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The great California Exodus

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Re: The great California Exodus

#61

Post by _dps »

rdl wrote: post #35
001sky wrote: post #30

Earlier quoted context omitted.

The point is taxes are second order. Locally (st.city) are based on either property values and incomes. (1) if incomes cannot support paying the housing costs, they cannot support higher taxes, because there is no excess earning power; (2) if people cant pay the rent, then they are likely to move away to "somewhere more affordable". Most people spend ~30 pc of their income on tax and another ~30pc income on housing.…

The funny thing is the counties where people weren't leaving (SF) had the highest housing prices.

I think there might be some nuance in the composition of the leavers vs the comers. This is purely speculative, but one could imagine that in SF:

- leavers are mainly people with established jobs, thinking of starting a family, who want more house per dollar (and more post-tax dollars per salary dollar)

- comers are mainly early 20s unattached aspiring professionals who aren't hit as hard by high real estate prices (price to rent ratios are still very high in SF), and who also don't yet have a large income against which to evaluate the tax impact

This kind of dynamic would result in a "perpetual churn" as each generation matures through their professional lifecycle, each time opening new jobs and housing opportunities (and thus the near-zero net migration).

Again, very speculative. But your observation made me scratch my head for a bit and this was the best explanation I could muster aside from "people just like SF and don't leave despite economic pressure".

Re: The great California Exodus

#62

Post by DannyBee »

subsection1h wrote: post #60
w1ntermute wrote: post #43

Earlier quoted context omitted.

> Are we going to do this for all submissions? Newspapers' leanings, political donations of blog authors...? Well, this isn't an institution that most people are familiar with. For example, most people know the New York Times is liberal and that the Wall Street Journal is (moderately) conservative. We wouldn't need someone to point that out. But in this case, the OP's information is helpful in analyzing the source fo…

For example, most people know the New York Times is liberal and that the Wall Street Journal is (moderately) conservative. TIL that in the US, "liberal" means pro-war and "moderately conservative" means fanatically pro-war.

The sad part is you aren't wrong

Re: The great California Exodus

#63

Post by saosebastiao »

tsotha wrote: post #53
saosebastiao wrote: post #41

Their conclusion about density is bullshit, supported by bullshit assertions. Population-Weighted Density is what people experience, not geographic density. Nobody moves out of their 10 acre farmhouse in San Bernadino county because Long Beach is too crowded. Even the Census acknowledges as much. http://www.theatlanticcities.com/housing/2012/10/americas-tr... Furthermore, there are plenty of dense cities that are gro…

While it's true nobody moves out of a 10 acre farmhouse in San Bernadino because Long Beach is too crowded, the low density parts of the state don't have any jobs and aren't particularly nice places to live to start with. So density in the nice, employment rich places matters. San Francisco is an outlier. It attracts people who want to live in a dense urban environment and has a reasonable public transportation syste…

High density doesn't directly translate into longer commutes. It directly translates into better jobs. Since people are willing to travel longer distances for better jobs, longer commutes are an indirect result.

Re: The great California Exodus

#64

Post by geebee »

prostoalex wrote: post #57
thrownaway2424 wrote: post #51

Earlier quoted context omitted.

I think the point was that Prop 13 was a gambit by incumbent asset owners to disproportionately tax newcomers. This worked perfectly well (for the incumbents) as long as California enjoyed robust net population growth, because the disproportionate tax burden was primarily born by newcomers. However, now that net migration has slowed, the disproportionate burden is now mainly born by natives of the state. It just does…

I'm having a tough time buying it. Imagine someone who's old and in the (lucky) position to sit on a highly appreciated real estate lot. Their potential behavior: (a) enjoy the low property tax they have to pay, while patting themselves on the back (b) sell to downsize and pocket the difference, retire to greener pastures I think (a) is more rational if you're on a giant farm, and this way you don't have to sell the…

I'm not sure it works like this. Keep in mind that most states don't have a tax system like prop 13. Texas actually has fairy high property taxes...

http://www.nytimes.com/2007/04/10/business/11leonhardt-avgpr...

So consider a 65 year old who purchased a house in San Francisco in the early 70s for $50,000. This house is now most likely worth about a million now. However, it is taxed at a far lower rate.

They can sell and repurchase in California and keep their old taxes provided that they don't purchase a more expensive house (this is limited to people over 55 and is a one time thing)

http://www.boe.ca.gov/proptaxes/faqs/caproptaxprop.htm

There is also one other major exemption - heirs to a property can keep the old property tax rate! I've always been amazed that California is essentially creating a low tax aristocracy based on inherited titles to land, but that is exactly what we have done.

Now, I suppose the retiree could sell the house and move to Texas, but now you're going to be paying a much higher tax rate. If you're a true prop 13 aristocrat, you'd probably have to buy a house that is worth no more than 20% of your current house's value to come out ahead, and you'd need to uproot to texas to do it.

If you're a young family looking to buy for the first time, or looking to trade up (triggering a reassessment of your property taxes), then it does make economic sense to move to Texas. Your prop taxes will be high, but you won't face California's income tax, and you also won't have to subsidize the low tax rates for the titled, landed aristocrats next door.

As for the young tech workers... well, the SF Bay Area is incredibly well positioned for high tech. It has an incumbent advantage and Berkeley, Stanford, and UCSF all within a stone's throw of each other. I think that our regulatory environment is a disadvantage, but clearly not enough to offset. I remember PG mentioning during an interview at the Hoover Institute that bad as things are, things would have to get incredibly bad to drive high tech out of California (I recall him joking "don't tell them").

Re: The great California Exodus

#65

Post by mc32 »

_dps wrote: post #61
rdl wrote: post #35

Earlier quoted context omitted.

The funny thing is the counties where people weren't leaving (SF) had the highest housing prices.

I think there might be some nuance in the composition of the leavers vs the comers. This is purely speculative, but one could imagine that in SF: - leavers are mainly people with established jobs, thinking of starting a family, who want more house per dollar (and more post-tax dollars per salary dollar) - comers are mainly early 20s unattached aspiring professionals who aren't hit as hard by high real estate prices (…

I think that is an important observation. The total population might be stable or slightly rising; however, that should not be interpreted as no one leaving and only a few people moving in. It's has to do with the churn, or velocity of people coming in and then going out (leaving) as children begin reaching school age. The (public) schools, which very few exceptions, are terrible and just about everyone I know who has young children has plans on moving somewhere with better schools when it comes time.

Yes the city has many cultural and civic attractions, but they do not outweigh the educational deficit, for those with young children. For singles and for empty nesters the city is perfect, for people with young families the dearth of good public educational institutions is maddening. The wealthy can afford to send their children to private schools, everyone else cannot.

Re: The great California Exodus

#66

Post by rdl »

_dps wrote: post #61
rdl wrote: post #35

Earlier quoted context omitted.

The funny thing is the counties where people weren't leaving (SF) had the highest housing prices.

I think there might be some nuance in the composition of the leavers vs the comers. This is purely speculative, but one could imagine that in SF: - leavers are mainly people with established jobs, thinking of starting a family, who want more house per dollar (and more post-tax dollars per salary dollar) - comers are mainly early 20s unattached aspiring professionals who aren't hit as hard by high real estate prices (…

That makes sense. The Bay Area also has a lot of H1B and other (legal, not tied to agriculture and thus inherently migratory) immigrants, too (in the tech sector), relative to the rest of California.

OTOH, it's pretty safe to say Californians outside of the Bay Area and maybe LA tech industry are struggling at all ages, so if you live in Redding, and don't own a productive farm or something, jumping up to Oregon or Nevada isn't a big compromise.

I can kind of justify California taxes and other expenses if you get the benefits of industry concentration, and maybe even if you are tied in with UC somehow, but for a person working in a fast food restaurant or light machining job or something, there's a lot less to tie you to California vs. a place with faster growth.

Re: The great California Exodus

#67

Post by tsotha »

thrownaway2424 wrote: post #58
tsotha wrote: post #56

Earlier quoted context omitted.

Where are you getting that? It's hard to believe, given that California has the 4th highest per capita tax burden: http://www.usatoday.com/story/money/personalfinance/2012/10/...

http://www.nasbo.org/sites/default/files/State%20Expenditure... See page 7 for the spending amounts. I don't see how tax revenues as a fraction of income (your link) has anything to do with spending per capita.

Where is the ranking in per capita expenditures? I don't see it?

Re: The great California Exodus

#68

Post by tsotha »

saosebastiao wrote: post #63
tsotha wrote: post #53

Earlier quoted context omitted.

While it's true nobody moves out of a 10 acre farmhouse in San Bernadino because Long Beach is too crowded, the low density parts of the state don't have any jobs and aren't particularly nice places to live to start with. So density in the nice, employment rich places matters. San Francisco is an outlier. It attracts people who want to live in a dense urban environment and has a reasonable public transportation syste…

High density doesn't directly translate into longer commutes. It directly translates into better jobs. Since people are willing to travel longer distances for better jobs, longer commutes are an indirect result.

In the long run that's true, but if you're already living somewhere and the density increases you're going to have a longer commute, most likely.

Re: The great California Exodus

#69

Post by rdl »

kungfooey wrote: post #21
rdl wrote: post #16

Earlier quoted context omitted.

I was kind of turned-off of TN due to Memphis, but maybe Nashville is enough better to be worth considering.

I know a lot of Memphis residents who have relocated to Nashville. One guy described it as "life-changing." The cities are completely different. The problem with Nashville is the same as the problem with Austin - it's surrounded by rural hicks. On the other hand, I moved here because housing is cheap and it allows me to do the things I want to do (like travel) while keeping my overhead low.

I'm pretty pro-TN (my relatives are from KY and OH), and surprisingly compatible with hicks, but I wonder how it would be for e.g. my Japanese-ancestry girlfriend. She seems afraid of Texas for the same reason.
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