17 thoughts on “Death-Spiral States

  1. Godzilla

    The whole article makes no sense to me. Property taxes aren’t the only factor influencing property value. Environment, crime level, access to services are much more important factors. I still think it makes more sense to lease rather than sell a house. Especially given that housing prices have gone down since 2008 and still haven’t recovered. But they will. It may take a decade but it will happen.

  2. Barbara Skolaut

    It’s California. It ain’t gonna get any better, and will surely get much worse. If you can get a decent price, sell!

    1. Thales

      With all the urgency of a scream queen, Barbara warns them to “Get out…while you still can!”, but the Blob is spreading. You can run, but…

      1. Brock

        You’re long CA real estate with a variable mortgage? Dude, you are SCREWED if you hang on. Do you have any idea what will happen to mortgage rates if Bernanke successfully re-inflates the economy? Remember that the Fed rate tracks inflation minus a few points.

  3. Leland

    Austin is booming. I visited in October and there was lots of new development. It is still weird, but that’s probably perfect for California transplants. Just can’t fit the entire population of California in Austin, unless it grows north to Waco. I say north, because San Antonio is like San Diego, too many military types for the Northern SoCals and NoCals.

    1. Godzilla

      It makes sense. In Austin there are no state taxes and there is a high tech environment with lots of businesses in the area. If I ever moved to the US it would either be to California, Austin Texas, Raleigh North Carolina, or one of the more arid states where wages are low but living costs are lower.
      However things would be different for Rand since he’s in the aerospace business. The hubs of activity are somewhat different since for large scale manufacturing you are more interested in places with lower land value costs or access to bulk transportation by barge or rail. Since he’s married the optimum place to be may change again depending on what his spouse does for a living.

  4. Daver

    The rental prices in our area of CA have been climbing, which might mean that other people are thinking the same as you (I certainly am, but there’s no point in trying to convince my wife to sell).

    California is likely going to end up bimodal–lots of rich, lots of poor, very few in between. I expect that houses in preferred areas are going to retain or even increase their value, house values elsewhere will collapse. My guess is that my house isn’t in a good enough area. Maybe I’ll have paid off the mortgage before its value goes to zero, which ought to make the bank happy.

      1. DaveP.

        Sir, genius lies in leaving the party before it gets to be too late. By the time you notice your values decreasing, it’ll be too late to punch out.
        Don’t ask yourself if things are getting worse, ask yourself if there’s any possibility if things getting any better…

        1. Rand Simberg Post author

          I agree. Every bubble is a matter of timing. I think that the coast will be the last to go. You said yourself that preferred areas would be OK, at least for a while.

          We have to hold on for another couple of years (actually, a little less, for reasons I don’t want to go into), but I think we’ll be able to do that.

        2. Daver

          Things don’t have to get better, depending on the neighborhood. If the cut-off line for how rich you have to be to be able to afford to live in the area is low enough, Rand’s house may continue to appreciate in value.

  5. Alan K. Henderson

    Any theories on Alabama and Mississipi being in the top ranks? Someone asked that at Althouse comments, but only one person (me) offered a theory: widespread poverty, as signified by a lack of booming commercial centers. YoungHegelian says this isn’t true of AL:

    I don’t think that’s been true for a while, at least in Alabama. Huntsville, now the second largest city in Alabama, has been a thriving technology center since the Apollo space program days. It has one of the highest percentage of PhDs per capita of any city in the US.

    Birmingham has had some troubled times as the steel industry shrank, but it has a thriving medical center. And, they’re still bringing ships into port in Mobile.

    Alabama’s commodity crops (soybeans, cotton, and corn) have all done well, with the exception on some drought years.

    I do know of one particularly municipality in AL – Prichard, AL defaulted on its pensions in 2010.

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