Maybe we're on different pages here, but I fail to see how things "balance out" in SoCal when an average family home is $500k+, but the average family family doesn't make much more money than in KS. I know that's the price of admission, but it still just doesn't vibe. Until people can actually AFFORD to purchase suitable homes, I don't see how things balance.

I think he'll do quite well. Home prices in outlying areas have been decimated. If he's cash flowing, more power to him. I have no interest in being a landlord, however.

COMPLETELY DIFFERENT MARKET than I'm looking in. Coastal is slip sliding away. Price/rent far off historic norms. See no reason to say 'this time it's different'

Matt, shhhh.... the Californians need to believe their 'story.'

Repeat after me... "Californians have THE BEST of everything."

It's hard for me to explain well. Let's just say some areas will always be subject to supply and demand. And, if you think the average family in LA is making what they make in KS, you're wrong.

I have followed construction and labor prices for different regions. I think I can frame a house in KS for $10/ sq. ft. In CA that would be about $35. Part of that is code, part is a heavy insurance burden, but the rest is that the lowest paid guy on the crew gets $15. When I worked out of state I got less than half what they pay here.

Currently, I get $45/ hr against 300/ day. I doubt that will fly anywhere else except the high dollar cities.

Lots of tech folks have the opportunity to work over VPN. That worked out well for some of our guys who decided for whatever reason to relocate. Guys making SoCal wages while living in TN, TX, and SLC - hell they even had their home office expenses (internet, equipment) picked up by the company.

Milt, in rural central KS (where you can buy a livable house for $30k) you won't find a decent contractor/tradesman for less than $35/hr. I know because I spent a few years out there in construction and my father in law is a contractor. In Wichita I recently had to hire an HVAC guy to do some soldering on my A/C compressor, he billed at $90/hr (and he was cheap).

A friend of mine graduated with a construction science BS from K-State a few years ago. His best offer in KS was $52k. His best out-of-state offer was $56k in SoCal. He accepted the SoCal offer, and ended up buying a 1200 sq ft townhome for $435k (maybe $120k here). He's been trying to move for over a year, and is stuck for obvious reasons. Similarly, I could have made $8-10k more in SoCal when I graduated. No thanks.

I've said it before, I'd rather be comfortable in KS than poor in SoCal. Obviously that's everyone's individual choice. Personally I enjoy the opportunity to raise my family in a nice house in a nice neighborhood, own paid-for vehicles, not be laden with debt, and allow my wife to stay home with the kids. No way I could do that in SoCal.

+1

We don't want all of the left coast folks coming back to the "fly over states." Let them believe California is the place to be.

A friend of mine is a retired federal judge. He worked in San Diego for 30 years. He sold a modest home out there that he bought back when prices were not crazy. He lives on a several acre parcel of land that backs up to a creek. It is a 5,000 square foot house with a 4 car garage. He has a constant flow of wildlife in his back yard. He sold the place in California and still had a lot of cash left over when he bought the local house.

I find that hard to believe. 35/hr in rural KS? It's not to debate, you're there, I'm not.

I can buy into being comfortable anywhere rather than being poor somewhere else. I think that's a commonly respected theme. I just know that I worked as a job site superintendent on residential in 2 other states and made less than half. And, I worked with tools at the same time, no dead weight. I checked AZ at the time and it wasn't any better unless you were in the metropolitan areas.

I'll stand by my theory that wages are higher in more expensive areas when living outside the area is basically impossible. An example of that is Santa Barbara. It is ridiculous to buy a home there; one of the most expensive places in CA. But, most of the workers bees commute from other less expensive cities. Just try to get in there at 8 in the morning to see what I mean. As a consequence, they pay little more for all the usual home services than their counterparts in the better parts of L.A.

Now, go down to AL (a state where I spent a year working) and you can get a 1/2 acre of grass cut for 50 bucks and they bring the mower! When I left CA in '93 everyone in the trades was making 200/ day. I got to AL and got 15/hr. tops. And I had more and better tools than anyone for miles around.

BTW, never compare trades like plumbers, HVAC and electricians in service trucks to carpenters, drywallers, painters, roofers, concrete finishers, plasterers, carpet layers, etc. They tend to bill themselves out a a higher rate. As more and more independents move into those 3 trades, the prices will soften. I wouldn't pay 90/hr to 3 AC guys.

And I don't. The last one that tried to play me for a fool never got a dime. I did it myself and showed him the costs and time when finished to drive the point home with him. He can go fvk someone else, not me. but, I digress.

What Jeff keeps sniveling about is the fact that a young family is expected (or were) to pay 4 to 6k a month for a house to raise a family in a lot of urban CA. That would be in modest areas and require a huge down payment which is hard to accumulate when rents are sky high. I've never disagreed with him on this. I've only said that houses are expensive where people want to live and therefore wages tend to be somewhat higher, which is what I referred to as "balance." Not really much of a balance at all, as you point out.

What is it? 50% of the entire nation's population lives within 60 miles of an ocean or major water? I'm guessing, but it's a staggering figure.

speaking of market forces...

I certainly like being in California. Though, with all the wealth and taxes there, it is mind-boggling how they can possibly not have enough money to run the place.

I suppose that Market forces are finally catching up. ...Too many dollars promised to too many govt people and programs. Madoff went to jail for similar.

The upkeep of the complex and aging infrastructure is pretty incomprehensible. You know, at one time they wanted to landscape, water and maintain 1000's of miles of freeways and highways. That's just one tiny example of how things become unmanageable.

One thing ol' Ahnold did in the beginning was to consolidate dozens of state agencies. We have had a commission and board and bureau for everything imaginable from horse racing to fingernail filing. There are literally 1000's of state employees paid to do nothing but stick their nose in. When it comes to regulating nail parlors, I think the cities and counties can do this thru their own health depts that oversee restaurants, etc. It's not like these people can move around like a contractor does.

They need fees and taxes to feed all of this. The list goes on and on an there is way too much redundancy. We can thank the politicians for all of this. The number of bills written to control the smallest activity every session is just overwhelming. We get whiff of a little problem in some valley and they want a state wide law. Fortunately, a lot of it doesn't fly these days.

Median Income in San Diego, 2007: $61,863
Median House Price, 2007: $558,100

Median Income in Houston, 2007: $40,856
Median House Price, 2007: $124,100

Look at the difference in Median housing. I live in a very nice neighborhood, professionals, business types, etc. My house is in the middle to low end at $380K. This puts me about 3 times the median value of a house in Houston.

I suspect that a 'similar' level/neighborhood house in San Diego would be 3 times the median, or about $1.5M. Would I have 3 times the salary or 3 times the income in San Diego? Not a chance.

As a professional, I can't afford $1.5M.

Well, as you and I both know, the CA housing pricing structure was not built on or for 1st time buyers. You would have had to roll your profits over w/o taking money out for each move up. Just the taxes alone on a 1.5m house would dent your professional salary while giving you a bit of a deduction. All factors need to be considered.

I don't think I know of anyone in even a starter house that didn't get some financial help going in. I know my stepson got about 30K in help from other family to get out of his apt and get into a 400K+ house. It really is the land of the privileged in that manner.

Oh, but he "moved up" and is now upside down. I'm glad he didn't re-fi within the last 18 mos. of he'd be walking away. I'd guess he's lost 200-250k and that my friends is more than his loan even with the rolling over. My actual equity is half. That was my retirement. I've played it conservatively never taking a dime out. Good thing.

Milt, the issue is that the price is not equal to the value. The Prices were and still are crazy. The prices should be 1.5 or 2 times what we're paying here. There is no reason for them to be 4 times Houston.

Manhattan? I can understand. San Diego? No.

Manhatten is landlocked, you're right. SD has some of the best weather in the world and the coast line is not infinite. All I've maintained is supply and demand. I'm not sure I can justify it any more than that. I've just always believed that people have run SoCal over to get here and started a fury. What do I know? I was born here, that's all.

I do remember some different times and house prices. Just after WWII, my parents bought a 2 bed, 1 bath that was less than 10 years old for 11K. They sold it for 30K about 16 years later. I bought a 3 bed, 1.5 bath in '74 for 35K. My ex wife sold it for 385K 13 years later. Big difference in the appreciation from the earlier period. It went down to 250K and up to 700K in this last run.

Things in terms of run away costs are pale in comparison today than that run up of a 10x factor in the 80's.

$400k......starter house. $400k......starter house. Wow.

By the way, here's $400k in Wichita.

http://sckmls.fnismls.com/Paragon/Li...KMLS247813.jpg

6 br, 4.5 bath, on a golf course in a great neighborhood.

http://www.weigand.idxco.com/idx/3929/details.php?idxID=075&listingID=247813

For comparison sake, median house cost in Wichita is about $157k, median income about $40k. Those two vibe pretty well. I think THAT is key to balance in your housing market.

I can't wait to get back to the US. Shanghai is both dirt cheap and ridiculously expensive at the same time.

If you want to do anything remotely fun and eat anything BUT local Chinese food, it's going to cost you big time.

Basic supply and demand. Of course houses are cheaper where people would rather not live.

Demand is WAY down, in CA.

What's worse than the housing price, are all of the taxes. They are not sustainable. Sure, if you bought your house decades ago, you property taxes are likely manageable. But if you are a smart young professional, California is NOT the place to go. The on-going crazy-taxes are no longer a 'gotcha' that people discover post purchase. Young people are ever increasingly choosing to stay away from CA. Certainly, some will be lured by all of the current resources and potential buyers; but, that is not the trend.

California needs to do what the governator said (to get elected) ... so while the people of California apparently know what needs to happen, the giant CA govt won't have any part of it. ...and this is what happens when the 'balance' of power leaves the people and is owned by the big(gest) business of big govt. (and big govt programs)

I think CA voters are a good part of the problem. They do not seem to take the budget crisis very seriously.

I have about 20 close friends in CA, all educated and successful types, and not a one of them expects the state's financial crisis to affect them personally, not enough to make their top 10 or even top 30 concerns. One of them, a highly educated, well-informed and pragmatic person, ticked it off on his fingers for me. "Kids go to private school. Don't go to the library. Don't commute on the freeways. The govt services I use are all local. My employment isn't tied to the state. etc".

Then there are the zillions of CA voters who don't know anything about anything. Not only are they incapable of assessing a very complex problem, but over the decades ago they approved or tolerated changes to state govt (prop 13, supermajority budget vote, gerrymandered legislative districts, etc) that make it almost impossible for the intelligent, well-intentioned politicians (there are some) to fix the problem.

The state's problems are structural, not just economic, and won't be fixed until enough people feel enough pain.

I still think that the real estate prices in greater CA are silly. Compared to the rest of the country (except FL and maybe AZ) it still seems like CA real estate prices are a bubble. In FL the bubble has popped, but CA still seems awfully high. And what do you get for those outrageous prices? A long slow commute in a smoggy valley? Postage stamped sized lots? High taxes? Brown-outs? Earthquakes? Forrest Fires? Mud slides? "Have a nice day!"???

Can you tell I'm a hopeless New Englander??? ahh-yut!