Is California worth the premium?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
zanian
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Re: Is California worth the premium?

Post by zanian » Sat Jan 19, 2019 11:27 pm

As a Californian, this question, to tell you the truth gets a little tiresome. It's really a personal preference. The pros and cons are well known and easily searchable.

A-Commoner
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Re: Is California worth the premium?

Post by A-Commoner » Sat Jan 19, 2019 11:34 pm

We bought a house in an affluent area of LA county 2 years ago. Except for the high cost of housing, the rest of our expenditures aren’t any higher than what we were paying in IL. Food is about the same or less. Our electric bills are higher but gas and water bills are less, so utility costs are a wash. Gasoline is about the same since we live close to work (3 miles). Our lawn maintenance costs and housecleaning costs are much less (Mexican labor is cheaper than the people we hired in IL). We’re able to max out our 401k contributions and still have taxable savings on top of this. This last item was a pleasant surprise, I didn’t expect it. The budget breaker, if any, tends to be discretionary spending on entertainment, of which LA has an abundance. But such spending can be curtailed. Once you have overcome the initial hurdle of high housing costs, i find that spending isn’t that much different than where we lived in IL.

socaldude
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Re: Is California worth the premium?

Post by socaldude » Sat Jan 19, 2019 11:49 pm

I am exhausted from helping people pack.

bryansmile
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Re: Is California worth the premium?

Post by bryansmile » Sat Jan 19, 2019 11:50 pm

No, not really.

lexie2000
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Re: Is California worth the premium?

Post by lexie2000 » Sat Jan 19, 2019 11:53 pm

It wasn't to us. I was born and raised in CA. I lived in Contra Costa County - 8 yrs., Santa Cruz County - 9 yrs., Riverside County - 5 yrs., Santa Barbara County - 26 yrs., and finally, Santa Clara County - 10 yrs. We bought a beautiful retirement home in Santa Clara County when my husband was transferred there for work in 2005. He retired in 2013. We said that we would never leave, but finally waived the white flag and in 2015 we decided to move out of state. Our problem was that we were being taxed to death (property tax, state income tax, sales tax, gas tax....what don't they tax?) and our quality of life was not great because everything around us was deteriorating...the schools, the infrastructure, the gangs and crime, the drugs, the litter, the homelessness, and don't even get me started about the traffic/congestion. Quite frankly, it became an unpleasant place to live (other than the weather, that is) because people are totally stressed out and always in a hurry.

We know that there are still beautiful places to live in CA that are not as congested as the Bay Area and we seriously considered moving to a few of them, but in the end, we decided that we could find just as beautiful places to live out of state where we would not be taxed to death and our overall quality of life could be greatly improved. That's exactly what we found and it has been the best decision that we have ever made. Our lifestyle now is so much more laid back. Strangers actually interact with one another instead of having their heads buried in their smarty pants phones. The people that we encounter in and around town are, for the most part, warm and friendly. The customer service in the stores is awesome; people go out of their way to help you and genuinely seem to enjoy their jobs. All of this while saving a MINIMUM of $20K/yr. in state income taxes and property taxes alone. We are sad to see what has happened/is happening in CA, but feel very fortunate to have found paradise somewhere else and at a MUCH lower cost.

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sigmadave_2000
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Re: Is California worth the premium?

Post by sigmadave_2000 » Sun Jan 20, 2019 12:11 am

HEDGEFUNDIE wrote:
Sat Jan 19, 2019 11:05 pm
Just to set the record straight for those saying the state is going down the tubes, CA has a record setting $30B budget surplus plus a $14B rainy day fund.

Yes there are lots of homeless on the streets but the new SF mayor was elected specifically to solve this problem. She’s gotten over 700 homeless off the streets already. Tech firms are stepping up too, with Cisco, Salesforce, and other companies committing tens of millions in private money to solve this problem.

So flee to NV or AZ if you’d like. But it seems like the winds of change are blowing there as well.
I would like to respectfully disagree with your statements; but on the other hand I hope you are correct. What you are saying is not untrue based on the state's accounting.
(1), the issue in California is the underfunded pension and health expenditures promised to state and local government employees. The problem is that the politicians don't report this underfunding because they "assume" that our pension funds will make what seems to many experts as an impossibly high rate of return on it's portfolio of stocks, bonds, real estate, and private equity. If future fund returns normalize rate of return, as many expect, state and local governments will have to make up the difference by raising taxes or cutting services. One economist has estimated that our total pension debt could be over a Trillion Dollars http://www.pensiontracker.org/ . And this article from CalMatters estimates the unfunded obligations to state and local government pensions at $400 billion plus an additional $147 billion in unfunded future health care costs. And the League of California Cities estimates that paying municipalities' employee obligations will increase by 50% by 2024. https://www.sacbee.com/opinion/editoria ... 93069.html All we can say for sure is that it's a big, big problem.

(2) I believe Governor Brown's current surplus under the state's accounting procedure does not include local governments from which we get most of the services that are important. Furthermore the new Governor has ambitious spending plans, so they refer to as our "surplus" might not last long.

(3) Silicon Valley has been a lifeline to the state, as Apple/Google/Facebook/Intel and the likes have made tons of money from around the world. Their employees and California based investors pay taxes big time. In 2014 about 1/2 of the income taxes were paid by people making the top 1% of income taxes https://www.sacbee.com/news/politics-go ... 71532.html (I am sure it's around the same today.) and I would assume that the also pay a big chunk of the sales tax and property taxes. But as those lucky enough to invest/and be hired with stock options cash out,California will need new companies to take their place to maintain the income flow. Will the next Facebooks happen in California?? We just don't know. If not he rest of us will have to pick up their burden. Many of us will have to flee the state.

In terms of the homeless situation, it's great that 700 people are off the street, but according to 2017 figures there are 134,000 homeless folks in California, and between 2016-2017 the number of homeless people grew by 13%. I don't know how to say this nicely, but most of the homeless people I see around my area seem to have mental illness and drug/alcohol dependency problems. They will not be getting a job and paying taxes anytime soon. I don't know where they all came from, It wasn't like this a six or seven years ago.
Last edited by sigmadave_2000 on Sun Jan 20, 2019 12:49 am, edited 2 times in total.

sf_tech_saver
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Re: Is California worth the premium?

Post by sf_tech_saver » Sun Jan 20, 2019 12:14 am

ThankYouJack wrote:
Sat Jan 19, 2019 6:54 pm
I had the chance to live in Santa Barbara for half a year and absolutely loved having the ocean in my front yard and mountains in my backyard as I love being outdoors and active. But it's sooo expensive. Median home prices $1.2 million and I'm not sure I'd be thrilled with those...compared to my < $400k east coast home that I love. If I moved to California I'd want to live in an ideal location like Santa Barbara, but considering my expenses would be about $40-80k more per year it doesn't seem worth it.

I'm curious to hear from people on here especially those who have lived there, at what point is California worth it? Did you move to there or from there and from/to where?
Yes, definitely.
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JoMoney
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Re: Is California worth the premium?

Post by JoMoney » Sun Jan 20, 2019 12:16 am

I have family and friends in California, and until they decide to move, that makes it worth it.
Santa Barbara is nice, if it's too pricey to be in the city proper you move to the North County (i.e. Lompoc) and deal with a 40 minute drive to the city and still have the ocean and mountains albeit in a more rural setting and with more wind (don't get the geographical benefit of how SB is located).
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Watty
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Re: Is California worth the premium?

Post by Watty » Sun Jan 20, 2019 12:27 am

Is California worth the premium?
You have to remember 99% of California is not a beach, a funky San Francisco neighborhood, or Santa Barbara.

When you are asking "Is it worth it?" you are asking an entirely different question when you are talking about if having an hour commute past strip malls in San Jose or Riverside is worth it or not.

HIinvestor
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Re: Is California worth the premium?

Post by HIinvestor » Sun Jan 20, 2019 12:40 am

For our D who went to college in LA 10 years ago and continues to live there, clearly at this point it is worth it for her to live there. She lives with other recent graduates, a frugal budget but in a good neighborhood.

Our S who also went to college in LA, he would have stayed when he graduated in 2010, if he accepted a job there but moved to DC where the job he accepted is. He’s still considering and reviewing options to move back to VHCOL HI or the West Coast, as most of our extended family live on Oahu.

Yes, the traffic, housing, tough job market and homelessness are issues, but we love the milder climate and being near loved ones. It’s also nice to have a lot of Asian + pacific island culture and food.

randomguy
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Re: Is California worth the premium?

Post by randomguy » Sun Jan 20, 2019 1:01 am

Watty wrote:
Sun Jan 20, 2019 12:27 am
Is California worth the premium?
You have to remember 99% of California is not a beach, a funky San Francisco neighborhood, or Santa Barbara.

When you are asking "Is it worth it?" you are asking an entirely different question when you are talking about if having an hour commute past strip malls in San Jose or Riverside is worth it or not.
This whole discussion is basically reduces CA to SF Bay area and SD/LA area. Nobody is talking about how great it is to live next to Lake Tahoe or how reasonable the house prices are next to beautiful Mount Shasta. Granted probably 80% of the people live in those metro areas.:) I could probably find a place for just about any lifestyle from City living (that isn't cheap pretty much anywhere) to rural life in CA. And most of the weather patterns (not sure I would call a tahoe winter mild:)).

In the end there are all sorts of folks. Some people go to a city and see traffic and crowding and wonder why anyone would want to live there. Others go to the city and see activity and energy and wonder why anyone would live anywhere else. You need to know who you are.

Finridge
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Re: Is California worth the premium?

Post by Finridge » Sun Jan 20, 2019 1:05 am

California is a big state. Many people think of places like "The OC" and "90210", when they hear "California"--high-priced coastal California. But like I said, it's a big state, and you don't have to leave it to get into "flyover country." There are places in California where you can still buy a house for $10,000. That is not a typo.

HEDGEFUNDIE
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Re: Is California worth the premium?

Post by HEDGEFUNDIE » Sun Jan 20, 2019 1:06 am

sigmadave_2000 wrote:
Sun Jan 20, 2019 12:11 am
HEDGEFUNDIE wrote:
Sat Jan 19, 2019 11:05 pm
Just to set the record straight for those saying the state is going down the tubes, CA has a record setting $30B budget surplus plus a $14B rainy day fund.

Yes there are lots of homeless on the streets but the new SF mayor was elected specifically to solve this problem. She’s gotten over 700 homeless off the streets already. Tech firms are stepping up too, with Cisco, Salesforce, and other companies committing tens of millions in private money to solve this problem.

So flee to NV or AZ if you’d like. But it seems like the winds of change are blowing there as well.
I would like to respectfully disagree with your statements; but on the other hand I hope you are correct. What you are saying is not untrue based on the state's accounting.
(1), the issue in California is the underfunded pension and health expenditures promised to state and local government employees. The problem is that the politicians don't report this underfunding because they "assume" that our pension funds will make what seems to many experts as an impossibly high rate of return on it's portfolio of stocks, bonds, real estate, and private equity. If future fund returns normalize rate of return, as many expect, state and local governments will have to make up the difference by raising taxes or cutting services. One economist has estimated that our total pension debt could be over a Trillion Dollars http://www.pensiontracker.org/ . And this article from CalMatters estimates the unfunded obligations to state and local government pensions at $400 billion plus an additional $147 billion in unfunded future health care costs. And the League of California Cities estimates that paying municipalities' employee obligations will increase by 50% by 2024. https://www.sacbee.com/opinion/editoria ... 93069.html All we can say for sure is that it's a big, big problem.
I moved to CA from IL, so I know a little something about unfunded pension costs. Here is the latest data:

https://taxfoundation.org/state-pensions-funding-2018/

As of 2016 CA pensions were funded at 70%, about the same as TX (72%), and much better than AZ (60%). CA is nowhere near the worst, nor is it in the bottom 10 states.
sigmadave_2000 wrote:
Sun Jan 20, 2019 12:11 am
Will the next Facebooks happen in California?? We just don't know.
The next Facebook has already happened, it’s called Instagram, it started in SF and was bought by Facebook. And the one after that was Snap, which was founded in LA. And these examples are why tech continues to be concentrated in only a few places in this country, the Bay Area being the epicenter.
Last edited by HEDGEFUNDIE on Sun Jan 20, 2019 1:17 am, edited 1 time in total.

RetiredCSProf
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Re: Is California worth the premium?

Post by RetiredCSProf » Sun Jan 20, 2019 1:17 am

SrGrumpy wrote:
Sat Jan 19, 2019 7:36 pm
Too many people here already. You won't like it. Look elsewhere. :twisted:
+1

HEDGEFUNDIE
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Re: Is California worth the premium?

Post by HEDGEFUNDIE » Sun Jan 20, 2019 1:21 am

A-Commoner wrote:
Sat Jan 19, 2019 11:34 pm
We bought a house in an affluent area of LA county 2 years ago. Except for the high cost of housing, the rest of our expenditures aren’t any higher than what we were paying in IL. Food is about the same or less. Our electric bills are higher but gas and water bills are less, so utility costs are a wash. Gasoline is about the same since we live close to work (3 miles). Our lawn maintenance costs and housecleaning costs are much less (Mexican labor is cheaper than the people we hired in IL). We’re able to max out our 401k contributions and still have taxable savings on top of this. This last item was a pleasant surprise, I didn’t expect it. The budget breaker, if any, tends to be discretionary spending on entertainment, of which LA has an abundance. But such spending can be curtailed. Once you have overcome the initial hurdle of high housing costs, i find that spending isn’t that much different than where we lived in IL.
Exactly.

Cook County property tax rates are 2%, double the CA rate. And IL has a flat income tax of 5%, in CA you have to make over $150k before your effective tax gets that high.

wootwoot
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Re: Is California worth the premium?

Post by wootwoot » Sun Jan 20, 2019 1:33 am

Fun to visit but not worth living there. High cost of living. High taxes (on everything). Unfriendly business environment. Major cities have big issues with homelessness. Middle class families are getting squeezed out and are moving to neighboring states.

brad.clarkston
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Re: Is California worth the premium?

Post by brad.clarkston » Sun Jan 20, 2019 1:44 am

visualguy wrote:
Sun Jan 20, 2019 1:02 am
Where are all these "paradise"-like places in the continental US? People keep mentioning moving to such places outside CA, but without saying where these places are exactly. I used to travel extensively around the country for previous jobs, and was never lucky-enough to discover these wonderful places.
JustinR wrote:
Sun Jan 20, 2019 12:46 am
Here's a hint: the "worth" of a location is already priced in.

The cost of living is directly correlated to the number of people who want to live there.

That's why SF and SB are expensive compared to Nowheresville, Flyover State.

Nothing says "this thread needs locked" like Caly ego's.

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HomerJ
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Re: Is California worth the premium?

Post by HomerJ » Sun Jan 20, 2019 2:10 am

visualguy wrote:
Sun Jan 20, 2019 1:02 am
lexie2000 wrote:
Sat Jan 19, 2019 11:53 pm
We know that there are still beautiful places to live in CA that are not as congested as the Bay Area and we seriously considered moving to a few of them, but in the end, we decided that we could find just as beautiful places to live out of state where we would not be taxed to death and our overall quality of life could be greatly improved. That's exactly what we found and it has been the best decision that we have ever made. Our lifestyle now is so much more laid back. Strangers actually interact with one another instead of having their heads buried in their smarty pants phones. The people that we encounter in and around town are, for the most part, warm and friendly. The customer service in the stores is awesome; people go out of their way to help you and genuinely seem to enjoy their jobs. All of this while saving a MINIMUM of $20K/yr. in state income taxes and property taxes alone. We are sad to see what has happened/is happening in CA, but feel very fortunate to have found paradise somewhere else and at a MUCH lower cost.
Where are all these "paradise"-like places in the continental US? People keep mentioning moving to such places outside CA, but without saying where these places are exactly. I used to travel extensively around the country for previous jobs, and was never lucky-enough to discover these wonderful places.
There are some seriously beautiful mountains and lakes throughout the country. Surely, you know this, right? But the weather isn't nice year-round like California or Hawaii. So you got us there.

We have family living in Orange County, and we've thought it would be nice to have that weather year-round.

But it's actually cheaper to own TWO homes in most states outside of California instead of one home in the nice weather parts of CA. One for winter, and one for summer.

So we plan to snowbird in Phoenix (or maybe the Caribbean), and live at the lake in the Midwest in the summer and fall.
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Luckywon
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Re: Is California worth the premium?

Post by Luckywon » Sun Jan 20, 2019 2:15 am

Many people note the high housing costs and taxes in California but the story is not always straightforward. I bought my home in 1998 in Los Angeles. It was expensive, but it has more than tripled in value. If I had bought my home in a rural town or in most medium sized cities in the U.S., my net worth would be a lot less today.

A friend of mine moved to Houston 4 years ago, complaining he was being taxed to death in California. The house he sold in Los Angeles has gone up in value probably 30 %. The house he bought in Houston has not increased in value at all. He is actually paying higher property taxes and much more for home insurance which together negate any savings on income tax. So he is quite a bit poorer for leaving California.

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JoMoney
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Re: Is California worth the premium?

Post by JoMoney » Sun Jan 20, 2019 2:17 am

FWIW, for longtime homeowners, Prop13 has given California property owners great property tax rates and incentives to stay. Unless you make more than an 'average' income, the state income tax blended rate is competitive with most other states... (that said, it's very discouraging to work harder to move above 'average' and earn each extra $ above a certain threshold).
If you're willing to live in-land and/or commute to the major metros you can find very affordable housing, but if you're willing to live in Bakersfield, you have to wonder why not Nevada and have no income tax....
If your personality and socio-political tendencies have you geared with an eye towards stability of economic and social structures, there is no shortage of looming threats suggesting the state is always one step closer to "progressing" off a cliff.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

FireSekr
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Re: Is California worth the premium?

Post by FireSekr » Sun Jan 20, 2019 2:23 am

Several posters have mentioned the homeless issue and suggested living in more affluent areas. I happen to live in one of the most affluent areas around LA with a median home value greater than $1.7M

Even in such a place, the homeless problem is unbearable. Public parks are unuasable with druggies shooting up in the park and having sex in broad daylight. Many of these homeless have mental health issues and become violent for no reason. The number of assaults in my area has gone up tremendously as homeless are just walking up to people and punching them or attacking them or attacking pets.

Crime in general in CA is out of control especially property crime due to Prop 47 and 57 which reclassified many felonies to misdemeanors and released “non-violent” criminals from jail.

Since those measures have passed in 2016, my affluent beachfront community has seen a 50% increase in violent crime and a 20% increase in property crime. It’s common to wake up and see that all the priuses parked on a block had their catalytic converters cut off.

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Re: Is California worth the premium?

Post by HEDGEFUNDIE » Sun Jan 20, 2019 2:36 am

ssquared87 wrote:
Sun Jan 20, 2019 2:23 am
Several posters have mentioned the homeless issue and suggested living in more affluent areas. I happen to live in one of the most affluent areas around LA with a median home value greater than $1.7M

Even in such a place, the homeless problem is unbearable. Public parks are unuasable with druggies shooting up in the park and having sex in broad daylight. Many of these homeless have mental health issues and become violent for no reason. The number of assaults in my area has gone up tremendously as homeless are just walking up to people and punching them or attacking them or attacking pets.

Crime in general in CA is out of control especially property crime due to Prop 47 and 57 which reclassified many felonies to misdemeanors and released “non-violent” criminals from jail.

Since those measures have passed in 2016, my affluent beachfront community has seen a 50% increase in violent crime and a 20% increase in property crime. It’s common to wake up and see that all the priuses parked on a block had their catalytic converters cut off.
And how much has your home appreciated since 2016?

Starfish
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Re: Is California worth the premium?

Post by Starfish » Sun Jan 20, 2019 2:38 am

To me ski, hiking, sailing, surfing, climbing, mountain biking all very close by is definitely a great thing.
Salaries and job diversity in my field are larger than anywhere else.
Expensive houses are no a big deal to me because I see it as money saved (and appreciated). It's a house 1 million? so what, I will sell it at the end and get my million back.

In truth I don't really remember how is to live anywhere else. I lived 5 years on Long island and I hated it, partially because of the weather (I come from a extreme 4 season place but I found humidity unbearable). But this was 14 years ago.
There are plenty of unpleasant things in California too.
I would say if there is no professional or family/friends factor is not worth it.

lexie2000
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Re: Is California worth the premium?

Post by lexie2000 » Sun Jan 20, 2019 2:42 am

visualguy wrote:
Sun Jan 20, 2019 1:02 am
lexie2000 wrote:
Sat Jan 19, 2019 11:53 pm
We know that there are still beautiful places to live in CA that are not as congested as the Bay Area and we seriously considered moving to a few of them, but in the end, we decided that we could find just as beautiful places to live out of state where we would not be taxed to death and our overall quality of life could be greatly improved. That's exactly what we found and it has been the best decision that we have ever made. Our lifestyle now is so much more laid back. Strangers actually interact with one another instead of having their heads buried in their smarty pants phones. The people that we encounter in and around town are, for the most part, warm and friendly. The customer service in the stores is awesome; people go out of their way to help you and genuinely seem to enjoy their jobs. All of this while saving a MINIMUM of $20K/yr. in state income taxes and property taxes alone. We are sad to see what has happened/is happening in CA, but feel very fortunate to have found paradise somewhere else and at a MUCH lower cost.
Where are all these "paradise"-like places in the continental US? People keep mentioning moving to such places outside CA, but without saying where these places are exactly. I used to travel extensively around the country for previous jobs, and was never lucky-enough to discover these wonderful places.
We live in a small, high-desert (pinion pine), rural community just south of Reno. We have wild horses wandering our neighborhood year round. Virginia City, a VERY small western tourist town is nearby and offers bars, restaurants, and free entertainment. If you want the "city life" Reno is just down the grade and offers everything you could want - shopping, great restaurants, entertainment (again, a lot of which is free), and an airport for travel - and it doesn't take forever to get anywhere that you want to go. The city is very clean compared to those in CA. The freeways are beautiful and decorated with rock work, metal sculptures, and stamped concrete. The natives think there is traffic, but it is nothing compared to CA. There is always something to do - fishing, trap shooting, duck hunting, Indian powwows, ATVing….and where can you ski in the morning and golf in the afternoon? Lake Tahoe is less than an hour drive away. The weather is awesome. We get snow off and on during the winter, but usually less than a foot at a time, but enough to make the landscape beautiful. Often times, the snow is followed by a beautiful, sunny days. In the summer the weather is cooler than our last location in CA.

All of this and no state income taxes!!

Starfish
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Re: Is California worth the premium?

Post by Starfish » Sun Jan 20, 2019 2:43 am

JoMoney wrote:
Sun Jan 20, 2019 2:17 am
FWIW, for longtime homeowners, Prop13 has given California property owners great property tax rates and incentives to stay. Unless you make more than an 'average' income, the state income tax blended rate is competitive with most other states... (that said, it's very discouraging to work harder to move above 'average' and earn each extra $ above a certain threshold).
I don't get it.
The highest tax bracket in California is only 13%. How is that discouraging you from making more money?

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Re: Is California worth the premium?

Post by Valuethinker » Sun Jan 20, 2019 3:25 am

Trism wrote:
Sat Jan 19, 2019 7:25 pm
San Diego was home from 1999-2014. We kept our house here when we moved 2,000 miles away for career reasons.

We will always have a place here to spend weekends, but we will not live in California full time ever again, since being taxed to death is not a primary objective. Right now it's looking like a tax on water is imminent. Drinking water. Shower and laundry water. WATER.

I am at our place in SD now, and I just drove home from the grocery store with the top down on the car. That's the part that is hard to leave behind forever, especially when a major blizzard is brewing where we keep our primary home.
If a tax on water causes people to use less water then it's a good idea. Water is in very short supply in California and the problem may be getting worse.

I presume your water authority in state or county owned in any case? So you already pay a tax in effect on water?

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JoMoney
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Re: Is California worth the premium?

Post by JoMoney » Sun Jan 20, 2019 3:27 am

Starfish wrote:
Sun Jan 20, 2019 2:43 am
JoMoney wrote:
Sun Jan 20, 2019 2:17 am
FWIW, for longtime homeowners, Prop13 has given California property owners great property tax rates and incentives to stay. Unless you make more than an 'average' income, the state income tax blended rate is competitive with most other states... (that said, it's very discouraging to work harder to move above 'average' and earn each extra $ above a certain threshold).
I don't get it.
The highest tax bracket in California is only 13%. How is that discouraging you from making more money?
In my personal situation, it was the tax burden in total, which wound up putting each additional dollar at
9.3% California Income Tax + 28% Federal + 15.3% self employment tax
which meant for each additional dollar I earned I was paying something like 52.6% off the top, plus sales taxes on whatever I actually spent the money on, a California LLC "Franchise Fee", and potentially bumping me out of the ability to use an IRA and some other income related benefits.
I decided that at that rate it just wasn't worthwhile to do any legitimate work outside of my day job.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Valuethinker
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Re: Is California worth the premium?

Post by Valuethinker » Sun Jan 20, 2019 3:45 am

HEDGEFUNDIE wrote:
Sat Jan 19, 2019 11:05 pm
Just to set the record straight for those saying the state is going down the tubes, CA has a record setting $30B budget surplus plus a $14B rainy day fund.

https://www.politifact.com/california/s ... y-30-bill/

Yes there are lots of homeless on the streets but the new SF mayor was elected specifically to solve this problem. She’s gotten over 700 homeless off the streets already. Tech firms are stepping up too, with Cisco, Salesforce, and other companies committing tens of millions in private money to solve this problem.

https://techcrunch.com/2018/03/26/cisco ... on-valley/

So flee to NV or AZ if you’d like. But it seems like the winds of change are blowing there as well.
Because of Proposition 13 and political gridlock I believe the California tax system is badly skewed. It relies on tax on high earners mostly in entertainment tech and healthcare.

Thus when a recession hits it hits revenues very hard.

The long term position vis a vis public sector pensions is a concern.

So is the water supply. Much off the state is effectively a desert. Reliant on water moved long distances and Fed by snow pack. That snowpack is declining.

You don't even have to invoke climate change. Just note that tree ring data has shown us that there are 100 plus year long droughts in southern California in its history.

California in some ways is the future of the American west, now. The future demographics of America (albeit younger) and all the future issues. Traffic. Division over schools. Rising pension costs. Water supply. Colorado and Nevada and Urah and Arizona will all have these problems to a greater or lesser extent.

Addressing the water problem will test the mettle of the American polis and governance.

California is not unique although it has particular pathologies inflicted by the political system. But the problems are very real and very now.

I think Kim Stanley Robinson may have written the best novels about a future California.

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Re: Is California worth the premium?

Post by lexie2000 » Sun Jan 20, 2019 3:46 am

JoMoney wrote:
Sun Jan 20, 2019 2:17 am
FWIW, for longtime homeowners, Prop13 has given California property owners great property tax rates and incentives to stay. Unless you make more than an 'average' income, the state income tax blended rate is competitive with most other states... (that said, it's very discouraging to work harder to move above 'average' and earn each extra $ above a certain threshold).
If you're willing to live in-land and/or commute to the major metros you can find very affordable housing, but if you're willing to live in Bakersfield, you have to wonder why not Nevada and have no income tax....
If your personality and socio-political tendencies have you geared with an eye towards stability of economic and social structures, there is no shortage of looming threats suggesting the state is always one step closer to "progressing" off a cliff.
That is until your company transfers you from one county to another; then Prop 13 does you no good.

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JoMoney
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Re: Is California worth the premium?

Post by JoMoney » Sun Jan 20, 2019 3:51 am

lexie2000 wrote:
Sun Jan 20, 2019 3:46 am
...
That is until your company transfers you from one county to another; then Prop 13 does you no good.
Yup!!! That actually hits home with me... but there is the benefit of the "California Non-Resident Safe Harbor" so at least you don't owe any state income taxes for being tax-domiciled in California while living abroad and saves you the effort of trying to claim some other state you never lived in as your domicile.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Is California worth the premium?

Post by Valuethinker » Sun Jan 20, 2019 3:58 am

The main thing I have learned new from this thread is about the homelessness problem and its pervasiveness.

I knew about the not in downtown LA and about San Francisco. Not that it had spread.

Not an easy problem to solve. The mild climate will attract the homeless. The very high cost of living will squeeze the marginal people out of housing.

Once homeless substance abuse problems will multiply.

We have these same problems in England. For economic reasons the problem has increasing enormously since the financial crash.

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JoMoney
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Re: Is California worth the premium?

Post by JoMoney » Sun Jan 20, 2019 4:03 am

^ One step beyond the homeless, is the problem with people living in the streets and their waste attracts rats and related pests, which brings things like the typhus outbreak
https://www.nbclosangeles.com/news/loca ... 97621.html
and people hypothesizing about worse "plagues" to come if the situation isn't handled.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

lexie2000
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Re: Is California worth the premium?

Post by lexie2000 » Sun Jan 20, 2019 4:13 am

Valuethinker wrote:
Sun Jan 20, 2019 3:25 am
Trism wrote:
Sat Jan 19, 2019 7:25 pm
San Diego was home from 1999-2014. We kept our house here when we moved 2,000 miles away for career reasons.

We will always have a place here to spend weekends, but we will not live in California full time ever again, since being taxed to death is not a primary objective. Right now it's looking like a tax on water is imminent. Drinking water. Shower and laundry water. WATER.

I am at our place in SD now, and I just drove home from the grocery store with the top down on the car. That's the part that is hard to leave behind forever, especially when a major blizzard is brewing where we keep our primary home.
If a tax on water causes people to use less water then it's a good idea. Water is in very short supply in California and the problem may be getting worse.

I presume your water authority in state or county owned in any case? So you already pay a tax in effect on water?
It puzzled me when they started "rationing" water in our town because of the short supply, yet continued to allow development of hundreds of homes. The homes were so close together that you could practically jump from one roof top to another. That right there makes a lot of sense...NOT!!

What is the CA state solution to the short water supply BESIDES imposing a tax on tap water? I can see encouraging people to xeroscape their yards, but to tax the water people use to drink, cook, bathe, wash their clothes and clean their homes? Seems to me that CA is eventually going to literally stink.

And not all water is "state or county owned". Some of us have our own wells and septic systems. We are not dependent on any municipality for our water.

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Re: Is California worth the premium?

Post by TheOscarGuy » Sun Jan 20, 2019 6:01 am

ThankYouJack wrote:
Sat Jan 19, 2019 6:54 pm
I had the chance to live in Santa Barbara for half a year and absolutely loved having the ocean in my front yard and mountains in my backyard as I love being outdoors and active. But it's sooo expensive. Median home prices $1.2 million and I'm not sure I'd be thrilled with those...compared to my < $400k east coast home that I love. If I moved to California I'd want to live in an ideal location like Santa Barbara, but considering my expenses would be about $40-80k more per year it doesn't seem worth it.

I'm curious to hear from people on here especially those who have lived there, at what point is California worth it? Did you move to there or from there and from/to where?
Been to California once, and although the weather is nice, I would not like to move there. Silicon valley is congested, crazy expensive, and I am unsure how the towns can support all the services for the long term.

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Re: Is California worth the premium?

Post by Tunechi Polo » Sun Jan 20, 2019 6:24 am

I am originally from California (Bay Area) and am seriously considering moving back. My entire family lives there, and I find myself missing it on a regular basis.

I currently live out of state with a lower COL. I wouldn't need an "ideal" location like Santa Barbara, I feel there are just so many wonderful places there. I could be happy in the Sierra Nevada foothills, the Napa/Sonoma area, Sacramento area, or plenty of other places. I'll really need to weigh the financial aspect of it if/when the opportunity to re-locate to California arises.

I doubt I'll ever be able to purchase a home of my own. If I do it would be far in the future. But to answer your question, I feel California is definitely worth a premium.

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Re: Is California worth the premium?

Post by Valuethinker » Sun Jan 20, 2019 8:14 am

lexie2000 wrote:
Sun Jan 20, 2019 4:13 am
Valuethinker wrote:
Sun Jan 20, 2019 3:25 am
Trism wrote:
Sat Jan 19, 2019 7:25 pm
San Diego was home from 1999-2014. We kept our house here when we moved 2,000 miles away for career reasons.

We will always have a place here to spend weekends, but we will not live in California full time ever again, since being taxed to death is not a primary objective. Right now it's looking like a tax on water is imminent. Drinking water. Shower and laundry water. WATER.

I am at our place in SD now, and I just drove home from the grocery store with the top down on the car. That's the part that is hard to leave behind forever, especially when a major blizzard is brewing where we keep our primary home.
If a tax on water causes people to use less water then it's a good idea. Water is in very short supply in California and the problem may be getting worse.

I presume your water authority in state or county owned in any case? So you already pay a tax in effect on water?
It puzzled me when they started "rationing" water in our town because of the short supply, yet continued to allow development of hundreds of homes. The homes were so close together that you could practically jump from one roof top to another. That right there makes a lot of sense...NOT!!
Setting aside the question of water for a minute ...

California has a housing problem even setting aside natural population increase. That means the supply of homes is insufficient. One way to increase the supply of homes, given the available land is to increase the density of homes. Given that homes are on average larger than they were 1,2 generations ago, that's even more the case - even if we didn't shrink the lot size per home, they'd cover more of the lot. (In another part of North America, around my Mum, 1800 square foot 1920s homes on 30x120' lots are replaced by 3000 square foot homes). That is not meant to justify your particular township's development plans vis a vis available water resources, but to give the background on smaller lot sizes/ higher lot coverage ratios.

Water. Rationing may be necessary regardless of whether you build new homes or not. Places like Adelaide and Cape Town, which have suffered brutal droughts, it is- -the current state of somewhat more rain is likely only a reprieve. Your town? I don't know, but water can be used as a NIMBY strategy (as can complaints about higher density) yet the reality is CA needs more homes, objectively, homes have become too expensive relative to incomes.
What is the CA state solution to the short water supply BESIDES imposing a tax on tap water? I can see encouraging people to xeroscape their yards, but to tax the water people use to drink, cook, bathe, wash their clothes and clean their homes? Seems to me that CA is eventually going to literally stink.
A price on consumption is how we ration any commodity in a capitalist system. If gasoline were free we'd all drive too much -- we do so anyways, because gasoline is so cheap compared to incomes. The alternative is to ration by quantity - you can only have so much - a la Cuba or the old Soviet Union. Except in wartime and times of national emergency, democratic societies find that onerous. And people work out ways to work around the rationing system-- that's the economic objection to pricing things too low and rationing by quantity not price.

Water is a necessity but people in Gaza Strip, say, live on c. 100th the water per capita of an American. Even a relatively developed state like Israel it is something like 1/5th to 1/10th-- I'd have to check the exact numbers. So the necessary amount of water is quite small. The rest is a consequence of our lifestyles. If you have ever been in a water poor area when the western tourists move in, and Americans are notorious for this (but not alone), then the usage of water is shocking by the standards of the people who live there.

Las Vegas (Clark County?) has shown what can be done. I think the population doubled without an increase in total water consumption. Golf courses are watered (at night) and the water is recycled back into the reservoir-- Las Vegas gets a "draw" credit for putting water back into (?Lake Powell?). It's all down to one woman who took over as Water Commissioner in the 1980s and has driven it through, ever since.

There is the distributional issue -the incidence of the tax will fall on those with the least ability to pay, in the sense that a rich person might make 20x the income of a poor person, but not use 20x as much water. (In actual practice, during the most recent drought, CA was publishing the names and consumption of ratepayers in LA County, and there were some phenomenal usage - I don't know whether these people keep vineyards, or what, but single properties were using as much water as whole communities).

Charging for a low cost but essential item is probably not the best way of allocating it. Because the people who want to waste water likely have the financial resources to pay that extra cost and the people who can't afford to pay still need water.

I suspect this tax is about the fiscal straightjacket that California is in, courtesy of Prop 13, various voter-initiatives & legislative gridlock?
And not all water is "state or county owned". Some of us have our own wells and septic systems. We are not dependent on any municipality for our water.
Interesting and thank you. Our water (England and Wales) all comes from private companies. Even if you use a well, you pay water rates. On the other hand, water supply is often just calculated as a number per property, meters are relatively recent. When the state water company started charging people for water use, in Ireland, there were riots. But conversely the Irish water system is badly underinvested - sewer breaks every time it freezes, and they actually have droughts in Ireland (who knew?). Parts of England are actually arid, despite popular preconceptions parts are as dry as Portugal. The more recent weather patterns of extreme precipitation in winter and long summer dry periods are not well addressed by a system which relies on streams, rivers and groundwater recharge, not man made reservoirs.

It's a big mistake in hydrological terms to think that geologic (ground) water is ever "separate". The water under the surface comes from the same hydrologic system as the water in rivers and streams. It may be centuries old water that fell on the mountains but it's part of the same system. And each property does not have its own separate reservoir. Reduction in water supply, or contamination, affects the whole water supply, not just an individual property. If the water is fossilized (old) that's actually worse, because it almost certainly means it is not being replenished as fast as we can deplete it - we are robbing the future.

I recognize that the system of prior use (the water rights legal doctrine in western states, whereas eastern states follow riparian right) does not recognize this. But it's actually how the physical system works. In the end, how we treat water supply in our own minds does not change the physical realities of water.

The choices and challenges are not easy. Southern California has reached the present level of development due to phenomenally ambitious long range water supply systems which bring water from the north and inland, and even over watersheds. A system as ambitious in scope as those of ancient Iran (hundreds and even thousands of miles of underground tunnels, many still used) or Rome's aqueducts (never really rivalled until the 1700s in Europe).

Everybody who lives in southern California and uses water (ie 100%) is reliant on that system as much as they are on the highway system or the electricity grid. Even in the former cases if they don't commute via highway or use much electricity, its existence and functioning is what makes southern CA the success story it is - if your town ran out of water, you'd be Little House on the Prairie.

People think having a clean car is a right - -it's not. To be fair, apparently professional car washes in CA are now extremely water efficient, so it's more the home washer that is an issue.

Undoubtedly California is going to have to shed agricultural activity - the single largest user of water. Winter salad and fruit are just going to be more expensive for all Americans. Again prior use legal doctrine* makes this very difficult. And since the whole Colorado River system is overdrawn, even without reductions in future snowpack, California cannot escape the problems therein. In a fascinating story, CA was unusually privileged in the draw it was awarded (because it was more developed and more politically powerful then than NV, AZ etc.). But the draw was done on an absolute number of acre feet, using a reference period which, in retrospect, turned out to be extremely wet compared to the centuries- long record. It should have been done by percentage. As the upper Colorado River develops, the demands rise to above what's available - that's true even in a normal year, now, let alone a very dry one.

People are also going to have to get used to recycling their own water, municipally. Sewage water recycling systems are viscerally unappealing, but in places where they have been installed, they work - and provide higher quality water than agriculture-contaminated runoff water.

I've only read 4-5 books about western water, and a couple of Pacific Institute reports, but it's a fascinating area. How an extremely advanced society confronts fundamental physical limitations, and tries to overcome them. The closest analogy I can think of is Australia and the Murray-Darling River system which waters about 60% of the population, and also has a Federal system of government creating its own legal and political obstacles. As a pretty flat continent in the mid 30s latitudes, Australia just does not get a lot of rain or snow except in the tropics of the very north.

Since the dawn of civilization in the Near East, control and management of water supply has been a key piece of civilizations - the advanced development of the relatively water abundant Europe north of the Alps is a recent phenomenon in history - and those were the countries which then settled the new worlds, bringing somewhat laisser-faire attitudes to water and water consumption with them. Chinese history is all about control of water, as well.

Civilizations are made, and broken, by what they do about water supply.

* a colleague says it is called "first in use, first in right" at least further north.

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Re: Is California worth the premium?

Post by Dyloot » Sun Jan 20, 2019 8:24 am

Tunechi Polo wrote:
Sun Jan 20, 2019 6:24 am
I am originally from California (Bay Area) and am seriously considering moving back. My entire family lives there, and I find myself missing it on a regular basis.

I currently live out of state with a lower COL. I wouldn't need an "ideal" location like Santa Barbara, I feel there are just so many wonderful places there. I could be happy in the Sierra Nevada foothills, the Napa/Sonoma area, Sacramento area, or plenty of other places. I'll really need to weigh the financial aspect of it if/when the opportunity to re-locate to California arises.

I doubt I'll ever be able to purchase a home of my own. If I do it would be far in the future. But to answer your question, I feel California is definitely worth a premium.
I left Sonoma County for a few years in my twenties and felt the same as you. I lived in an amazing place (South Orange County, a paradise in itself), but, as you said, my friends and family were back home and I missed being home. I’ve been back a decade now and have never regretted it.

In response to the thread as whole:

I find many of the positives and negatives in this thread to be true. I’ve also spent time in communities in Oregon, Nevada, and Arizona and found no compelling reasons why i’d leave California. I love it here.

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Re: Is California worth the premium?

Post by KlangFool » Sun Jan 20, 2019 8:34 am

OP,

This is a personal finance forum. So, I would answer this question from a personal finance standpoint. I would not live in any place that I would struggle financially. And, from my own personal point of view, that means to live a good quality of life and save 1 year of current expense every year. So, in my personal point of view, unless I am paid well enough to meet my conditions. It is not worth it.

Someone else could adapt my condition to whatever threshold that meets their financial stress-free requirement.

For some folks, they consider their home equity in their VHCOL house as savings. I don't. To each its own. Just make sure that you could "Sleep Well At Night" (SWAN).

KlangFool

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Re: Is California worth the premium?

Post by fasteddie911 » Sun Jan 20, 2019 8:40 am

For me, being close to family is important, without that no HCOL area is worth it for me. I'd rather see them once a week and visit California a few times a year instead of living in a HCOL area and seeing them a few times a year.

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Re: Is California worth the premium?

Post by LadyGeek » Sun Jan 20, 2019 9:03 am

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