Is California going to implode? (San Jose, San Francisco: sales, to rent, house prices)

[markfromCA]

I have lived here all my life in the Bay Area and what I hear really worries me. What I see is a changing demographic and way of life. My question to all is what will California look like when we make it through this economic crisis? My wives family is in Denver Colorado and their life sure looks allot better from here. I know Colorado has it's own issues but when you stack the issues and problem side by side California has so Manny more. Jobs are hard to find everywhere now so that is pretty much a wash. I you lived in a nice home in a good school district and had a good job would you hold tight and hope for the best or take a chance at a better life somewhere else like Colorado? I am just not sure that the California that my kids will get is one that they want to live in? I would rather relocate now at 40 than at 55 when my kids are out college and realise that California in morally and literally bankrupt.

[jbunniii]

For me it's a question of balancing three things:

(1) availability and compensation of jobs in my field (tech/engineering)
(2) cost of living
(3) do I like where I live?

I would rank California (at least the Bay Area and SoCal) as very good for (1) and (3), and very poor for (2).

I'm not sure there is anywhere in the US that I would call "very good" for all three, so I'm staying here for now, partly because I think (2) will improve as house prices continue to decline.

I don't consider the state government's financial woes to be a major deciding factor either way. I suppose if they result in massively higher taxes or massively reduced services of things I like, then this will rise in priority. California has always had a boom-bust economy as far back as 1848, and I doubt that will ever change.

As for "moral bankruptcy" I suppose that is subjective. I wouldn't personally want to live in a place where the schools resist teaching evolution, or where people care one iota what religion (if any) you have, or where "intellectual" is considered an epithet, or where people care what other people do in their bedrooms. Those are things I consider morally bankrupt. Others will have very different views.

[mysticaltyger]

Originally Posted by markfromCA

I have lived here all my life in the Bay Area and what I hear really worries me. What I see is a changing demographic and way of life. My question to all is what will California look like when we make it through this economic crisis? My wives family is in Denver Colorado and their life sure looks allot better from here. I know Colorado has it's own issues but when you stack the issues and problem side by side California has so Manny more. Jobs are hard to find everywhere now so that is pretty much a wash. I you lived in a nice home in a good school district and had a good job would you hold tight and hope for the best or take a chance at a better life somewhere else like Colorado? I am just not sure that the California that my kids will get is one that they want to live in? I would rather relocate now at 40 than at 55 when my kids are out college and realise that California in morally and literally bankrupt.

I don't have any good answers for you. I do think the US is a sinking ship. But I think California will be the first part of the ship to be underwater.

I'm in the same situation as you. Comfortable in my job, etc (too comfortable, I think) But I'm thinking I'd better be proactive and get outta here while I can be proactive about it.

[Charles]

Selling in California now (to move to CO) is like selling a stock low. Prices in nice neighborhoods in Denver or Boulder (Highlands Ranch, Lone Tree, Parker, Castle Rock and especially Boulder) aren't that much cheaper than nice neighborhoods in California now - maybe $180-$200/sqft versus $120-$140/sqft. And California is trending lower.

Pluses for CO: less traffic, less ugly neighborhoods, cheaper
Pluses for CA: Weather, (family?)

[Charles]

Originally Posted by jbunniii

As for "moral bankruptcy" I suppose that is subjective. I wouldn't personally want to live in a place where the schools resist teaching evolution, or where people care one iota what religion (if any) you have, or where "intellectual" is considered an epithet, or where people care what other people do in their bedrooms. Those are things I consider morally bankrupt. Others will have very different views.

California is more tolerant and open minded - by necessity. Fewer phony baloneys hiding behind their bibles for example as there are more open minded progressive people who can see past the facade.

[EscapeCalifornia]

Originally Posted by Charles

Selling in California now (to move to CO) is like selling a stock low. Prices in nice neighborhoods in Denver or Boulder (Highlands Ranch, Lone Tree, Parker, Castle Rock and especially Boulder) aren't that much cheaper than nice neighborhoods in California now - maybe $180-$200/sqft versus $120-$140/sqft. And California is trending lower.

Pluses for CO: less traffic, less ugly neighborhoods, cheaper
Pluses for CA: Weather, (family?)

I'm still seeing closer to $275/sf for anything nice around here unless you want to spend 3 hours a day commuting from the IE. And if you're willing to take an older house near the areas you mention in Colorado (but still very nice neighborhoods with good school) I'm seeing prices closer to $100/sf. That's still a big price gap between CA and CO.

[18Montclair]

Originally Posted by markfromCA

I have lived here all my life in the Bay Area and what I hear really worries me. What I see is a changing demographic and way of life.

What's wrong with the Bay Area's changing demographic?

[jbunniii]

Originally Posted by Charles

Selling in California now (to move to CO) is like selling a stock low. Prices in nice neighborhoods in Denver or Boulder (Highlands Ranch, Lone Tree, Parker, Castle Rock and especially Boulder) aren't that much cheaper than nice neighborhoods in California now - maybe $180-$200/sqft versus $120-$140/sqft. And California is trending lower

This is highly dependent on where you are in California. The core Bay Area still has a long, long way to go. Here are median sale prices per square foot for the past three months for 3+ bedroom detached houses, according to Redfin. I deliberately chose cities at the lower end of desirability:

Fremont: $307/sq ft
Milpitas: $286/sq ft
Santa Clara: $372/sq ft
Sunnyvale: $452/sq ft
Redwood City: $475/sq ft
San Bruno: $394/sq ft
Daly City: $360/sq ft

Even East Palo Alto clocks in at $220/sq ft.

Salaries for, say, experienced engineers aren't THAT much lower in Colorado, but assuming your $120-140 figure, houses there cost 25% to 50% what they cost in or around Silicon Valley.

By the way, it's even worse if you look at "nice" neighborhoods:

Mountain View: $543/sq ft
Palo Alto: $752/sq ft
Los Altos: $670/sq ft
Cupertino: $559/sq ft
Los Gatos: $526/sq ft
San Mateo: $498/sq ft
San Francisco: $457/sq ft

Median in my ZIP in San Jose is $406/sq ft. My monthly rent for a 4-bedroom house is $1.28/sq ft. Rule of thumb I've always heard is don't pay more than 200x monthly rent, absolute maximum, if you want the fundamentals to make any sense, e.g., if you want to have any chance to rent it to a tenant such that the rent will cover most or all of the mortgage. By that measure, houses in my ZIP are at least 58% overvalued. And rents are falling.

[Charles]

Yeah, you guys are probably right. I was cherry picking a few homes off redfin. While I did see some sub $200/sqft, the average was closer to $250 - these are south Orange County.

The Colorado homes were definitely higher than $100, maybe $120/sqft (and those are list prices not sales prices). (Eyeballing my calculations from a few realtor.com listings - no redfin there.)

[bhcompy]

And those south OC numbers dont include the fact that property tax is effectively doubled by Mello Roos and HOAs are an added cost on top of that.

And the house we were going to buy in Parker CO(before the bank backed out of our contract) was 126/sqft not counting the finished, but not permitted basement and 93/sqft with it. Currently, it's listed on Zillow about 25k more than our contract amount(not a true measurement for sure, but it's something)

Also, interestingly enough, according to Redfin, the houses in my zip(Los Alamitos/Rossmoor) are listing for around 390, but selling for around 430/sqft.