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Analyst Wait Uptrend_IHB

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Since CA is one of the most desired places to live in, when are the people from the rest of USA start moving here. If So Cal keeps seeing declines of 30% from peaks?



When will this downward trend cease. (Values based on not just the rent multiplier, but the premium people are willing to pay to be in the Sun?)



Remember the Japanese money buying up office buildings and golf courses in the late 1980's. Is the Chinese money going to come in soon?



Analyst Wait Uptrend

AWU
 
Californians have a pathologic belief in home appreciation. Everyone here believes they can get rich in residential real estate. This belief causes them to buy. This buying drives up prices. When prices get to high, affordability becomes a problem, and prices crash back down to fundamental values. We are on our third bubble since the 1970's, and there is no sign that people have learned anything yet.
 
<p>Where does this idea come from that CA is sooooo desirable and people are actually picking up and moving here just to be here - I haven't met anyone like that. I grew up in So. Ca, my family is here - and of course I see its incredible beauty - but because of the cost of living we would NEVER have moved back here from the east had it not been for a great job. The only people I meet who seem to talk about everyone wanting to live in CA are the poeple who own homes and are telling me why homes are so expensive. Someone show me the proof please!</p>
 
<em>Since CA is one of the most desired places to live in, when are the people from the rest of USA start moving here. If So Cal keeps seeing declines of 30% from peaks?</em>





california has always been a desirable place to live, but that doesnt mean it has always avoided housing slumps. by that logic, you should by gm and ford stock since americans are driving more and more with no end to the car culture in sight.





<em>When will this downward trend cease. (Values based on not just the rent multiplier, but the premium people are willing to pay to be in the Sun?)</em>





your guess is as good as anyones....





<em>Remember the Japanese money buying up office buildings and golf courses in the late 1980's. Is the Chinese money going to come in soon?</em>





remember how those japanese got pummelled in those investments, hightailed it home, and have been in a funk for the past 20 yrs? so far the chinese have avoided plunging head first into real estate. what they have been doing however is investing into american companies, if not buying them outright. australians and saudi money have been in love with RE however. i can give several examples of where these deals have already gone the wrong way for the buyers.
 
<p>movingaround-</p>

<p>It's a leftover meme from the post-WW2 era, based on two major migration patterns. The first was the wave of unemployed and displaced during the 30's when drought and foreclosures forced many farmers and their families to pack up everything and head for the fertile fields of California. Compared to the dustbowls of the plains states, California was paradise. So many destitute people were migrating that the state legislature passed a law preventing residents from knowingling bringing indigent people into the state. The second "migration" followed the end of WW2, and was most responsible for the idea that everyone wants to live in California. Because of the war, California was no longer just an agricultural and entertainment based state. Factories had sprung up everywhere to provide planes, ships, packaged foods, etc., to supply the Pacific front lines. When the war ended, California found itself with a thriving economy, a brand new manufacturing infrastructure, revamped and improved ports for air and sea, and thousands of discharged soldiers and sailors looking for employment and a place to live. California's climate, cheap fertile land, rapidly increasing port and rail traffic, quality higher education system, and booming state economy made it a great place to raise a family... in an era when making babies was the national pastime.</p>

<p>Now, people just keep repeating the idea because it's become 'common knowledge', even if the evidence says otherwise.</p>
 
<p>Yes, CA is a desirable place to live, but is it really worth 3-5x more to live here than in a place with pretty decent weather like, say Atlanta, considering a comparable job here doesn't pay nearly that much more?





Lots of my out-of-state friends have come here to visit and like it, but living here is another thing. Looking at it objectively, if you could make $100k a year and only afford a small, well-located condo here with a huge mortgage that eats into your monthly pay, or take the same $100k per year and buy a mansion for half the cost and have lots of extra $ left over, it's hard to make the argument that it's inherently better to live here just to have more sunshine. It's things like family ties, like movingaround said, that make it worth it for me to stay here. If we weren't from here and didn't have family here, I'd be ready to move tomorrow. Sure, it's great here, but you can be equally as happy in many other great parts of the country, and enjoy a better quality of life with the same amount of $.





It's telling to me that we're on yet another housing slump, meanwhile many other parts of the country (where it's not quite as nice to live in terms of say weather, but not bad by any stretch) have seen more normal long-term appreciation that's better tied to fundamentals. Seems to indicate that people here and people who come here do expect to strike it rich in real estate and constantly drive prices up before they inevitably fall back down, like IR said. The sense of entitlement makes me sick.</p>
 
Just wait several thousand years. When the global warming trend is over and we are in for another ice age, people will leave their frigid states and flock to SoCal
 
<p>Nude - great info, thank you - I had never heard it before - guess it wasn't taught in fourth grade along with the missions! :)</p>

<p>Caliguy - I find that most of the friends I grew up with here don't realize the benefits that can be found in other areas of the country. Not saying that I don't understand staying here for family - I absolutely know how hard and lonely and isolating it can be without family. However, over the past 10 years in my visits home I am just shocked to find out how many of my friends are sacrificing soooo much to live here and I don't think they realize how easier thier financial lives could be were they to leave ca. It is a hard bind for us - the generation that grew up here in CA when things were normal now to find ourselves unable to financially even think about buying a home next door to our parents! :) </p>
 
movingaround - Very good points. I personally feel fortunate to have gone out of state for undergrad since it helped me to see a lot more of the country and get out of the OC bubble for a bit to realize just how many other great area there are to live in. The more I saw, the more I questioned why it had gotten so much more expensive to live here (since the main things tying us here are familiarity - having grown up here - and family, not climate or location). It's home, no matter what the weather is like.
 
Thanks Guys. I do not have the hard proof of population growth from govt. concensus, but the anecdotal evidence of:



1. Watching the concrete jungle spring up in and aroud Aliso Viejo (there was no such city just 20 years ago)

2. seeing all the new housing developments in Irvine, Laguna Hills, Mission Viejo, RSM



Where did all these people come from?



I agree that it would be better to live in different areas of the USA, more affordable and a better quality of life. Austin TX, N Charlotte, New Jersey, Atlanta, Phoenix, even Oregon, Utah? I have though often of moving out, away from the ridiculous commute and the rat-trace here.

But somehow it is difficult to give up the idea of leaving family friends and ties, and being less then 2 hours away from the beach/mountains/skiing/hiking/ cities offering entertainment.



Perhaps my next move will be to India, where the saved dollar will go a long way? By Irvine Renter's analysis, I may have to wait it out until 2013! Either that or sell now and rent until I am truly ready to move. (India or New Jersey?)



AWU
 
<p>AWU-</p>

<p>I'm confident that had TIC not been steady on the brakes, Orange County would have been paved from end to end and all the way to the coast back in the 60's. The demand has always been there, but the population was channeled down the 91 freeway because TIC wouldn't build until it could command top dollar. TIC (Don Bren) wants maximum money and controlled growth to prevent south Orange county from looking like Orange, Fullerton, Santa Ana, Costa Mesa, etc.</p>
 
<p>I agree - we can't deny there has been growth and lots of it! But, did those people just up and leave their homes for the sunshine - in my experience most people believe that where they grew up is very special and a wonderful place to live and will not leave forever if they have an option. So, I would venture that the exponential growth had to do with something else other than the sunshine.</p>

<p>I too echo your question - where did they come from!! I would like to know!</p>

<p>Caliguy - I like your statement - home is home no matter what the weather is - I think people feel that way even in the plains of Canada!</p>
 
<p>As an immigrant family, we had very few choices as to where we wanted to live. Being new to the country, our family looked for shelter in communities with familiar faces, i.e. from our homeland who spoke the language, ate the same types of food, etc. That was 20+ years ago but I do not believe that desire for familiarity has not changed in the recent immigrants. Asians nowadays come from abroad with a lot more wealth than they did twenty some years ago, but they still do not speak the language or understand the culture enough to navigate through the day to day life without struggles. I believe that the general LA/OC/Riv/SB is diverse enough that it can take on additional number of immigrants who are looking for such sanctuary in this foreign land. </p>

<p>As for the 1.5 and 2nd generation who grew up in OC, most of my friends have left the socal scene to SF, NY, Colorado Springs, Eugene OR, Richmond VA, and even Vancouver BC. If I knew how, I sure would like to know if my theory holds, that the increase in population has direct correlation to immigrant population increase rather than migrant population from other states.</p>

<p>By the way, those who have left have no intention of returning here. </p>
 
<p>Interesting article in the LA Times today (California section, I believe). This is the 5th year of declines in student enrollement in LA public schools. There are about 50,000 less students from 5 years ago!</p>

<p>Some have transferred to charter schools, which have exploded in popularity recently. However, the implication is that families have just left the area. </p>

<p>The IE public schools, on the other hand, are "busting at the seams." </p>

<p>Housing prices do impact populations.</p>
 
Same thing is happening in OC...declines in student enrollment. Seems like a no-brainer to me: Too expensive for many to live here and comfortably raise a family, particularly after house prices skyrocketed. That's been driving out some of the younger families who would otherwise be here raising kids that are just beginning to enter schools.





Here's some exceprts from a Register article in April.I have access to their archive, but couldn't find the story on the web site to link to:





<strong>Enrollment<img class="opaqueImage" id="hitarrow0" style="LEFT: -25px; POSITION: absolute; TOP: -30px" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrowSelected.gif" /> slips again</strong>


<strong>19 O.C. school<img id="hitarrow1" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> districts have dropped a total of 17,725 students since 2004.</strong>


In just three years, the en<img id="hitarrow3" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" />rollment in 19 Orange County<img id="hitarrow4" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> school<img id="hitarrow5" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> districts has dropped by a combined 17,725 students. That’s enough to fill about 10 high schools<img id="hitarrow6" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" />, or 30 elementary schools<img id="hitarrow7" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" />.


And some educators, who attribute the trend to young families escaping the county<img id="hitarrow8" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" />’s high housing prices, are predicting even sharper declines in years to come.


Meanwhile, other educators, along with real estate agents, say this trend is part of a cycle, easily reversed by everything from increases in new housing developments to changes in birth rates.


New state figures indicate public school<img id="hitarrow9" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> enrollment<img id="hitarrow10" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> in the county<img id="hitarrow11" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> dropped for the third straight year. For 2006-07, 503,836 students are enrolled in public schools<img id="hitarrow12" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" />, down from 510,114 last year.


Orange County<img id="hitarrow13" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> figures mirror state numbers that indicate school<img id="hitarrow14" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> enrollment<img id="hitarrow15" style="POSITION: absolute" border="0" alt="" src="http://epaper.ocregister.com/Archive/Images/Common/HitArrow.gif" /> in coastal communities shrinking.

 
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