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Do you have any stats on the wealth distribution of people leaving California? This really is a situation where more demographic information would be helpful, s

by geebee 8y ago

Do you have any stats on the wealth distribution of people leaving California? This really is a situation where more demographic information would be helpful, since an average wouldn't tell you as much. Do the wealthy Californians tend to be old, retirees? Young with kids? Are half the Californians leaving well off, with other half largely penniless? Your assertion that "when Californians leave, they leave wealthy" may be true, but I would like to see it substantiated with some kind of cite. Having grown up in SF (I'm in my late 40s), I have, by this point, seen a lot of people leave (and arrive), and they run the gamut. I know a couple with two small kids who did what everyone in Portland fears most - they bought in SF during the housing bust, sold recently, collected 800k or so, and now own a house outright in Portland. I know a woman who grew up in Palo Alto in the 1970s and works as a documentary film maker. She left for Denver with nothing but the savings that can get you through a few months. Lots more, and they're anecdotes, but it's enough to make me suspect that "when Californians leave, they leave wealthy" isn't true often enough to make it a generally accurate statement, even if it does describe a substantial number of these cases.

austincheney 8y ago
California is bleeding something like 60,000 people each year just to Texas. The Californians moving to north Texas metros do not appear poor relative to neighboring Texans enjoying superior standards of living with deprecated wages compared to California. When I bought my Texas house about a decade ago the average house price in my metro was about $200,000 and now I think it is about $250,000. These average houses are individual units from 2500-3000sqft on a quarter acre lot. If you are able to sell an equivalent CA house for $2,000,000 you are moving in wealthy compared to Texans. It doesn't mean you can afford a mansion here though, because property taxes are about equal to CA property taxes at about 6.5% per year.
- geebee 8y ago
  You did say "do not appear to be poor". Is there a chance you're noticing wealthy people, because they tend to be more noticeable? Yes, people who bought a house while ago in California, sell, and move to Texas would have a lot of money. But again, is this typical? I'm not saying it necessarily isn't typical, just that "it seems like", or "appears to be" isn't data. A lot of people leave California because they can cash in on their house, but a lot of people also leave because they'll never be able to get a foothold in the housing market. We really do need some data on this to have a meaningful conversation about it.
  - deleted 8y ago
    [deleted]
  - austincheney 8y ago
    > Yes, people who bought a house while ago in California, sell, and move to Texas would have a lot of money. But again, is this typical? This was the business owner at my first job out of college. He sold his California home and used that money to bootstrap his business for two years and hire employees while also supporting himself and his family. The answer though is middle class people according to IRS data - https://www.cnbc.com/2018/03/19/californians-fed-up-with-housing-costs-and-taxes-are-fleeing-state.html https://www.cnbc.com/2018/03/19/californians-fed-up-with-hou...
  - burlesona 8y ago
    I would love to see the data on this as well. But at least anecdotally around me (an immigrant working in tech in SF), the overwhelming number of people who moved here are following a plan that looks like this: 1. Get a big tech job in SF and earn > $200k per year (in some cases 2-3x that). 2. Deal with living in a run down apartment yet still paying $2200-3500/mo. 3. Shovel a large percentage of your income into savings for 5-10 years. 4. Move back to <anywhere else> with $300k in cash. At which point you can pay either pay straight cash, or make a huge downpayment, for a nice house and live pretty comfortable in the upper middle class for the rest of your life. Again I would love to see scientific data on this, but in my immediate work setting, I've heard 12 of the 15 engineers I work with state this as their "life plan." Of the three who that isn't their plan, two are Bay Area natives, and one (I think) has decided he'd like to stay. So, circling up to the parent comments, there are certainly large numbers of these people leaving every year, taking their <geographically relative> big bags of cash back to the corners of the world.
- eweise 8y ago
  California property taxes about are about 1.5%, not 6.5%
  - panzagl 8y ago
    I think they mean the houses are 5x cheaper, but tax is 5x higher, therefore they wouldn't want to buy a 'mansion' in Texas
  - techslave 8y ago
    he means that you end up paying the same in property tax, even tho the house itself is much (6.5x) cheaper. and the tax payment comes out of your cash flow, not your assets. but he’s not taking into account other reductions in expense, like no state income tax.
- jdavis703 8y ago
  > property taxes are about equal to CA property taxes at about 6.5% per year. Property tax in CA is capped at 1% of assessed value per year.
deleted 8y ago
[deleted]
mdorazio 8y ago
I think this is the data you're looking for [1]. It actually runs somewhat counter to the parent comment's assertion. On average, wealthier people move to CA because they can afford to live here while poorer people leave because they can't afford to live here. However, you'd have to do some additional lookups based on the median incomes of where emigrants are moving to in order to draw a conclusion about whether they are better or worse off than the local population of their destination. [1] https://lao.ca.gov/LAOEconTax/Article/Detail/265 https://lao.ca.gov/LAOEconTax/Article/Detail/265
qqqwerty 8y ago
It's quite possible that the 'California wealthy' are a minority of transplants (say 20-40%), but that could still move real estate markets significantly. Looking at [1], it seems like the Portland housing market does about 20-40k sales per year. And it sounds like Portland has been growing by about 30-40k people per year (that is total, not just Californians). So if 25% of those folks are jumping into the real estate market, it can probably have a big impact on the supply/demand. Housing is pretty slow to respond to supply/demand imbalances so even a small imbalance can swing the market. [1] https://www.trulia.com/real_estate/Portland-Oregon/market-trends https://www.trulia.com/real_estate/Portland-Oregon/market-tr...

by geebee 8y ago

austincheney 8y ago

California is bleeding something like 60,000 people each year just to Texas. The Californians moving to north Texas metros do not appear poor relative to neighboring Texans enjoying superior standards of living with deprecated wages compared to California. When I bought my Texas house about a decade ago the average house price in my metro was about $200,000 and now I think it is about $250,000. These average houses are individual units from 2500-3000sqft on a quarter acre lot. If you are able to sell an equivalent CA house for $2,000,000 you are moving in wealthy compared to Texans. It doesn't mean you can afford a mansion here though, because property taxes are about equal to CA property taxes at about 6.5% per year.

geebee 8y ago
You did say "do not appear to be poor". Is there a chance you're noticing wealthy people, because they tend to be more noticeable? Yes, people who bought a house while ago in California, sell, and move to Texas would have a lot of money. But again, is this typical? I'm not saying it necessarily isn't typical, just that "it seems like", or "appears to be" isn't data. A lot of people leave California because they can cash in on their house, but a lot of people also leave because they'll never be able to get a foothold in the housing market. We really do need some data on this to have a meaningful conversation about it.
- deleted 8y ago
  [deleted]
- austincheney 8y ago
  > Yes, people who bought a house while ago in California, sell, and move to Texas would have a lot of money. But again, is this typical? This was the business owner at my first job out of college. He sold his California home and used that money to bootstrap his business for two years and hire employees while also supporting himself and his family. The answer though is middle class people according to IRS data - https://www.cnbc.com/2018/03/19/californians-fed-up-with-housing-costs-and-taxes-are-fleeing-state.html https://www.cnbc.com/2018/03/19/californians-fed-up-with-hou...
- burlesona 8y ago
  I would love to see the data on this as well. But at least anecdotally around me (an immigrant working in tech in SF), the overwhelming number of people who moved here are following a plan that looks like this: 1. Get a big tech job in SF and earn > $200k per year (in some cases 2-3x that). 2. Deal with living in a run down apartment yet still paying $2200-3500/mo. 3. Shovel a large percentage of your income into savings for 5-10 years. 4. Move back to <anywhere else> with $300k in cash. At which point you can pay either pay straight cash, or make a huge downpayment, for a nice house and live pretty comfortable in the upper middle class for the rest of your life. Again I would love to see scientific data on this, but in my immediate work setting, I've heard 12 of the 15 engineers I work with state this as their "life plan." Of the three who that isn't their plan, two are Bay Area natives, and one (I think) has decided he'd like to stay. So, circling up to the parent comments, there are certainly large numbers of these people leaving every year, taking their <geographically relative> big bags of cash back to the corners of the world.
eweise 8y ago
California property taxes about are about 1.5%, not 6.5%
- panzagl 8y ago
  I think they mean the houses are 5x cheaper, but tax is 5x higher, therefore they wouldn't want to buy a 'mansion' in Texas
- techslave 8y ago
  he means that you end up paying the same in property tax, even tho the house itself is much (6.5x) cheaper. and the tax payment comes out of your cash flow, not your assets. but he’s not taking into account other reductions in expense, like no state income tax.
jdavis703 8y ago
> property taxes are about equal to CA property taxes at about 6.5% per year. Property tax in CA is capped at 1% of assessed value per year.

deleted 8y ago

[deleted]

mdorazio 8y ago

I think this is the data you're looking for [1]. It actually runs somewhat counter to the parent comment's assertion. On average, wealthier people move to CA because they can afford to live here while poorer people leave because they can't afford to live here. However, you'd have to do some additional lookups based on the median incomes of where emigrants are moving to in order to draw a conclusion about whether they are better or worse off than the local population of their destination. [1] https://lao.ca.gov/LAOEconTax/Article/Detail/265 https://lao.ca.gov/LAOEconTax/Article/Detail/265

qqqwerty 8y ago

It's quite possible that the 'California wealthy' are a minority of transplants (say 20-40%), but that could still move real estate markets significantly. Looking at [1], it seems like the Portland housing market does about 20-40k sales per year. And it sounds like Portland has been growing by about 30-40k people per year (that is total, not just Californians). So if 25% of those folks are jumping into the real estate market, it can probably have a big impact on the supply/demand. Housing is pretty slow to respond to supply/demand imbalances so even a small imbalance can swing the market. [1] https://www.trulia.com/real_estate/Portland-Oregon/market-trends https://www.trulia.com/real_estate/Portland-Oregon/market-tr...