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Californians in LA/SF are used to paying $800k for a house, and the Cali salaries are high enough to support it. A Texan in Dallas/Austin is used to paying $250

Californians in LA/SF are used to paying $800k for a house, and the Cali salaries are high enough to support it. A Texan in Dallas/Austin is used to paying $250k for that same house, and has a relatively lower salary to match. The Californians, after years of having higher salary, more savings, and a job that lets them move, goes to Texas and offers $400k for that same house. The Californian thinks it's a great deal, because they get the same size house they previously lived in for only half the price! And the seller thinks it's great, because he now suddenly gets a huge premium on his previously-valued-at-$250k-house. All of the real estate responds in kind, expecting to get $400k+ from all the Cali transplants. However, the average Texan, who doesn't have that high paying salary, gets priced out and can no longer afford a house in their city. This has been happening en masse to the northern suburbs of Dallas, as well as many neighborhoods in Austin. It's gentrification, more or less, and it comes with all the same problems.

lotsofpulp 6y ago
>The Californians, after years of having higher salary, more savings, and a job that lets them move, goes to Texas and offers $400k for that same house. Nobody pays more for something just because they have more savings. They pay more because they might be getting outbid by someone. I don't see the purpose of characterizing that as "California exporting higher costs of living". People with more money outbid people with less money all over the world all the time. You can say "Americans are exporting higher cost of living" by purchasing avocados from Mexico, or factory capacity in China, etc. and depriving the locals who can't afford to pay the same. I'm sure the people in the poorer neighborhoods of Dallas and Austin are complaining about the richer neighborhoods exporting a higher cost of living.
- tidepod12 6y ago
  >Nobody pays more for something just because they have more savings. They pay more because they might be getting outbid by someone. No, they pay more because they can afford it. When a bidding war starts between a Californian and a Texan for the same house, the Texan loses every time because they can't bid as high as the Californian. It isn't just housing, either. When a new grocery store opens up in one of these neighborhoods, do you think they just sell their goods as cheap as they always have? Of course not. They want to make a profit, so they up their prices because they know the Californians are more than willing to pay for it. The Texan who now struggles to make ends meet because food is more expensive? They get pushed out. > You can say "Americans are exporting higher cost of living" by purchasing avocados from Mexico, or factory capacity in China, etc. and depriving the locals who can't afford to pay the same. Yes, that is exactly what is happening. Have you ever been to any of these countries where Americans-with-money swoop in and starting buying up goods or property? They hate it, just as much as Texans hate the Californians who are moving in.
  - lotsofpulp 6y ago
    It seems like we're saying the same thing, except that I am claiming it is unremarkable, or trivial. People with more resources have been outbidding people with fewer resources since forever, and whether they're from China or California or Kansas or the other side of town is irrelevant.
    - tidepod12 6y ago
      If you think discussing the effects that people moving from CA to Texas has is irrelevant when we are literally in a thread specifically about the effects of people moving from CA to Texas, I dunno what to tell you.
      - lotsofpulp 6y ago
        That is true, I did lose sight of that. I think the more interesting statement would be California is exporting lots of high income / net worth people, which would prompt the questions of what causes CA to have lots of high income / net worth people, and what causes them to leave? E.g. Are CA's policies more conducive to wealth creation, and then are people taking advantage of arbitrage opportunities elsewhere to guard that wealth?
- monocasa 6y ago
  At least in Denver, it's common to see Californians come in and for the first offer drop down 20% over asking. No bidding war. They want to guarantee they get the house _without_ having to deal with a bidding war, and have enough savings that the marginal cost of each of those dollars is less than those living and working in Denver.
  - lotsofpulp 6y ago
    The extra 20% is the bidding war. If they thought there was a reasonable chance they would be able to purchase without the 20%, they would.
    - monocasa 6y ago
      The term "bidding war" doesn't typically apply to initial offers.
      - lotsofpulp 6y ago
        The concept of bidding war includes having to pay more than someone else to obtain something. If a market is so hot that the seller has no reason to even wait for competing offers, then the initial offer has to be high enough to make it worth their while. The initial is your bid, and because you predict other buyers will be able to satisfy the seller's demands, you bid defensively by bidding extra.
        monocasa 6y ago
        A single shot isn't a war.
        lostcolony 6y ago
        A single shot that decides the outcome is an assassination, and that's generally done to avoid a war that will have worse outcomes, if we want to stretch this metaphor to the breaking point.
avl999 6y ago
> The Californians, after years of having higher salary, more savings, and a job that lets them move, goes to Texas and offers $400k for that same house. The Californian thinks it's a great deal, because they get the same size house they previously lived in for only half the price! And the seller thinks it's great, because he now suddenly gets a huge premium on his previously-valued-at-$250k-house. All of the real estate responds in kind, expecting to get $400k+ from all the Cali transplants. However, the average Texan, who doesn't have that high paying salary, gets priced out and can no longer afford a house in their city. That makes no sense. If the housing prices in a market go up, it is because there is more demand without an increase in supply. Not because a certain group is paying almost double the market value for absolutely no reason.
- tidepod12 6y ago
  The supply of housing isn't a problem in Texas, but "supply and demand" isn't the end of the story. When two Texans want the same house, a bidding war is artificially capped (at, say $300k) because that's all the average Texan can afford. But when a Californian moves in with high net worth and a higher paying job, they can bid much higher, and they don't mind doing so (the mindset I have personally heard from most CA transplants to Dallas is that they don't care if they paid more than the average Texan pays, because at the end of the day they're still paying less than half what they were paying in CA). And then there's the issue of property taxes. A Texan lives in his nice $250k house and pays $X/year in property taxes. Then someone comes in and buys the house next to them for $400k/yr. Suddenly this neighborhood is now appraised at a much higher value than before, and the Texan's property taxes are now twice as high, bordering on the edge of unaffordable. I've personally seen several people be priced out of an area due to this.
  - ntsplnkv2 6y ago
    > And then there's the issue of property taxes. That seems like a Texas problem being blamed on Californians. I'm sure a lot of Texans are very happy that their houses have shot way up in value.
  - sbeller 6y ago
PaulDavisThe1st 6y ago
I remember in the mid-90s, living in Seattle just as one wave of "californication" was drawing to a close and just before the tech boom would start an even crazier rise in housing costs there .... listening to some local talk radio show. A caller was complaining about Californians coming to WA/Seattle and doing just what you describe. The radio host said "well, it takes two to tango, those prices going up reflect the actions of both buyers and sellers, not just buyers". The caller was indignant: "It would be un-American not to try to get the highest possible price for your property" The defense rests.
- jeffbee 6y ago
  Doesn't seem like mid-90s property appreciation in Seattle could have been pinned on Californians anyway. Wouldn't it have been more related to Microsoft, a gigantic and extremely successful company with an in-house Porsche dealership among other perks? I see a similar defective thought process right here in Berkeley, CA. Everyone here blames housing demand on peninsula companies like Facebook, Apple, and Google but it's a fact that employment right here in the city of Berkeley has been allowed to double in the last 30 years while the city built zero net dwellings. We can try to blame it on distant villains but the gentrification, to borrow a meme, is coming from inside the house.
  - PaulDavisThe1st 6y ago
    Microsoft in the mid-90s didn't seem like it was having much impact on Seattle itself. If there was a staffing explosion, it just wasn't evident in town. Redmond and the rest of the 405 corridor? Yeah, maybe. But not so much Seattle itself. By contrast, the "Californication" period (say, 87-94) and the tech boom actually took place in the city itself. Keep in mind that in the 87-94 period, Boeing and UW were still the two largest employers in Puget Sound. Companies like Microsoft were "good" for the economy, but they weren't quite the behemoths that they became as the tech boom happened (and, coincidentally, as I left :)
    - throwaway201103 6y ago
      Yeah I would expect that Microsoft in the late 1980s was paying much more modest salaries for software developers. That job didn't really start paying crazy salaries until the VC money arrived with the Dot-Com wave.
pwarner 6y ago
Yeah, I mean people with money buying stuff in the free market and prices going up because of increased demand! Yikes! That's California Communism coming to Texas clearly right there!

lotsofpulp 6y ago

>The Californians, after years of having higher salary, more savings, and a job that lets them move, goes to Texas and offers $400k for that same house. Nobody pays more for something just because they have more savings. They pay more because they might be getting outbid by someone. I don't see the purpose of characterizing that as "California exporting higher costs of living". People with more money outbid people with less money all over the world all the time. You can say "Americans are exporting higher cost of living" by purchasing avocados from Mexico, or factory capacity in China, etc. and depriving the locals who can't afford to pay the same. I'm sure the people in the poorer neighborhoods of Dallas and Austin are complaining about the richer neighborhoods exporting a higher cost of living.

tidepod12 6y ago
>Nobody pays more for something just because they have more savings. They pay more because they might be getting outbid by someone. No, they pay more because they can afford it. When a bidding war starts between a Californian and a Texan for the same house, the Texan loses every time because they can't bid as high as the Californian. It isn't just housing, either. When a new grocery store opens up in one of these neighborhoods, do you think they just sell their goods as cheap as they always have? Of course not. They want to make a profit, so they up their prices because they know the Californians are more than willing to pay for it. The Texan who now struggles to make ends meet because food is more expensive? They get pushed out. > You can say "Americans are exporting higher cost of living" by purchasing avocados from Mexico, or factory capacity in China, etc. and depriving the locals who can't afford to pay the same. Yes, that is exactly what is happening. Have you ever been to any of these countries where Americans-with-money swoop in and starting buying up goods or property? They hate it, just as much as Texans hate the Californians who are moving in.
- lotsofpulp 6y ago
  It seems like we're saying the same thing, except that I am claiming it is unremarkable, or trivial. People with more resources have been outbidding people with fewer resources since forever, and whether they're from China or California or Kansas or the other side of town is irrelevant.
  - tidepod12 6y ago
    If you think discussing the effects that people moving from CA to Texas has is irrelevant when we are literally in a thread specifically about the effects of people moving from CA to Texas, I dunno what to tell you.
    - lotsofpulp 6y ago
      That is true, I did lose sight of that. I think the more interesting statement would be California is exporting lots of high income / net worth people, which would prompt the questions of what causes CA to have lots of high income / net worth people, and what causes them to leave? E.g. Are CA's policies more conducive to wealth creation, and then are people taking advantage of arbitrage opportunities elsewhere to guard that wealth?
monocasa 6y ago
At least in Denver, it's common to see Californians come in and for the first offer drop down 20% over asking. No bidding war. They want to guarantee they get the house _without_ having to deal with a bidding war, and have enough savings that the marginal cost of each of those dollars is less than those living and working in Denver.
- lotsofpulp 6y ago
  The extra 20% is the bidding war. If they thought there was a reasonable chance they would be able to purchase without the 20%, they would.
  - monocasa 6y ago
    The term "bidding war" doesn't typically apply to initial offers.
    - lotsofpulp 6y ago
      The concept of bidding war includes having to pay more than someone else to obtain something. If a market is so hot that the seller has no reason to even wait for competing offers, then the initial offer has to be high enough to make it worth their while. The initial is your bid, and because you predict other buyers will be able to satisfy the seller's demands, you bid defensively by bidding extra.
      - monocasa 6y ago
        A single shot isn't a war.
        lostcolony 6y ago
        A single shot that decides the outcome is an assassination, and that's generally done to avoid a war that will have worse outcomes, if we want to stretch this metaphor to the breaking point.

avl999 6y ago

> The Californians, after years of having higher salary, more savings, and a job that lets them move, goes to Texas and offers $400k for that same house. The Californian thinks it's a great deal, because they get the same size house they previously lived in for only half the price! And the seller thinks it's great, because he now suddenly gets a huge premium on his previously-valued-at-$250k-house. All of the real estate responds in kind, expecting to get $400k+ from all the Cali transplants. However, the average Texan, who doesn't have that high paying salary, gets priced out and can no longer afford a house in their city. That makes no sense. If the housing prices in a market go up, it is because there is more demand without an increase in supply. Not because a certain group is paying almost double the market value for absolutely no reason.

tidepod12 6y ago
The supply of housing isn't a problem in Texas, but "supply and demand" isn't the end of the story. When two Texans want the same house, a bidding war is artificially capped (at, say $300k) because that's all the average Texan can afford. But when a Californian moves in with high net worth and a higher paying job, they can bid much higher, and they don't mind doing so (the mindset I have personally heard from most CA transplants to Dallas is that they don't care if they paid more than the average Texan pays, because at the end of the day they're still paying less than half what they were paying in CA). And then there's the issue of property taxes. A Texan lives in his nice $250k house and pays $X/year in property taxes. Then someone comes in and buys the house next to them for $400k/yr. Suddenly this neighborhood is now appraised at a much higher value than before, and the Texan's property taxes are now twice as high, bordering on the edge of unaffordable. I've personally seen several people be priced out of an area due to this.
- ntsplnkv2 6y ago
  > And then there's the issue of property taxes. That seems like a Texas problem being blamed on Californians. I'm sure a lot of Texans are very happy that their houses have shot way up in value.
- sbeller 6y ago

PaulDavisThe1st 6y ago

I remember in the mid-90s, living in Seattle just as one wave of "californication" was drawing to a close and just before the tech boom would start an even crazier rise in housing costs there .... listening to some local talk radio show. A caller was complaining about Californians coming to WA/Seattle and doing just what you describe. The radio host said "well, it takes two to tango, those prices going up reflect the actions of both buyers and sellers, not just buyers". The caller was indignant: "It would be un-American not to try to get the highest possible price for your property" The defense rests.

jeffbee 6y ago
Doesn't seem like mid-90s property appreciation in Seattle could have been pinned on Californians anyway. Wouldn't it have been more related to Microsoft, a gigantic and extremely successful company with an in-house Porsche dealership among other perks? I see a similar defective thought process right here in Berkeley, CA. Everyone here blames housing demand on peninsula companies like Facebook, Apple, and Google but it's a fact that employment right here in the city of Berkeley has been allowed to double in the last 30 years while the city built zero net dwellings. We can try to blame it on distant villains but the gentrification, to borrow a meme, is coming from inside the house.
- PaulDavisThe1st 6y ago
  Microsoft in the mid-90s didn't seem like it was having much impact on Seattle itself. If there was a staffing explosion, it just wasn't evident in town. Redmond and the rest of the 405 corridor? Yeah, maybe. But not so much Seattle itself. By contrast, the "Californication" period (say, 87-94) and the tech boom actually took place in the city itself. Keep in mind that in the 87-94 period, Boeing and UW were still the two largest employers in Puget Sound. Companies like Microsoft were "good" for the economy, but they weren't quite the behemoths that they became as the tech boom happened (and, coincidentally, as I left :)
  - throwaway201103 6y ago
    Yeah I would expect that Microsoft in the late 1980s was paying much more modest salaries for software developers. That job didn't really start paying crazy salaries until the VC money arrived with the Dot-Com wave.

pwarner 6y ago

Yeah, I mean people with money buying stuff in the free market and prices going up because of increased demand! Yikes! That's California Communism coming to Texas clearly right there!