California Taxes - Am I Missing Something?

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Alexandria
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Re: California Taxes - Am I Missing Something?

Post by Alexandria »

EmergDoc wrote:
clubby wrote:
Can anyone explain to me how someone with a 2nd quartile income (let's say $50-80K) can actually pay California real estate prices and actually save enough money to call themselves a Boglehead? It seems impossible to me. I see houses in California listed at $2 Million that would go for $200K in Arizona, Nevada, or Utah. It's such a huge sacrifice it just surprises me to see so many making it.
Don't live in San Francisco or Bay Area. :D

Seriously. I am from Bay Area. San Jose is second most expensive city in the country? We owned a condo there - paid $260k. We then bought a $260k house in Sacramento. Bogleheads just have to be creative. We are not in tech or science, so this was probably a lot of our decision to leave Bay Area. Housing is such a large over-riding expense (Bought/owned these homes with $50k-$60k income) that everything else gives. We have never spent much money on cars, for example. We have enjoyed being able to raise our kids in a sprawling house with a yard, but it's not a deal breaker for us. WE can certainly afford to live in the Bay Area if we go small with the housing. Which we are fine with. Our first home was a condo because was all we could afford. (Could not afford rents). But, our takeaway was that we really enjoyed the low-maintenance home ownership. So we are itching to downsize again, anyway. (Ironically, the cost of living has taught us a lot about contentment, which bodes well for Bogleheads and frugality. We also are aware that we have a lot of options. We've already done one major lower-cost-of-living move and are very open to doing another).
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Bustoff
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Re: California Taxes - Am I Missing Something?

Post by Bustoff »

Alexandria wrote:I've seen a lot of comments about how California is too expensive a state to retire in. I don't agree at all.
I think many of the comments reflect the frustration with CA real estate prices. They have risen so much that it's now out of the reach for many of us who would love to relocate there.
surfstar
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Re: California Taxes - Am I Missing Something?

Post by surfstar »

Bustoff wrote:
surfstar wrote:Why buy an overpriced house/condo when you can rent?
Can get this for double-wide for $150,000 in Lawrence Welk Village, Escondido, CA

Image
Give me a double-wide on the beach (heck even smaller would be fine) and I'd be more than happy.


Do some road trips - there is plenty of empty land out here. I just wish that people who didn't take advantage of living near the beach, would move elsewhere.
Why up our cost when you don't seem to even care about where you're living? If you haven't been to the beach in the last two months, you should be forced to move inland :mrgreen:
NorCalDad
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Re: California Taxes - Am I Missing Something?

Post by NorCalDad »

This Atlantic blog post examines the COL issues we're discussing here: http://www.theatlanticcities.com/housin ... urbs/8816/

A young middle-class family that wants to build wealth in the Bay Area would probably have to live in areas that are less desirable from a safety, schools and commute standpoint. Like Alexandria, we have a comfortable life and build wealth in California in part because we don't live in the Bay Area. Something would have to give on our nearly $200,000 income to achieve our financial goals in the Bay Area, trading down in neighborhood quality or saving less for retirement. I think this has less to do with taxes than with home prices and transportation costs. But these factors are not exclusive to the Bay Area or California - I would stay out of NYC and D.C. for the same reasons.
paulsiu
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Re: California Taxes - Am I Missing Something?

Post by paulsiu »

My mom just move there. Because she is low income, her tax is zero or close to zero. There are some issues:

1. Housing is really expensive, at least near the Bay Area. Property taxes are OK.
2. In CA, pension is taxed. Her previous state did not tax pensions or IRA's.
3. She find that gas is really expensive, but she does not travel much so this wasn't an issue.
4. She find that health insurance is nearly 2x from her previous policies.
5. She find that Pet care is also 2x fro her previous resident.
6. Grocery bill are higher.
7. Heating cost appears to be inline with her previous resident.
8. Sale tax is definitely several percentage higher.

The area is bad for higher income earners. You could be paying 10% income taxes.

Paul
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Bustoff
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Re: California Taxes - Am I Missing Something?

Post by Bustoff »

OR,
You can retire to Colorado where you carry your $3,000 mountain bike atop your $500 car and the top of your head is bald, but you still have a pony tail. :wink:
OR,
You can retire to Phoenix, Arizona where you're willing to park 3 blocks away from your house because you found shade. BTW, that "dry
heat" is comparable to what hits you in the face when you open your oven door. :shock:
epilnk
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Re: California Taxes - Am I Missing Something?

Post by epilnk »

dipsylala wrote:For IT related professionals, I understand that CA is the best state to work in.
For outdoor enthusiasts, CA is nice. But is there any other cities/states with similarly nice weather all year round?
For those who are neither IT related professionals nor outdoor enthusiasts, why do you live in CA?
Because I lived 40 years of my life in various towns and cities on the other side of the country, moving every 3 to 6 years for career/professional reasons. And I've traveled quite a bit to other parts of the country. I've yet to find anywhere else I'd rather be. I'm not even in a particularly desirable area of CA, but I love the lifestyle here. We're committed to staying in one town until the children graduate high school but we're considering a move within the state afterward.
wander
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Re: California Taxes - Am I Missing Something?

Post by wander »

Chinese are buying real estate mainly in San Francisco, Los Angeles and New York.
U.S. home market pulls in more Chinese buyers
letsgobobby
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Re: California Taxes - Am I Missing Something?

Post by letsgobobby »

I've lived in CA off and on for about ten years and in WA for the last ten years.

I did college and residency in CA. It is a beautiful place, especially the Bay Area, the Central Coast, San Diego. There is a vibe, the weather, the cultural sophistication, the concentration of creativity/intellect/inventiveness in the Bay Area/South Bay in particular that doesn't exist anywhere else in the US.

However when I left CA for good in 2003 I made a conscious decision that the negatives (primarily cost of living and traffic/crowded conditions, but also living in a desert without environmentally responsible access to water; the never-ending threat of a serious earthquake; and the mostly lousy public schools unless you want to live in an extremely high-priced town - think Los Gatos or Palo Alto) outweighed the positives. We gave up primarily the weather to live in WA; the Portland, OR metro area isn't diverse the way CA is but it's nonetheless enough so to meet our needs. I've calculated our annual state tax savings to be $30,000 or more, and that's without considering the higher cost of housing or the need to send our kids to pricey private schools which would quickly add another $50k+ per year. At some point the sacrifices just aren't worth it. And yes, you can do it cheaper by living in Rancho Cucamonga or Visalia or Susanville or someplace similar, but that's not the California most people have in mind...

This week we made our first road trip down from PDX to California, now that the kids are old enough for such a thing. Wow, it sure is beautiful here. You can forget... the Golden Gate Bridge, the food, Highway 1, coastal Monterey and Santa Cruz, even the drive from Sacramento to San Francisco (or at least from Vallejo onwards) is more spectacular than I remember. But the total cost of our road trip will be maybe $2500... far more palatable to do that once or twice per year than to pay $75k-$100k per year without end.
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goodenyou
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Re: California Taxes - Am I Missing Something?

Post by goodenyou »

I don't confuse cost of living with cost of lifestyle. I moved to Texas in an area that most would not want to live. I have all the basics, 3 airports, tons of retail, great supermarkets, an excellent public (free) STEM high school (#9 in Texas). In order to re-create my lifestyle in California, I would have to make twice what I make here. That is impossible in a price-fixed profession. Labor costs here are a fraction of major cities in California. What that affords me and my family is time. Living in an area with a low cost of living has afforded me the ability to retire 10 years earlier, fully fund 3 private college tuition and participate in my children's activities (coach etc.). It would have been 72 degrees and fluorescent a lot longer in California. It was a choice, and it was completely out-of-the-box for 2 big city East Coasters. We travel to California and vacation in very nice accommodations. It is a matter of priority and opinion not argument.
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cowboysFan
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Re: California Taxes - Am I Missing Something?

Post by cowboysFan »

NorCalDad wrote: Someone with that income would find it challenging to build wealth in the Bay Area, but there are plenty of areas beyond the Bay Area they can live, such as further inland toward the Central Valley. In Southern California, the same applies as someone moves into the Inland Empire. Either that, or the person could live with roommates or rent an apartment in a less-desirable neighborhood. It's similar to what people have to do in NYC or DC.
DC has to be one of the worst areas of the country to live. You have LA housing prices and traffic without California's good weather and beaches.
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mrpotatoheadsays
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Re: California Taxes - Am I Missing Something?

Post by mrpotatoheadsays »

island wrote: Yes definitely. I'm trying to get on that now. Thanks for reminding me I need to post to ask if any San Diegan's can recommend an attorney for that.
You don't need an attorney. Get Nolo's book on creating a living trust and read it. It's simple.
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mrpotatoheadsays
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Re: California Taxes - Am I Missing Something?

Post by mrpotatoheadsays »

lyner wrote: I am considering a move to CA and housing seems to be the big ticket item to factor in for cost of living.
Please don't move here. There are too many people of the freeways now. :(
NorCalHiker
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Re: California Taxes - Am I Missing Something?

Post by NorCalHiker »

FWIW, my in-laws live in Texas most of the year. They live in a very nice high-end area of DFW. They visit us often (especially after the grandkids) and used to constantly complain about CA. Most of it seemed to center around CA being too left wing. In the 15 years that I've known them and seen them visiting us, I've noticed that they've warmed up to here. MIL is constantly surprised at how little we pay for fresh fruit and veggies and property taxes too. She loves the ethnic markets. While they aren't as "foodie" as we are, FIL loves the variety of sushi places and different types of food here. He has a mild case of Celiac's disease (basically a gluten allergy) and he almost had a religious experience when we took him to this awesome pizzeria which had a gluten-free crust. :) They both enjoy the outdoors and take different drives around CA when he come out here.

MIL used to load up on all kinds of stuff like nuts/tea/ethnic stuff and boat loads of items from Trader Joe's whenever she would visit. She was so happy to have Trader Joe's and In-n-out, both CA companies, open up near DFW! The last time they were here, before they were headed back, I heard him mutter, to no one in particular, how they will be returning to a 'wasteland of food'.

Don't get me wrong, they still complain about CA, especially the politics! :)
fareastwarriors
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Re: California Taxes - Am I Missing Something?

Post by fareastwarriors »

mrpotatoheadsays wrote:
lyner wrote: I am considering a move to CA and housing seems to be the big ticket item to factor in for cost of living.
Please don't move here. There are too many people of the freeways now. :(
+1


The trains are super crowded these days too.
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Milano
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Re: California Taxes - Am I Missing Something?

Post by Milano »

I moved to Los Angeles in 1987, for what I do (Commercial & Education Architect) the best projects and firms at the time were either in New York or Los Angeles (now its China). I did not move here to go surfing.

Bought a home in 1998 for $ 245,000 with a $ 100,000 down payment. Refinanced in '06 $50,000 left to pay. The house is worth circa $ 750.000. Property taxes are $ 4,000 and mortgage is less than half of what it would cost to rent the same place. Like others have done these properties can be expanded, lets call it small scale development, and sold, then buy another small home and repeat.

Gas is $ 30.00 most of the year and $ 70.00 in winter, the electrical bills are < $ 40.00.
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Wannabe
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Re: California Taxes - Am I Missing Something?

Post by Wannabe »

Milano, you're sitting pretty there. Santa Monica is a favorite area of ours.

Do your property taxes go up when you add on to a house or are the taxes still based on your original purchase price?
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Artsdoctor
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Re: California Taxes - Am I Missing Something?

Post by Artsdoctor »

^ I can speak to the above. When significant remodeling is done, you should pull permits and the job is inspected during various stages of work. This will affect your property tax although it is still usually far less than the market value of your house.

People do a lot of renovations without permits, but I cannot recommend that. While it's less expensive and less hassle in the short run, the inspector is supposed to be there to protect you (against shoddy electrical, plumbing, etc.). But two important features: if something and unforeseen happens and you've not built up to code, you could have a legal mess on your hands; and, when it comes time to sell, it could create programs if the remodel is unpermitted. Of course, the majority of the time you'll never get caught but I've found that it's just better all the way around to do it legally.
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Milano
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Re: California Taxes - Am I Missing Something?

Post by Milano »

Wannabe wrote:Milano, you're sitting pretty there. Santa Monica is a favorite area of ours.

Do your property taxes go up when you add on to a house or are the taxes still based on your original purchase price?
I don't know if the home is reassessed at sale or at permitting new construction.

It worked not by intent but by location (location, location, location) and timing. Others have done this with a low income, buy property with rental space and let the tenants pay the mortgage.

If only I had been smarter with my investments at ML.
sscritic
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Re: California Taxes - Am I Missing Something?

Post by sscritic »

Artsdoctor wrote:^ I can speak to the above. When significant remodeling is done, you should pull permits and the job is inspected during various stages of work. This will affect your property tax although it is still usually far less than the market value of your house.
"Remodeling" does not change your assessment; new construction does. However, many people refer to new construction as remodeling. You need to use the definitions the Assessor uses.

From the LA County Assessor's Office:
In general, what is considered assessable (taxable) new construction?
  • Assessable new construction may be any of the following:
    new structures;
    area added to existing structures;
    new items added to an existing structure such as bathrooms, fireplaces, central heating / air conditioning;
    physical alterations resulting in a change in use;
    rehabilitation, renovation, or modernization that converts an improvement to the substantial equivalent of a new improvement;
    land development (grading, engineered building pad, infrastructure).
    Examples: new homes, room additions, patio covers, pools, spas, and decks
If I add area (square footage) to my home, will the increase in my assessed value be based on the new square footage of the addition, or will it cause a reappraisal of the entire property, including the land?
  • This is one of the most commonly asked questions about new construction. Under Proposition 13, the entire property, land and improvements, will only be completely reappraised when the real estate transfers ownership. The Assessor will typically only add value for assessable new construction.
..
Will the remodel of my kitchen or bathroom trigger a reassessment?
  • Assuming you are remodeling or replacing what already existed, this would typically be excluded from assessment. Remodeling is primarily cosmetic and while it usually improves a building’s appearance, it does not extend the usable life (effective age) of the building. However, if you replaced a half bath with a full bath, the difference in value between the two may be added to the assessment of your property.
...
How does the Assessor’s Office know when new construction has occurred on a property?
  • The Assessor receives a copy of building permits from the various city and county agencies. This is the primary method of discovery for the Assessor. To a much lesser extent, the Assessor may be informed of new construction by a neighbor, another governmental entity, an appraiser from the Assessor’s Office while out in the field or even directly from the property owner. When the Assessor has knowledge of new construction on a property, whether it is permitted or not, the Assessor has a legal duty to assess and add value for the new construction.
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TimeRunner
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Re: California Taxes - Am I Missing Something?

Post by TimeRunner »

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Epsilon Delta
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Re: California Taxes - Am I Missing Something?

Post by Epsilon Delta »

Artsdoctor wrote:While it's less expensive and less hassle in the short run, the inspector is supposed to be there to protect you (against shoddy electrical, plumbing, etc.).
The inspector is also supposed to protect your neighbors against shoddy construction on your home. History has many examples of entire cities burning down, this doesn't happen quite so often these days, largely due to building codes.
tj
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Re: California Taxes - Am I Missing Something?

Post by tj »

EmergDoc wrote:
clubby wrote:
And yet we all manage without even being doctors. ;)
Of the people I know in California, I see a lot of "managing" and a lot of "surviving" but not a lot of thriving, even with some rather impressive incomes. The only friend I've got there who I would say is thriving runs a private equity fund.

Imagine for a moment, what your finances would look like if you were living in a city where the median house were, say, $250,000. The difference between a 4% mortgage on $250K vs a 4% mortgage (assuming you can get one) on $800K is $32,000 a year. While that might not make a big difference if you make $200K a year, it certainly does if you're making $75K.

Can anyone explain to me how someone with a 2nd quartile income (let's say $50-80K) can actually pay California real estate prices and actually save enough money to call themselves a Boglehead? It seems impossible to me. I see houses in California listed at $2 Million that would go for $200K in Arizona, Nevada, or Utah. It's such a huge sacrifice it just surprises me to see so many making it.
Well, obviously if you have between $50k and $80k income you should not be buying a $2 million or $800k house. My income was in that range and my 2BR condo cost $135k. It was not a very fun place to live - but it was very close to work and so far has been a reasonably good investment.

i personally could never imagine spending $800k on real estate. I lived in my owned condo for 3 years in order to keep the $8000 homebuyer tax credit, but now it is a rental property and I have been able to be a renter in two different beach towns with only one roommate for less than I collect in rental income on my condo. I currently I rent an apartment in Orange County right on Pacific Coast Highway.

Owning the condo I live in currently would, in my opinion, be very unbogleheadish. It would cost $600k with HOA's of over $500/month, Could I live for less in utah? Absolutely I could, and I loved Salt Lake City - though they have some expensive condos downtown as well -
My family is in California and that's the biggest reason I stay. I also grew up here and there is a comfort level- it's where I have stable employment. I like that I can walk to the beach on my days off, that I can walk to several restaurants and services, and I also like that I'm a short drive away from suburbia if I feel so inclined for the big box stores like Costco.

I probably will retire to somewhere like Arizona or Utah if I remain single. If $$ was not an issue, I'd retire to Hawaii.

When I looked at state taxes on a $50k income, I found that Arizona wasn't really more tax efficient because their rates on lower income are higher than California's, AND Arizona is miserable in summer and their job market is just as bad as what we have here.
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White Coat Investor
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Re: California Taxes - Am I Missing Something?

Post by White Coat Investor »

cowboysFan wrote:
NorCalDad wrote: Someone with that income would find it challenging to build wealth in the Bay Area, but there are plenty of areas beyond the Bay Area they can live, such as further inland toward the Central Valley. In Southern California, the same applies as someone moves into the Inland Empire. Either that, or the person could live with roommates or rent an apartment in a less-desirable neighborhood. It's similar to what people have to do in NYC or DC.
DC has to be one of the worst areas of the country to live. You have LA housing prices and traffic without California's good weather and beaches.
Amen.

I was encouraged to apply to be a white house doc and turned it down primarily because I didn't want to live/drive in/work in DC.
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westcoastinvestor
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Re: California Taxes - Am I Missing Something?

Post by westcoastinvestor »

These posts about California always amaze me. California must be the most controversial state in the nation.

It seems really simple. If two of your top three priorities are low taxes and owning the largest house possible, then the San Francisco Bay Area might not be the best region for you.

I live in the San Francisco Bay Area. For me, the higher costs are worth it because of the opportunities for professional advancement, (I do not work in the tech sector), there is a tolerant political culture, there is a high proportion of intellectually aggressive risk takers, and the year-round outdoor activities are unrivaled.

It is hard to own a home on a mere mortal’s salary. I think the trick is renting until the next downturn, and then buying during the downturn. It is a boom and bust region, and housing prices do fluctuate with the booms and busts.
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White Coat Investor
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Re: California Taxes - Am I Missing Something?

Post by White Coat Investor »

westcoastinvestor wrote:These posts about California always amaze me. California must be the most controversial state in the nation.

It seems really simple. If two of your top three priorities are low taxes and owning the largest house possible, then the San Francisco Bay Area might not be the best region for you.

I live in the San Francisco Bay Area. For me, the higher costs are worth it because of the opportunities for professional advancement, (I do not work in the tech sector), there is a tolerant political culture, there is a high proportion of intellectually aggressive risk takers, and the year-round outdoor activities are unrivaled.

It is hard to own a home on a mere mortal’s salary. I think the trick is renting until the next downturn, and then buying during the downturn. It is a boom and bust region, and housing prices do fluctuate with the booms and busts.
I don't think it's so much about priorities (although there is no doubt that plays a role) as about what is actually financially possible. When a city has an average home price of $800K, where do the teachers live? Where do the firemen live? Where do the folks who want to start a lawn mowing business live? As one of my partners (who trained at Stanford) said last night, "I don't know of any doctors practicing in the Bay Area who aren't either married to someone making a lot more than them or who get "family money" (economic outpatient care) enabling them to buy in the area." $800K at 4% is $32K in interest a year. A 30 year, 4%, mortgage payment on $800K is $46K a year. It's just bizarre for me to see so many people whose "priorities" are to spend 1/3, 1/2, 3/4 of their income on housing related expenses. I also find it bizarre to see so many people willing to commute 2 hours each way (drive til you qualify) when they could move somewhere else and commute for 15 minutes.

Don't feel like I'm singling California out here though. I think similar things about DC, NYC, and many other high cost of living places, and they don't even get the nice weather you get in California.

I also totally and complete disagree that "year round outdoor activities are unrivaled." Just because the activities don't change with the season doesn't make them unrivaled. In fact, I'd say that's a definite downside of California- the seasons don't change. I can think of dozens of outdoor activities that are better somewhere else than the Bay Area-

Hiking
Snowshoeing
Skiing (both water, and snow)
Surfing
Windsurfing
Rock climbing
Ice climbing
Canyoneering
Mountaineering
Kiteboarding
Wakeboarding
Boating
Cliff jumping
Camping
Hunting
Fishing
Trapping
Ice skating
Ice fishing
Cross country skiing
Dog mushing
Scuba diving
Canoeing
River rafting
Flying
Base jumping
Parasailing
Skijoring
Speedflying

I guess if your idea of "outdoor activities" is road biking, sailing, and golf then the Bay Area is pretty good. But I assure you an average ocean temperature of 54 degree and an average air temperature of 60 degrees isn't exactly ideal, much less "unrivaled" when it comes to playing in the ocean. And driving four hours to Lake Tahoe or the Sierras isn't exactly a day trip.
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White Coat Investor
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Re: California Taxes - Am I Missing Something?

Post by White Coat Investor »

This one from another thread is great:
ktd wrote:We are moving to the bay area next year from Dallas. My uncle has small multifamily housing in Mountain View. He offers to rent it to us one of his units for $1200 a month not including gas and electricity. The unit is small less than 700 square feet 2 bedrooms 1 bath. We have 2 kids one of each. My kids have never shared a room before. We are currently living in over 3000 square feet house so this is a huge adjustment for us. My husband thinks we are wasting money on rent. Housing is expensive here. We have about 300-350K for down payment. We thought about Sacramento before but changed out mind. We don’t want to commute too far to work. Would you buy? Or would you live in this tiny apartment for a few years and wait for the market crash again? Your opinion please. Thank you
700 square feet with 4 people! Sounds awesome! I guess this is where the teachers and firemen live. And this is a special deal from a family member. What a bizarre place that someone with $300K available for a down payment would even consider living in a place like this. 700 square feet is a kitchen and a dining room, not an entire house. Our first condo was about that. There was nowhere to put any stuff (and we didn't have much), it was a "one-butt" kitchen, a bedroom, a tiny bathroom, and a tiny living room. The "dining room" doubled as the entry way. I can't imagine where the second bedroom is going to come from. 700 feet is a 25 x 28 foot rectangle. That's a garage, not a house.

All right, rant over. I'm glad all you folks want to live in California. We've got plenty of people here already.
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sscritic
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Re: California Taxes - Am I Missing Something?

Post by sscritic »

EmergDoc wrote: I don't think it's so much about priorities (although there is no doubt that plays a role) as about what is actually financially possible. When a city has an average home price of $800K, where do the teachers live? Where do the firemen live? Where do the folks who want to start a lawn mowing business live?
They live in East Palo Alto. Median family income less than $50k. 20 minutes to get to work. Median house a little over $500k (American Community Survey, for some reason the 2010 census income data is missing).
http://www.bayareacensus.ca.gov/cities/EastPaloAlto.htm

Historical Note: after WW II, Japanese were excluded (by practice) from buying in Palo Alto, so they bought in East Palo Alto and did their gardening business in Palo Alto.

P.S. I like easy ratios. 100 to 1 sounds good for the home price to income one, notwithstanding all you read on bogleheads.
ThatGuy
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Re: California Taxes - Am I Missing Something?

Post by ThatGuy »

sscritic wrote:(American Community Survey, for some reason the 2010 census income data is missing).
This is probably my only chance ever to do this to a sscritic post, so here it goes:

2010 US Census for East Palo Alto.
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jackpistachio
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Re: California Taxes - Am I Missing Something?

Post by jackpistachio »

EmergDoc wrote:When a city has an average home price of $800K, where do the teachers live? Where do the firemen live?
Here:
http://www.mercurynews.com/sunnyvale/ci ... tys-salary

And here:
http://www.mercurynews.com/salaries/bay ... geSize=250&

Lot's of physicians on the list, but keep going and you will run into the firemen, police, and department of public safety (firemen+police). Nowhere near a $50k total cost of employment.
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sscritic
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Re: California Taxes - Am I Missing Something?

Post by sscritic »

ThatGuy wrote:
sscritic wrote:(American Community Survey, for some reason the 2010 census income data is missing).
This is probably my only chance ever to do this to a sscritic post, so here it goes:

2010 US Census for East Palo Alto.
A defective google search. Who woulda thunk it?

So here are the relevant numbers from the better source pointed to by ThatGuy:
Median value of owner-occupied housing units, 2008-2012 $377,900
Median household income, 2008-2012 $47,950
Not even 100 to 1!

P.S. I would guess that incomes in owner occupied housing units would be above the median for all households.
dgdevil
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Re: California Taxes - Am I Missing Something?

Post by dgdevil »

EmergDoc wrote: When a city has an average home price of $800K, where do the teachers live? Where do the firemen live? Where do the folks who want to start a lawn mowing business live?
The first 2 professions are a protected class, so no worries there; the metaphorical lawnmower guy, yes, California is not as welcoming to small business as it likes to think it is. So these entrepreneurial, middle-class types are getting squeezed, and the state will be for the poorer for it.

The Bay Area, dare I say it, is an outlier. And SFO is a famously unreliable airport, btw. There are other parts of California where one could live. Not Sacramento or Stockton, obviously.
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Re: California Taxes - Am I Missing Something?

Post by random_walker_77 »

Just so everyone knows, there's a reason why east palo alto is so "inexpensive". Back in the early 90's, it was the murder capital of the US. It's way way better now, but it's murder rate is still quite... elevated (4 per 100K in CA overall, 8 per 29K in east palo alto).

Given that, I'm surprised the median house price is over half a million, as referenced by sscritic

http://www.smdailyjournal.com/articles/ ... 16409.html
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Re: California Taxes - Am I Missing Something?

Post by sscritic »

random_walker_77 wrote:Just so everyone knows, there's a reason why east palo alto is so "inexpensive". Back in the early 90's, it was the murder capital of the US. It's way way better now, but it's murder rate is still quite... elevated (4 per 100K in CA overall, 8 per 29K in east palo alto).

Given that, I'm surprised the median house price is over half a million, as referenced by sscritic

http://www.smdailyjournal.com/articles/ ... 16409.html
And when I was growing up, it was our local ghetto. I don't remember the murder rate, but we used to go to EPA to buy race records (not that they were called that anymore, even then).

P.S. Note the better data had a median under $400k.
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Re: California Taxes - Am I Missing Something?

Post by TimeRunner »

deleted - TMI
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Ron Ronnerson
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Re: California Taxes - Am I Missing Something?

Post by Ron Ronnerson »

EmergDoc wrote:I don't think it's so much about priorities (although there is no doubt that plays a role) as about what is actually financially possible. When a city has an average home price of $800K, where do the teachers live?
I am a Bay Area teacher. Same as anyone, teachers live in the community. My wife and I live in a 4 bedroom townhouse in a nice suburb where the median home is valued at around 800k and the schools are excellent. We did get lucky with purchasing our home at a good time. We paid $500k in 2010 and the home is worth close to $700k now. Our mortgage (30 year fixed) runs about $1800 per month. We earn about $130k per year combined (with my wife working part time) and live very comfortably on that. We are able to save about $30k per year in IRAs and 457b plus another $5-10k in cash each year as well. There should also be a decent pension which covers most of our expenses upon retirement.

I teach in a town about 20 miles away and it takes 30-45 minutes to get to work depending on time of day and traffic. It's not ideal, but it is doable. The drive down the highway is congested but very scenic. As a teacher, I do get a break from it during the summer.

Salaries for teachers in the Bay Area have to be sufficient to allow us to live at least decently. Most of us don't live luxurious lifestyles but there isn't a need to share a small apartment with a bunch of roommates either. It's not really as hard as it may seem to those living outside the area. We simply try to minimize our expenses.
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jackpistachio
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Re: California Taxes - Am I Missing Something?

Post by jackpistachio »

jackpistachio wrote:
EmergDoc wrote:When a city has an average home price of $800K, where do the teachers live? Where do the firemen live?
Here:
http://www.mercurynews.com/sunnyvale/ci ... tys-salary

And here:
http://www.mercurynews.com/salaries/bay ... geSize=250&

Lot's of physicians on the list, but keep going and you will run into the firemen, police, and department of public safety (firemen+police). Nowhere near a $50k total cost of employment.
I buried the lead. A smattering of data from the 2nd link:

Code: Select all

Entity          Title                           Base      OT        Other     MDV      ER        EE      DC        Misc     TCOE
Milpitas        Fire Battalion Chief - 40 hr    $84,372   $0        $376,261  $12,114  $20,336   $0      $463      $156     $494,282  
Redwood City    Police Officer                  $73,131   $43,960   $182,885  $12,653  $30,471   $0      $117,851  $2,741   $463,690  
Alameda County  Asst Sheriff                    $216,504  $0        $42,698   $29,688  $158,671  $7,776  $0        $494     $455,831  
Redwood City    Fire Fighter/Engineer           $53,190   $50,222   $193,628  $10,464  $25,978   $0      $116,002  $2,740   $452,224  
San Francisco   Lieutenant, Fire Suppression    $128,809  $220,909  $13,126            $23,075   $0      $0        $5,841   $391,760  
San Francisco   Electronic Maintenance Tech     $111,921  $146,415  $78,057            $27,046   $0      $0        $12,744  $376,183  
San Francisco   Captain 3                       $104,404  $0        $245,999           $16,975   $0      $0        $300     $367,678  
San Francisco   EMT/Paramedic/Firefighter       $126,863  $192,424  $17,917            $23,235   $0      $0        $5,546   $365,985  
San Francisco   Asst Chf of Dept (Fire Dept)    $204,033  $85,503   $26,193            $37,358   $0      $0        $5,102   $358,189  
San Francisco   Battlion Chief, Fire Suppressi  $174,822  $118,216  $28,846            $33,120   $0      $0        $566     $355,570  
San Francisco   Battlion Chief, Fire Suppressi  $174,822  $112,731  $28,660            $32,175   $0      $0        $5,143   $353,531  
San Francisco   Battlion Chief, Fire Suppressi  $176,772  $124,413  $15,803            $31,349   $0      $0        $5,078   $353,415  
San Francisco   Battlion Chief, Fire Suppressi  $174,822  $99,624   $36,522            $34,376   $0      $0        $5,039   $350,383  
San Francisco   Deputy Chief 3                  $263,427  $0        $22,858            $45,569   $0      $0        $517     $332,371  
San Francisco   Captain, Fire Suppression       $145,659  $125,868  $30,475            $28,633   $0      $0        $584     $331,219  
San Francisco   Captain, Fire Suppression       $124,574  $53,896   $130,200           $20,947   $0      $0        $300     $329,917  
San Francisco   Captain 3                       $108,175  $0        $203,471           $17,372   $0      $0        $300     $329,318  
San Francisco   Captain 3                       $104,404  $0        $204,290           $17,122   $0      $0        $300     $326,116  
San Francisco   Captain 3                       $98,748   $1,386    $203,736           $16,505   $0      $0        $300     $320,675  
San Francisco   Captain, Fire Suppression       $145,659  $114,513  $28,743            $26,477   $0      $0        $530     $315,922  
San Francisco   Firefighter                     $109,784  $160,418  $19,874            $20,510   $0      $0        $4,758   $315,344  
San Francisco   Firefighter                     $110,847  $139,260  $17,844            $20,214   $0      $0        $4,367   $292,532  
San Francisco   Firefighter                     $109,784  $130,268  $19,688            $20,084   $0      $0        $4,315   $284,139  
San Francisco   Lieutenant, Fire Suppression    $128,809  $102,879  $18,677            $24,004   $0      $0        $4,123   $278,492  
San Francisco   Firefighter                     $109,784  $114,847  $20,768            $20,998   $0      $0        $4,036   $270,433  
San Francisco   EMT/Paramedic/Firefighter       $126,863  $108,599  $8,836             $22,075   $0      $0        $4,011   $270,384  
Saw plenty of school district supervisors also in this range, but no teachers.
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Re: California Taxes - Am I Missing Something?

Post by JonnyDVM »

Wow that is some sweet overtime pay. Also, why doesn't my job pay me for "other" ? I think we all just figured out why the state tax brackets are so high.
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Re: California Taxes - Am I Missing Something?

Post by westcoastinvestor »

It is about priorities. People have free will. It is called “voting with your feet.”

The Bay Area has a highly skilled population, high levels of private sector investment, and high per capita productivity. Software engineers, lawyers, janitors, and everybody in between choose to move to the Bay Area. Also, most of the 7 million or so existing residents choose to stay in the Bay Area. They are clearly and consciously making decisions that they determine to be in their best interest. Housing prices are high because many people move here, few leave, and there are geographic and political constraints to the development of new housing.

There are many wonderful other places to live, work, and raise a family. I am not blind to the challenges of California and the Bay Area.

Preference for outdoor activities is subjective. There are two seasons where I live: cool and sunny; and cool and sunny/foggy. If I want snow I drive to the Sierras. It works quite well. If trapping and ice fishing were priorities for me, I would not live in California.
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Re: California Taxes - Am I Missing Something?

Post by goodenyou »

Regardless of all the beauty, culture, activities etc., living in California would have forced me to work for many many years longer. Raising 3 children in a large, comfortable home with a lot of help has given me a luxury (and time) I could not afford in California. I could not afford the time nor money to do the activities that my children do now. Making 50% less money, living in a shoebox with 3 children and having to retire with a lot less 10 years later never interested me. That decision is made ever more clear today, Tax Day. If I were paid enough to recreate my lifestyle, I would would move to California and pull the (ever getting heavier) cart too. In my situation, the juice isn't worth the squeeze to live in California. Getting to the Freedom Finish Line was more important.
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Re: California Taxes - Am I Missing Something?

Post by fareastwarriors »

goodenyou wrote:Regardless of all the beauty, culture, activities etc., living in California would have forced me to work for many many years longer. Raising 3 children in a large, comfortable home with a lot of help has given me a luxury (and time) I could not afford in California. I could not afford the time nor money to do the activities that my children do now. Making 50% less money, living in a shoebox with 3 children and having to retire with a lot less 10 years later never interested me. That decision is made ever more clear today, Tax Day. If I were paid enough to recreate my lifestyle, I would would move to California and pull the (ever getting heavier) cart too. In my situation, the juice isn't worth the squeeze to live in California. Getting to the Freedom Finish Line was more important.

Sounds like you made a great choice for youself and family.
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Re: California Taxes - Am I Missing Something?

Post by sscritic »

goodenyou wrote: Making 50% less money, living in a shoebox with 3 children and having to retire with a lot less 10 years later never interested me.
I know lots of families with 3 kids here in California who do not live in a shoebox. I don't know that I know any that would double their salaries if they moved away. In that regard, your situation is unusual (I don't doubt your statement that you would make only half as much living in CA). I do know a family who is moving back to Texas from LA, but they moved here for better jobs and to be close to family, and now they are moving back to Texas for the same reasons.

P.S. Maybe moving in and out of state is the best way to increase your income. If you are desirable, people will bid for you.
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Re: California Taxes - Am I Missing Something?

Post by goodenyou »

sscritic wrote:
goodenyou wrote: Making 50% less money, living in a shoebox with 3 children and having to retire with a lot less 10 years later never interested me.
I know lots of families with 3 kids here in California who do not live in a shoebox. I don't know that I know any that would double their salaries if they moved away. In that regard, your situation is unusual (I don't doubt your statement that you would make only half as much living in CA). I do know a family who is moving back to Texas from LA, but they moved here for better jobs and to be close to family, and now they are moving back to Texas for the same reasons.

P.S. Maybe moving in and out of state is the best way to increase your income. If you are desirable, people will bid for you.
I went through that exercise. My MIL lived in Carlsbad until she passed away in 2011. She tried to get us to relocate, but it was a losing proposition. Same for my family in NY. I am desirable, just ask my beautiful wife. It is my highly specialized skilled labor that is not compensated based on desire. I cannot move for a "better" job. Thankfully, I have a lot more choices because of my decision not to go to an expensive, highly taxed state. It was right for me and my family. It is not for everyone. I am thankful that I have many more options (to not work or minimize work) than many of my colleagues at the same stages of our careers. Don't get me wrong, I think California is beautiful and has a lot to offer. I just don't want to be pulling the heavier cart in a 72 degrees and fluorescent environment in California or anywhere else.
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