Nobody seems to be talking about it, but the cost of housing in California continues to be way too high, as it has been for at least three decades. This remains true even after the collapse of the “bubble.”
For example, take a look at the home depicted below as advertised in today’s real estate tabloid. It is located in Burbank, a middle class suburban community in the East San Fernando Valley, next to Los Angeles. It has two bedrooms, one bath, and an area of 708 square feet. The advertised price is $399,000.
In contrast, in North Carolina, in an equivalent or better suburb of Charlotte, like Waxhaw for example, four hundred grand can get you a new or nearly new 3000 square foot, four bedroom brick veneer house, with a three car garage for $300,000.
As for employment opportunities, Burbank is home to major film and TV studios (the once-famous local aircraft manufacturers like Lockheed moved East years ago), while Charlotte is the nation’s banking headquarters — some two dozen major banks are headquartered there, including the Bank of America which was once a California bank headquartered in San Francisco.
The weather may be nicer in California, but people have to live in homes, not the great outdoors. So moving from California to North Carolina, as many folks have done, is the functional equivalent of getting a large raise, since wages in California are not that much higher, and in the case of many jobs not higher at all. To say nothing of wages on the lower socio-economic rungs where locals face stiff competition from illegal aliens who are willing to work for peanuts.
What it means is that (apart from a few undesirable, foreclosure-ridden areas) there are no entry level homes that can be bought in California by a young family, certainly not with the new, higher down payment requirements. In the past, people may have been willing to go for the “subprime” gimmicks to buy an overpriced home whose ownership strained their resources, as long as market value of homes kept going up and their equities grew. But today, rational people are not willing to do that in the face of declining home values and shrinking home equities.