When people you know can't afford the Bay Area any more, where do they move to? (San Diego: hotels, buying a house)

[ScottJP]

No, I'm rather literally going to be priced out, at least at the rate that I see coming. I'm not too worried about getting a job in at least a couple of the places I'm interested in... the problem is, of course, obvious. The places you want to go cost too much, the places you don't want to go are the bargain. I actually don't want to move east of the Rockies either, but that's where the relative bargains are. But then again I never much understood the fascination with places like Boise, ID either. I think if I were moving in that area I'd rather live in Spokane.

[JohnSoCal]

Originally Posted by SunDevil1212

State income tax is zero in Washington compared to 9.3% here. You seem to downplay that difference, but its a big deal. For someone making $100k, that's $9300 in income - an extra $775 per month you could put towards a mortgage.

I personally don't understand why people would move inland to the central or Sacramento Valley. Same high cost of living (relative to outside of CA - not the Bay Area, obviously), same insanely high state income tax - but without the thrill of living on the coast/Bay and within one of the many great climates and cities that surround it. Might as well leave California at that point, in my opinion.

But, I'm not a native Californian, so I might not have the same attachment to staying in California as others would.

The state income tax on $100K is NOT $9300. It is much less than that. For a single person taking the standard deduction, the tax is $6550. For a married couple filing a joint return, the tax is $3871. The 9.3% tax rate is the marginal rate, not the effective rate.

You can check it out using the tax calculator.

[Ultrarunner]

Originally Posted by ruckerz

prop 13 essentially unlocks property taxes from market volatility. the fact that your property taxes are not linked to market value acts in favor of (long time) homeowners who bought their houses long ago..

The unfortunate side effect (and one of the reasons of high cost of living) is low housing supply as most people don't want to reset to a higher property tax rate and continue to live in their homes as long as possible.

A retired Homeowner can sell and move to a less expensive home and take their Prop 13 with them... so no reason to hang on when you can keep Prop 13.

[ruckerz]

Originally Posted by Ultrarunner

A retired Homeowner can sell and move to a less expensive home and take their Prop 13 with them... so no reason to hang on when you can keep Prop 13.

Point taken. However this is limited to moving within the county (prop 60) after the age of 55 (not necessarily retired). (The exception is prop 90 but youre at the mercy of the county on whether youre allowed to) As prop 13 was passed in 1978 I'm not convinced enough time has passed to see if people are really selling their homes and moving outside of their counties. This further exacerbates the limited home supply in many counties of the Bay Area.

However back to my original argument that prop 13 adds a tremendous value to existing home owners. Your tax rate is limited to at most 2% increase based on the value of the property at the time of transfer (rather than the market value). This is often neglected when people talk about taxes and income in California.

[Discover San Francisco]

More and More people are moving from the Bay Area to Reno, NV (No State Tax, Buying a house and Renting are less expensive)

[Ruth4Truth]

Originally Posted by Discover San Francisco

More and More people are moving from the Bay Area to Reno, NV (No State Tax, Buying a house and Renting are less expensive)

That's fine if you don't mind living in the middle of nowhere, with very little water or greenery, and insufferable heat in the summers. Oh boy.

[bmw335xi]

I would hate living in Reno. I guess you are near Lake Tahoe, but still. There are so many other cities in the US that are more pleasant with better economies.

[mysticaltyger]

Originally Posted by SunDevil1212

State income tax is zero in Washington compared to 9.3% here. You seem to downplay that difference, but its a big deal. For someone making $100k, that's $9300 in income - an extra $775 per month you could put towards a mortgage.

Your calculation is incorrect. That 9.3% rate is a marginal rate. The first few thousand dollars you earn are not taxed at all. Above that they are taxed at lower rates. I don't remember at what income level the 9.3% rate rate kicks in...I think it's around $40,000.

However, I mostly agree with the 2nd part of your post. With the exception of Sacramento, the Central Valley isn't a great place to live. Sac. is decent, but still somewhat overpriced for what you're getting.

[mysticaltyger]

Originally Posted by Ruth4Truth

A roommate in a 1-br. place or a studio??

It's called renting a room in someone's house. Definitely not fun if you have your own place, but possible.

You are sort of right though...If I am priced out of my studio apartment, I know it's time for me to leave...No way am I going back to having roommates.

[Ultrarunner]

Originally Posted by ruckerz

Point taken. However this is limited to moving within the county (prop 60) after the age of 55 (not necessarily retired). (The exception is prop 90 but youre at the mercy of the county on whether youre allowed to) As prop 13 was passed in 1978 I'm not convinced enough time has passed to see if people are really selling their homes and moving outside of their counties. This further exacerbates the limited home supply in many counties of the Bay Area.

However back to my original argument that prop 13 adds a tremendous value to existing home owners. Your tax rate is limited to at most 2% increase based on the value of the property at the time of transfer (rather than the market value). This is often neglected when people talk about taxes and income in California.

True... each transaction stands on it own...

Assessments are no longer based on the Assessor's opinion of value or subject to one person with more money than sense paying an exorbitant price for a neighborhood home and raising every one's assessed value.

I was not old enough to have voted for Prop 13 at the time it became law... I am thankful each day that it did pass because it brings some predictability to property taxes and requires voter approval for new ones... and in the case of school construction and infrastructure the threshold has been reduced to 55%.

Even with Prop 13... a lot of folks I work with move out of State when they retire... just last year one to Austin and two to Oregon and another to Arizona... they all have family living in the area.