money with such a low down payment. Besides, a seller will be more attracted to a buyer with cash since they are more able to get a loan with a large down payment. Good areas are harder to gain entry. In my area, very few homes are selling. Those that are on the market last less than 2 months.
I have some advice for new buyers. Save your money. You need a large downpayment. There is no way around it. If you’re single, live at home. It is easy to save money while living at home. Also, know how to invest in the stock market. I made some bets that allowed me to accrue some big bucks. The stock market isn’t such a risk for a young person. I’m older now so I don’t bet too much these days.
Lord B,
It depends on your perspective. If you are looking at it as rent to own, then it might be a good deal on rent. As an investment though now might not be the time to buy. True rates are low, but prices rise to compensate. It is better to buy in the low price, high interest market because when things change, as the always do, you’ll capture a lot of appreciation and refi to a lower rate along the way, coming out like a bandit. There might be better places to invest your money right now.
Of course, you gotta live somewhere.
Having spent about 40 of my 50 years on this planet in CA, I can honestly say that it is starting to look more and more like third world country. Two distinct groups. The “Haves” and the “Have Nots”.
The only thing resembling the old middle class is the govt employee. The private sector employment is bisected into low wage or $100K plus. CA now has the most people on welfare of any state.
and there’s a reason why only the government workers are getting paid a FAIR WAGE. It’s called union membership and it is at it’s lowest in decades. The media and their elite masters have almost completely conned the public into the false statement that unions are bad and drive out business. No, unions represent the WORKER, and force the company to share more profits for work performed. Welath disparity is at the highest since before the great depression. Companies are making more profit than ever before….yet, americans are working for less than a living wage, unions are broken, and the ignorant masses fight each other over whom is worth less.
When they finally break the backs of the public sector unions, then watch the falling as the last bastion of labor is broken to make slave wages across the board. It’s coming…just like Europe. Carlin had it right, the rich want their money, and they will take it all back one way or another. And people wonder why I do not support this system anymore? LOL.
It is interesting to note the politicians discussing social security like it will bring down the house. When SS contributes almost nothing to the national debt and people have been paying into it since they’ve had a job. Entitlement, indeed. I’d just like my money back, thank you.
Well…government workers may be making those higher wages, but their employers are not corporations; ultimately, their employers are taxpayers. Raising taxes, especially in this economic environment, squeezes those fewer and fewer workers in the private sector and chases many businesses out of the state (many are NOT huge corporations) until tax revenue cannot support those goverment workers in government unions making ~$100K/year. Actually, I wonder why the government unions are needed? Government employees are not fighting an “evil” corporate monolith; they’re fighting…taxpayers? Isn’t it rather absurd that the same entity…government…is the one that those who are out fighting the “evil” corporations also petition for “redress”? If governments are so benevolent as to be the repositories for “fairness”, (especially with the “correct”, “caring” party in charge) why do government workers need unions to fight the benevolent government to make their employment better for them? Anyway, it’s simply a matter of time. California and its’ crop of cronyist, corrupt politicians will not be able to solve this problem. They probably don’t even care; they’ll just keep riding the same horse until it dies.
Gov’y\t unions aren’t needed.
They exist because you have voters like Swiller.
An ignorant populace who can vote is the bane of successful civilizations.
patsfaninpittsburgh
Union membership is on the decline and has been for 50 years and the decline has accelerated in the last 20 years. So, going by that metric alone, the U.S. economy should be strong and job growth should be booming.
Yet it seems that the countries with the highest union membership are countries that are truly doing well, like Sweden, Norway, Australia and Germany. These countries also have much stronger middle classes than here in the land of dying unions. They all have their share of minorities.
I trust you will explain this discrepancy with your vast intellect. We have had declining union membership along with declining top tax rates for 3 decades, we really ought to have utopia by now by your reasoning.
Don’t forget, that net Government jobs have declined in the last couple years, which again, should lead to a booming economy.
Could you explain to a feeble minded person like myself why the above mentioned countries are better off when they have pursued the opposite of what intellectuals such as yourself have successfully pursued in the United States for the last 30years?
Martin
Your problem is that you are completely clueless about economics.
Germany is “doing well” (ha, ha,ha….that’s funny) because over the past decade they have massively cut labor costs (that’s union salaries in the ignorant world) to sell to credit addicted peripherals.
Drug dealers can do great for a period selling dope laced with rat poison. It’s not a viable long term proposition…unless you find more fools.
Norway has oil. Imagine that. A part of the world that’s not too stupid to tap it’s natural wealth.
Who knew.
patsfaninpittsburgh
You made some excuses as to why some “Liberal” economies are better than ours but as is typical of your type, you fail to explain why your Utopia has not produced the desired out come.
We have had declining union membership, declining upper tax brackets , declining minimum wages, for decades and to top it off, a for profit health insurance system.
Clearly your Utopia must be Mexico, if you think we should stay the course. My ideal is a thriving middle class.
You are in the bubble but you don’t know it, processing your own ideas with available information is not a possibility for you.
By the way, Mr. Bubble, I understand your favorite website next to Faux News is Wikipedia, I suggest you look up the term “living wage job”. It actually means more than earning enough to buy food.
Are you a graduate of Wikipedia?
Uhhh Martin
What part of drilling oil is……………”liberal”? Oil sustains Norway’s economy. Being clueless doesn’t alter reality.
Sorry
Why do you think Germany’s “success” by selling to peripheral, credit addicted southern Europe is commendable when it’s as unsustainable as a SoCal housing bubble?
As the economic ignoramous, you aren’t the victim.
Unions never equalled prosperity. The union heyday of the 1950’s was also the last decade of zero Medicare, Medicaid, and Social Security a fraction of it’s current monster status.
I would trade for union utopia in exchange for a complete dismantling of the rest of your Great Society utopia catastrophe.
Patsfaninpittsburgh
You never answered martins question. How has the following conditions not led to a booming economy like the neoliberals have promised?
“I trust you will explain this discrepancy with your vast intellect. We have had declining union membership along with declining top tax rates for 3 decades, we really ought to have utopia by now by your reasoning.
Don’t forget, that net Government jobs have declined in the last couple years, which again, should lead to a booming economy.
Could you explain to a feeble minded person like myself why the above mentioned countries are better off when they have pursued the opposite of what intellectuals such as yourself have successfully pursued in the United States for the last 30years?”
So, I should support your 100k+ public sector job while I’m earning 50k for the same work, just out of sympathy for unions? Like all the entitlement minded, you are delusional..!!
Yes, California is a big state, but because of it’s size not every area is created equal. Terrain, weather, amenties vary greatly. If I could only afford to live in San Bernardino , there’s no “incentive” to stay in California versus many other states. Everyone always says, “Oh, you’re paying the sunshine tax” by living in California. Screw that. Quality of life matters beyond whether the sun shines 300 days out of the year (and it does rain in California, no matter what the song says). Oppressive heat, dusty and dry hillsides that go up in flames every few years, infrastructure that’s crumbling, insane traffic, and self-absorbed citizens (don’t believe the “California is so mello” BS). People here are probably the most rude in the nation. California is not the “golden state.” It’s just gotten a lot of mileage out of the myth.
After living in California for a total of 16 years (13 and 3 with a year-long hiatus elsewhere) I was very glad to leave there permanently in 2000 and return to Texas. I’m a professional in the Aerospace sector and I note how a lot of that sector has moved from California, too, (how many companies started in California are now headquartered elsewhere? If memory serves me correctly, Northrop-Grumman was the last major to move their headquarters out) for other area better suited to their needs with only vestigal elements of the firm left in California. I enjoyed living in LA, but not as much as I enjoy the freedoms of Texas. You would have to cross my palm with considerable silver to persuade me to live and work in California again, and then it would only work for selected locations. If I’m honest, I’ll say that watching California’s government has given me a much greater appreciation for the restrictions on government set in Texas’ post-Reconstruction state constituion; it’s cumbersome, but it holds government in check.
Raytheon just applied for a zoning change to double the 1.3 million of usable space at their El Segundo site. They know the really good people don’t want to live in TX.
http://www.indeed.com/salary/q-Lifeguard-l-California.html
I was wondering about that $100K figure. Thanks for clarifying.
The histrionics on this board is reaching fever pitch! Oh no, California is doomed!
California indeed has always been a boom-bust state, and here we are in bad times and we’re the 8th largest economy in the world and the top economy in the U.S. So much for the ignorant “jokes” about Kalifornia, as if it’s some sort of communist haven.
If Texas has edged ahead for a second it’s because of oil prices. Big Deal. The next 6 U.S. states on the list of world’s largest economies are all ALL blue states (NY, IL, FL, PA, NJ), with all the garden-variety ills of “liberal” moochers, entitlement-mania, socialism, illegals, etc. Conservative Red states take from the Feds much more than they give, and the opposite is true with Blue states.
Many problems mentioned having to do with income inequality & disappearing middle class aren’t endemic to California…”The U.S. has a higher level of income inequality than Europe, as well as Canada, Australia and South Korea, according to data gathered by the World Bank.” http://money.cnn.com/2011/11/08/news/economy/global_income_inequality/index.htm
So many gripers on this board seem to be out-of-staters. If you don’t live in Southern California, or aren’t considering purchasing or selling real estate here, it’s sad to see you wasting your time on this board. Oh, I’m sorry, it’s not a waste of time for you. Telling.
I’m a 4th generation Southern Californian, among the 10% of income earners (W-2) and a graduate of UCLA. I bought and sold homes in 1998/2005 and 2005/2007 and made money each time. I’m currently renting and waiting, knowing full well that prices are out-of-wack in the South Bay and Westside, my desired locals. I’m betting So Cal neighborhoods will settle down at some point, as interest rates rise, investors lose their appetite for lower rental yields, and California solves some fiscal problems. If not, I’m happy to continue to rent and enjoy all that Southern California has to offer*
*That doesn’t necessarily mean a 5,000 square foot McMansion on an acre that so many here seem to think is the requirement for happiness and a healthy, successful family.
California’s main problem is an ignorant populace.
CA, NY, PA, NJ, IL are “big” states that attained wealth during their former “red” status.
Their inevitable decline started when they transitioned to “blue” status.
Where would California be if the emigrants moved back?
When the residues left are comprised of “Dfresh”, your state is on the road to disaster.
Stupid doesn’t aggregate into a strong society.
Oh, poor Patsfan. Perhaps you don’t understand what “generation” means. Or, the difference between “immigrant” and “emigrant.” Or, what it takes to get into and graduate from UCLA. Or, well, why bother.
Keep those one-liners coming, Patsfan. You’re hilarious.
Ha, Ha, Ha………….
It appears the meaning of emigrant just went over your head.
Educate yourself and look it up on Wikipedia.
Ofcourse, graduating from a second stringer institution and ADMITTING IT is a telling clue.
Education dollars at work.
And the Red states? Why are they all so poor?
Maybe you can find something on Wikipedia about this?
patsfaninpittsburgh
One more question, then I will end it for tonight.
I was just wondering if you have all of the fire power you might need for when Obama gives the United Nations the authority to take over of the United States?
You know, if it wasn’t for George H. Bush (Bush daddy #1) there would be few handicap ramps on sidewalks and the vast majority of city buses would not have wheelchair lifts. My how things have changed.
It is not the unfunded wars, the bloated military industrial complex, it is the WORKING poor and the handicapped.
Martin
Are you a parody of yourself?
The “red” states that are poor started at a poverty base through Democratic rule post Civil War to the recent past. Their recent rise to economic prominence correlates with political change.
Know any history?
Guess not…..this is most likely too sophisticated for certain regions and institutions like UCLA.
“My name is Martin. I’m ignorant and I blog like it at Dr Housing Bubble”.
I think they were red states because democrats used to use red and republicans used to use blue.
Remind me the next time I respond to you that arguing with the feeble minded is a hopeless affair.
Are you looking out the window for those U.N. forces?
Ahhh Sadie
Until recently, the south was the most solid Democrat area of the country
Honest Abe…Republican….slavery….Civil War….
Apparently they don’t teach this stuff. Study American history.
You don’t what to wind up like Martin.
I am well aware that the South went Red back in the 60’s when they were told they would have to treat blacks equally under the law.
I just didn’t think (my fault for underestimating your indoctrination by Faux News) you would lay blame from more than 40 years ago for today’s economy.
Japan went from a bombed out devastated country in 1945 to 40 years later, the envy of the world (1985) and German social Democrats took a bombed out Germany from 1945 to a modern first world country by 1985. Yes Germany and Japan got some starter funds (the marshall plan) but the RED states didn’t need to rebuild, they were handed an intact infrastructure..
Now, you are claiming that the reason Red states are poor today is because some 40+ years ago they were controlled by Democrats? Those poor Southern states have had 40 years, yet they are still, today, officially the Welfare Queens of the United States.
At the same time you are claiming that the Red states are still poor from the actions of Democrats over 40 years ago, you claim the Blue states are still wealthy over 40 years later after Republicans lost control?
You are so full of it. Don’t forget that any Republican from the 1970’s would be considered a right wing liberal today and a perfect example of that is how the Senate Republicans caused Bob Dole to leave the Senate in tears YESTERDAY while he was pushed away in his wheelchair.
Keep an eye out for those UN forces, they could be lurking around any corner.
Ahhhhh……………….
Martin
Like the south is not poor…..now
It’s the most dynamic area of the country with a future much better than your dysfunctional state.
Sorry but there is zero point living life beyond clueless.
Texas exports goods to world markets with twice the value of those exported by California. Five California counties (so far) this year have filed for bankruptcy. The federal government is going to pull the plug on the military-industrial complex because it’s broke and it’s not going to be refunded. But that’s OK: Kalifornia can go back to low-skilled and no-skilled real estate work and maybe squeeze one more curtain call out for another land hustle. You may have noticed that during the heyday of network television all westerns (except “Bonanza”) were set in places like Kansas or Texas but were filmed in California. Why? Because historically (in the so-called days of the “wild west”) there was no reason to come to California because there was no water or naturally arable land. It took an industrial corporation (the Southern Pacific Railroad) to hustle the federal government into doing something about that to make the land marketable.
Please don’t come here lying. No California counties have filed for bankruptcy. Ever actually. Uh, the military industrial complex is one half government and the politicians aren’t pulling the plug. In fact Republicans are trying to get more tax dollars into the military than the military wants. Wonder why? Cause they are befriended by lobbyists of private companies seeking to suck tax dollars out of the government. Why is it that none of you people ever get up in arms about private companies milking money from the government? As to California you really should take a history class.
Wyeedyed,
I think he meant cities going bankrupt not counties because San Bernardino, Mammoth lakes, and stockton have all filed. I worked for a public finance company in orange county this year and watched the big bosses struggle to convince San Bernardino not to file. Each of these cities were completely mismanaged cutting deals with unions and giving them huge pensions. When the economy turned in 08, all the sudden their tax revenue fell off and they have obscene pensions to pay. The unions are scamming tax payers. The policy that infuriates me the most is employees “cashing out” their sick days. In their contracts an employee is entitled to a certain number of paid sick days per year. But guess what, even if the employee decides to not take a single sick day their entire career they still receive money equal to all their unused sick days. People are retiring after 30 year careers with their regular pensions PLUS cashing out unused sick days for an extra bonus. Some people have cashed out for 200K+ just because they showed up for work. Disgusting.
http://articles.latimes.com/2012/feb/13/local/la-me-coliseum-20120213
Well, white people can afford to live more from minorites in Texas since its cheaper. Take Chuck Devore who moved from OC to Texas, not that he lived in the big section since he lived in Irvine or so but he could afford a bigger house with less taxes and Chuck’s a big conservative.
Well, the good news is immirgation is slowing and brithrates in mexico and even among US hispanics is dropping which mens that Mexicans and Central Americans can move a little better in the middle class in California or other places.
I mean means that Mexicans and Central Americans can moved better in the middle class by lower birthrates in Ca, or other states.
Texas has more illegal immirgants than most Blue states since it borders Mexcio. New York has a lot less illegal immirgants. Ca is number 1 at 2.6 million and Texas 2 at 1.6 million. George W Bush tried 3 times to legalized them, Texas politicans are soft on illegal immirgant to please business interest. In fact the Lincoln Club of Orange County Ca are Republicans that support the guesworker program of Texas on the Texas Republican Platform and they criticzed a former mintuemen from Twin Peaks. The Lincoln Club stated that illegal immirgants need legal resident so they can use their labor. People opposed to illegal immirgants are not all on the right and people that support legalizing are many on the elite right.
What I finally determined was in CA is that they have a weird triad of abuse going on. The elites who run the state provide extensive subsidies for officially unemployed workers, enough to cover most of the basic necessities of life. They then use this so that they can employee unofficial workers for a fraction of the normal cost, and keep them in line with threats of firing and deportation.
The illegal workers abuse the system and double dip, by collection welfare and poverty services at the same time they are working off the books.
This creates resentment in the documented workers, because, first, they are paying for the social services the undocumented workers get for “not being employed”, and second, in order to compete with them, they have to drop their wages to something that would only be livable if someone else was covering their basic costs of living (the way that the undocumented workers are being covered.)
And, just to make sure that none of them realize they are being taken for a ride, the CA elites play a game of “Let’s you and him fight” between the documented and undocumented workers.
All of this ends up in scenarios like the fires a couple of years back, when the illegal immigrants were left out in the fields to finish the harvests with the flames on the horizon, while the owners drove off in Mercedes Benz.
Texas doesn’t have this issue, in part because we don’t have a welfare state to feed it. If you get a job here, that is what must cover your bills, so even workers willing to go below minimum wage, aren’t willing or able to go below living wages under normal circumstances.
Also, the Texas state is funded primarily through sale tax and property tax, so by in large, the illegal immigrants are already part of the tax system. At the state level, nobody is documented.
Contrast that with the CA system, where most of the tax revenue is through income tax. There anyone who isn’t properly documented is, literally, stealing from their neighbors, simply by existing.
The climate is worlds apart. If someone tried something in TX like they pulled out in CA, leaving their people in the fields with the fires coming over the hill, they would be up on charges by the end of the week.
Voyager, good for Texas. That’s one reason we come to California. In my neighborhood, everybody is cheating on taxes, welfare, and anything else than can cheat on. You would do it to if you could. Is it our fault that the stupid government lets us get away with it? Don’t give a sucker a even break. Don’t blame us immigrants, blame the stupid government that you fools voted for. You get the government that you get under your “democracy”.
Good for you Boris
Drain them of every last penny!!!!!!!!!!!!!!!!
For a better understanding of what is happening in real estate and the rest of the economy you may want to read
http://www.financialsense.com/contributors/james-quinn/all-i-want-for-christmas-is-the-truth
“Welcome to California,now go home” true back 40 years ago, true now.
In Texas they sales taxes same as Ca. They usually don’t pay property taxes since they are renters. And their kids received emergency health care in Texas same as Ca and free and reduce lunch programs bid cities in Texas Houston, Dallas, El Paso have just as many kids on the free and reduce lunch program as Ca does.
In both states they pay sales taxes and in both states they tend to be renters so they don’t pay property taxes the landlord does. Income tax well Texas no won pays.. Dallas, houston and El PAso has a lot of kids also on free and reduce lunch programs just like in big Ca cities, many are children of illegal immirgants. Texas has to provide emergency health care as Ca. Maybe they don’t get section 8 or food stamps in Texas but the most use welfare for illegal immirgants are emergency health care and free and reduce lunch progams.
Love how a site about California housing attracts so many bitter California hating losers.
True. It’s rare to come across a Californian who has such disdain about other parts of the country. We like other places, like to visit, and enjoy the people.
Yeah, like that good old California-hating Will Rogers : ” When the Okies left Oklahoma for California, they increased the IQs of both States “.
You mean people like you gael.
If you’ve read this site for more than a few seconds today, you’d realize that the majority of commenters are currently living in CA or recently moved away from CA during the last boom and bust cycle. But if you have the attention span of a gnat, you’d be unaware of that reality.
Wow, you’re keeping track of whether the “majority” of posters are from California or have recently moved out of state. You rock.
And, no, DMAC, I wasn’t counting those who have left California as “Californians.” Thanks for pointing out my misunderstanding of the term. And, I suppose those who have moved to California have no right to claim to be Californians. Keep up the good work.
DFresh, still with the troll ad hominem attacks with nothing but snark substituting for substance. Your projection is duly noted, as always. You offer much food for thought here – for those recently evolved from plankton.
That is correct DFreash. You will never be a Californian as I will never be a New Englander. I lived there for 10 years and I was always the crazy Californian. My cousin moved to Texas over 10 years ago and is not considered a Texan. You are from where you are from not where you are!
In particular, I noticed the effect immigrants have in technical fields; they will work for less than they “should” because it’s still a much better quality of life than their home country (I am thinking India due to what I have seen in Nor-Cal but that’s not the only place). I understand the motivation. However, it lowers the standard of living for the people already here (lower wages than before, or stagnant wages where they normally would have increased). They cluster 2-3 families in a house or apartment so it becomes relatively more expensive for people who do not want to do that to afford it. We get tired of a lower standard of living and we do the logical thing: we leave for a place where wages are more in line with cost of living, commute time isn’t hell, and perhaps also where the culture more closely reflects our (economic/social?) values.
I generally consider myself an honest person, but when all the energy put into education (5 years) and work amounts to just treading water and you see decay and system abuse all around you, then you start to treat it as a business would – cold and calculating, you play the game, you play the system in any way legally possible. The middle class is splitting, and if you’re not increasing assets, you are falling behind as more fake money is created and wealth is re-distributed with bubbles, bursts, and government intervention. Welcome to Socialist USA, land of the Have-Nots.
A friend of mine figured out one easy way to stay middle class and own a house: student loans. He and his wife had $120k loans from college degrees, but only made 60k/year since the wife had difficulty finding work and he had a modest job (for the area). They filed separate taxes which in California (community property) or Nevada results in 30k AGI per person and little to no tax penalties vs. filing jointly. A school will look at your personal AGI to determine financial aid, so he got lots of free money and more loans to return to a JC part-time for a few more years, and so did his wife. As a graduate you can borrow about 20k/year plus any grants/other aid they give you.
Worked and go back to school part-time for 3-5 years, borrow the max, and then he bought a triplex for cash in Reno, NV where it’s cheap (100k-150k) and rented it out and ran it as a business. That same 30k AGI also reduces your IBR payments on the student loans down to about $100/mo. per person. So: he could borrow up to $140k with no effect on the payment amount. That makes interest rates irrelevant, there are no credit checks for Stafford loans, you don’t pay anything while going to school, and payments are limited by income. In fact he found this was superior to a mortgage since he was already making the maximum IBR payment for his income.
No wonder about the student loan bubble – it makes business sense to borrow the max, the system allows it. We all know any losses will be socialized later on, so as usual take your share of the pie or lose it. That is how the New USA operates. In another day and age I might have thought it abusive, but now I think it’s simply a brilliant strategy.
dangermike
December 4, 2012 at 11:39 am
“Base Salary†is a figure horribly loaded toward the low side. I would be surprised if bonuses and OT boost that up 75-100%, and when considering the cost of the medical and retirement programs available to “first responders†(I find it interesting they don’t like the term “public servant†anymore. It shows the shift in attitude toward the fllecing they’ve been doing the past 10-15 years), the actual compensation package is likely closer to $250-300 thousand per firefighter.
I am laughing my head off at you. Incredulous unsubstantiated bull…. Pensions for public servants run about 12 -13% of base usually with half from the employee and half from the employer. Firefighters do not get bonuses. Period. Firefighters do get overtime. The rest of your ranting is described in my second sentence.
RE firefighters–you’re a little bit right (it’s not CALLED “overtime”), and MAJORLY WRONG (it’s called “hazardous duty” pay, and “shift premium”, and “qualifications premium”, etc.), and in LOW-cost-of-living Las Vegas/Clark County, NV, it’s completely out of control, with high % of FFs pulling down OVER $200k/YR, and most others over the $170,000 mark! The latest scam/booster is earning a Fire “Engineer” certification, i.e. a couple courses at a comm. college. Union McScams.
http://www2.8newsnow.com/salaries/search.php?type=ot&limit=50&agency=all
And if that’s how it is in low-tax NV, I’m assuming it’s REALLY outrageous in Duh Peoples’ Demokratik Republik of Kalifornia.
(Don’t get me wrong, FFs, parameds, and LEOs are about the only pub sector employees who DO deserve pensions… unless they’ve raped the system while still in uniform. ;^)
Why so full of hate? There is little credibility in emotionally negative rants like “REALLY outrageous in Duh Peoples’ Demokratik Republik of Kalifornia. ”
Also please get specific with your stats. When you say high percentage – name the percentage otherwise it becomes more emotional trash. Facts are powerful as the descendents of those condemning Galileo found out the hard way.
Condemning unions is only profitable to the ruling class and by that I do not mean anyone in government. If your life is perfect in terms of sitting on your ass and raking in dough I suggest an education course. Go take a hard physical job with long hours in any non-union position in America. Then come back and condemn unions. And while your at it bear in mind that the most excessive incomes in this country are in middle and upper management with a top heavy bent toward the financial sector – those that do not actually produce any goods.
Using all caps on the internet is the equivalent of shouting, again not a credible practice.
“Do You Live in a Death Spiral State?”
http://www.forbes.com/sites/baldwin/2012/11/25/do-you-live-in-a-death-spiral-state/
OK, DMAC. Time to prove you’ve evolved beyond a gnat or plankton:
Please direct me to which of your posts in this stream that does not use an hominem attack nor snark substituting for substance.
This should be good.
“If you’ve read this site for more than a few seconds today, you’d realize that the majority of commenters are currently living in CA or recently moved away from CA during the last boom and bust cycle. ”
I do believe that the majority of commenters here do currently reside or used to reside in CA. Is that an incorrect assumption? Is that not what this site’s POV is, and the commenters here duly reflect that premise? What is devoid of substance about that opinion? Since you appear to believe that my assertion was incorrect, please prove otherwise.
Maybe Texas is doing so well because they are supplying all the illegal guns to the Juarez gangsters. Maybe it’s all the beef they eat and their big bellies that make them so great? Everything’s bigger in TX, even delusions of grandeur. Here’s an idea, every backwards redneck fool reading this who cannot accept the coming global world needs to leave this board and go buy a big ass house in TX and bury their head in their mashed potatoes. This is a blog about the market here in Southern California, not a place for Texans to wax poetic about some fantasy that never came true… Get a life!
Candace dear, I am offended by your post. You use demeaning ethnic terms that are so prejudice and stereotypes. Your bigotry really comes through. Shame on you.
Candace, I loved your comment. Thanks! I’m fat and I’m not offended.
The problem with California is that you have no middle class here…I would propose having a 30% tax on anyone making over $250,000 and then adjust Californias unemployment, social. security and welfare.payments higher so that the poor can survive. A good amount would be $3,000 per month for the poor.This will make it so we don’t just have the rich and the poor……we should do this to make up for the rich folks getting away with paying the lowest property.taxes in the entire nation.
The aggregate top tax rate is already 52%, not including sales and property taxes. Push that to 82% and we’ll all be in Texas. I went to middle + high school there. I don’t wanna go back!
DHB, I feel like you’ve answered your own question here. Who is going to buy at these elevated prices based on what income? Well, looking at the migration data, it appears that the people buying the houses are unlikely to be Californians! Is it any wonder then that housing prices don’t match median Califorian incomes?
Everyone wants to live in sunny California, but who can afford it these days??? Thank god my parents moved here in the 80’s and I now have a roof over my head (my parents sold the house to me and retired in Az). But man, what’s worse than high prices are these insane commissions we pay to realtors for the work they do. Is the effort of selling a house in CA that much more demanding and time consuming than in Az??? My parents bought an awesome place for only $160k. That broker earned nothing compared to how much I would get raped for selling my $700k place today! Oh well, not much we can do…it is what it is WTF
Hey @Jenna, all is not hopeless. I’m with a company that has developed what some have coined “the Uber of Real Estate” – Propzy, give it a try…you certainly won’t be breaking any piggy-bank open to sell your house. Good luck!
WOW, If I lived in California I would do my best to move out. After reading all the comments about all the corrupt pensioners. I for one wouldn’t be able to sleep . Knowing that my taxes were going to these crooks. You have to be a real sucker to live there knowing this is going on . Why would you want to pay these crooks . Get out you fools
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