Its been this way for decades. Probably got to an extreme recently, but I'm not hopeful for living costs in coastal CA to go anywhere close to middle America levels. Look at Manhattan, same thing - a very expensive place to live, and is always so. The condition does appear to be sustainable.
Housing decline will help, but I'm not sure price decline will translate fully to lower cost of living. Suppose a $800K house drops to $480K (-40% drop). But cost of borrowing goes up, as lenders require down payments, eliminate teaser adjustables, push borrowers to higher rate based on underwriting, higher rates on jumbo loans, etc. Suppose interest rate rises from 4% to 6%. Monthly payment then decreases only -25%.
I think its basically because a lot more people want to live in SF, LA, San Diego than want to live in Wichita. For job, lifestyle, weather, etc reasons.
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Originally Posted by onewhippedpuppy
True, but when the wages aren't higher to compensate, is that a sustainable condition? While I'm sure it's not cheap overall, it seems that housing costs are the biggest difference between CA and much of America. This has been the opinion of friends who live in Orange Co and San Diego. It seems that this cycle is doomed to repeat itself until wages adjust upwards (doubtful), or cost of living adjusts downwards, especially housing. Really, lets face facts, it doesn't cost 6x as much to build a house in CA. This is an artificial condition, driven by demand and greed.
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