Cashing out, leaving California

Good morning again. The L.A. Times covers a topic that has generated endless discussion here (hello, Arkansas): Californians who cash out, sell the house, and discover their Cali-cash goes a long way in other housing markets.

Broker Neil Klemow said he is seeing more California baby boomers purchase rural properties out of state. "The real estate market in Southern California has been so ripe with appreciation for so long, that sellers want to take advantage of their equity and reinvest in a home at half the cost with double the value in land and amenities."

More: "'It seems to me most are going to Palm Springs, Austin, Texas, or North and South Carolina and buying new homes in new developments, or on golf courses, where you get terrific homes for a pittance compared to Los Angeles prices,' said Linda Zimmerman, a broker in Studio City."

We hesitate to ask your thoughts on this, as we've heard so many. (Yes, Arkansas, we know about the big house on a lake and the horses and the golf course). Let's frame it this way: If you owned a house outright in LA, and were sitting on a pile of equity, would you stay or take the money and go? And if you would go, where to?

Comments

[CD]

Up North,Oregon, Washington state, any university town where there is a life of the mind and youth. Palm Springs !!!!That is typical realtor BS, the population in Riverside will double in 10 years( where will the water and energy come from?) The builders did not exactly worry about conservation or solar here, the 10 freeway is chaos. All the drugs comes down the 10 from Arizona, en route to Los Angeles where the buyers are. Desert hot Springs is crime ridden and crime is starting to get in the "more expensive near by area"
Why do you quote realtors as a source of information? By now we all know : better ask Satan !!!!Lets do our own homework.

[Jack]

I've just done this. I bought my SoCal house in 1997. I never refinanced and paid the mortgage down to about $40K, so I was sitting on a pile of equity. I put the house on the market in June, closed in July, and took my loot to an East Coast state, where I bought twice the house as in LA at half the price. I had an eighth of an acre in LA. I have ten acres here.

The reason I did this, however, had less to do about cashing out and more about quality of life. I was tired of the LA grind, the increasing crime and congestion, the ugly sprawl. I miss some of LA but not all of LA.

[jemarqu]

I would take the money and run. I would love to get a nice ranch in Montana. Clean air and big sky seems nice right now.

[Barbara from Chicago...and Cleveland...and Bloomington...and Madison...and Birmingham/Royal Oak]

On water in the Midwest--yes, there is water, even beyond the Great Lakes and the Mississippi and Ohio rivers. People are mentally stable, with solid values. And there is that wonderful range of weather and seasons that let you know you are finite and life is passing quickly.

[Jax]

I cashed out of my home in San Diego in the spring of 05 and moved to South Carolina. We lived in San Diego for 30 years. WE bought a 2600 sq/ ft brick home on 2/3 acre with taxes of only $1700 per year for $250k. (and the tax structure just changed and they will be less than $1k) The weather is hotter and more humid in the summer months but the rest of the year has really decent weather. There is no lack of services that we had in CA and although I do miss the coastal weather where we used to live, I wouldn't change a thing if I had it to do over again. When the SoCal housing market finally falls 40-50%, I may move back to one of the coastal communties but until then, life is not bad in SC.

[caliguy2699]

It would be tough not to cash out - a hard decision, considering I grew up in Southern California and except for college (went to school in the Northeast) I've lived here all my life.

When you consider factors like ridiculous prices here in SoCal, coupled with awful traffic, overcrowding and bad air quality (plus bad summer heatwaves, haha) other parts of the country where you can get at least double for your money start sounding real good. One thing to consider is how important it is for you to live close to your family, and where they are living.

As far as where to go, there are plenty of nice places I've visited where your money goes much further than here - Atlanta, Cincinnati, Louisville, Kansas City and Nashville metro areas, plus states like North and South Carolina and parts of Arizona and Nevada to name a few.

Bottom line, I'm a believer in the theory that says no matter where you decide to live, your level of happiness will be about the same. The question is whether or not you think it's worth it to live in a great place like Southern California after factoring in its positives and negatives.

[nopoliticiansallowed]

GOVENATOR:

“I have been working closely with GB , and the FB homeowners behind in payments and things in Callifornia. Many of yous have told me ‘noway dude!’ to assist the speculators and such. I agree. Therefore, I am implementing stateoffaults Lieonceshameonyou Order #86, which will set up a toll free hot line for yous to report any person you see….who are known speculators and liar loans users…. and things, and who are trying to get free bailout monies….and I will personally Terminate their activities and such….. in my spare time….and with one hand. End of problem…..and they won’t be back………hahahahahahahahahahaha”

PRESS: What else do you plan to do to help Cally FB’s?

GOVENATOR: “ I also will be implementing stateoffaults pricesonlygoupincally Order#13 which automatically add $500,000 to ALL home values in Cally…..then they can all continue to use their homes as ATMs and such…..and Cally economy will boom”

PRESS: Brilliant Governator……just f$&@#%* brilliant!

[Kathy]

For some people, it may be too late. I have relatives living in an inherited house in the Valley, bought back in the 50's, but they're afraid to sell it, or rather price it low enough to sell without ticking off long time neighbors; some of them are counting on their presumed equity to at least partially fund their retirement, like the people in the story today. Those people got out just in time, or so it seems.

[m]

I've lived in a few other states and hated it. If you leave CA, you more than likely will end up coming back. But I hope more people leave. More for me!

[investorguy]

At least a half dozen of our friends are in the process of doing just this. They're going all over the country, mostly to be near family in the Carolinas, Texas, Tennessee, Georgia.

[somedude]

Leave Cal and abandon this multicultural paradise to be surrounded by red state neanderthals? No way. It's worth putting up with the endless congestion, pollution, graffiti and ever rising taxes just to be surrounded by all these wonderful persons of color who've come here to make a better life for themselves. It's fun watching the US come apart at the seams, and "living" in L.A. gives me a front row seat. Pass the popcorn.

[Giacomo]

We put our Pasadena house (bought '94) up for sale in '05; it was more because we were fed up with the congestion and lack of civility than from any profit motive - the inflated prices just made the decision an easy one.
We've moved to a rural part of Northern California, and are leasing while we watch prices fall. We miss seeing our family and old friends (though we visit every few months), but there really isn't anything else about the L.A. area that was hard to give up. We look back at all the conspicuous consumption, the traffic, the noise, the threat of crime, and the overwhelming influence of the "undocumented" population...and we wonder why we took soon long to make the move.
My advice to anyone still there; if you are beginning to dislike where you live now, count on it getting worse. Sell if you can, and don't be greedy about the price - time is short.

[LA Expat in Arkansas]

Peter, I never said anything about a golf course ;-)

Listen up all you equity-rich Californian's - Buy my 5 acre ranch, w/ mountain view, pool and stables. Check out http://www.sharpmls.com/110899. Only $399k, and just outside of Little Rock. Such a deal! BTW we are a Blue State. Remember Bill & Hillary - they're from Little Rock. Arkansas is a Democratic hold-out.

Where am I going? Cambodia to teach English. I need a break from Bush, et al. And didn't I just read SoCal is having record breaking heat and and earthquake. Tsk. Tsk. Wish I was there...

[Sam]

Bailed 14 years ago for CO and never looked back. I was a CA native and it was best move we ever made. You could not pay me to go back and it goes beyond the cost of RE. If you are considering leaving do it. Read the book California Escape Manual it may inspire you. If you are not happy in CA take action because it will only get worse.

[SoldandleftCali2005]

I sold my home in Castaic in February of 2006 and moved to Dallas. I really enjoyed our home in Castaic, but after two years it had risen in "value" from $289,000 to $530,000 (the price of the home that sold before ours). I started to look around and realized these prices couldn't be sustained, taxes were going up, and crime was back on the rise. If I couldn't see myself paying $530,000 for a house in our area I figured more people were going to come to the same conclusion. So I pulled my chips off the table, listed the home for $520,000 in order to sell quick, and moved on down the road. Now I have a home 3x's the size, 20 year newer home, a tax bill less than half, and a new pool installed in case I miss the water to much. All for $224,000. I don't miss the taxes, the congestion, the self loathing or the hypocrites. I do miss Yosemite though...

[Teresa Rothaar]

I've talked about this before. My husband and I sold his condo in 2004. We first moved to Jacksonville, Florida--BIG mistake. Racists and fundies all over the place, coupled with jobs that involved malls, call centers or car lots and paid $12.00/hour or less. The cost of living there was low, but NOT low enough to make it on 12 bucks an hour.

We lasted 17 months before fleeing up the 95 to the Philadelphia suburbs. Our mistake was not leaving L.A., but in not moving here when we first left. Things started getting better for us as soon as we left Florida. We have a modest home, with a small yard, that would cost at least $400k to $450k in L.A. Our expenses are low enough that I was able to return to college full-time, and I expect to get my degree in two years.

Philadelphia is a large city that boasts all of the things L.A. has, including fine restaurants, museums and cultural diversity. I walk across the campus at Temple University and hear five different languages being spoken along the way. Philly is struggling with a gang problem right now...but it's not like L.A. doesn't have the same problem.

The real estate market here is stable. There is no bubble here because we didn't have the maniacal run-up in home prices that struck Cali, Florida and other coastal states. Plus, because it doesn't cost half a mil to buy a house here, nowhere near as many buyers took out exploding ARM's.

I agree with Jax. I would love to return to Cali when I complete my degree, but unless prices fall 40% to 50%, Philly continues to look really good. We are NOT moving back there and paying half a mil to live in a house that's no better than what we bought here for $78k.

[Stuart]

I did this - cashed out my house in Manhattan Beach for nearly twice what I had paid for it some 5 years before, used the money to start a computer company.

That was 1975. Computer company did ok until someone on staff embezzled all the money a couple years later. In 1980 I moved to the foothills of N. Calif. to enjoy big sky, big trees, big house with lotsa uninhabited space surrounding.

Recently I noticed the same house in MB was on the market for 1.6 million. I had sold it for $88K. No regrets, however. Hated having to cleaning the darn pool all the time. Life has been much more interesting this way... as it should be.

[Mr. S]

Hey Peter, why the slam on Arkansas? I'd be happy to host you or one of your Times reporters for a weekend and show you around! I grew up in Socal, went to USC, worked for a downtown LA bank for ten years (where I rode the Blue Line 2 hours every day beginning the first day it opened).

I took a job in Northwest Arkansas last year. Today, I really love the 10 minute commute to my office, my new 4200 sq foot luxury home on a 3 acre lot filled with oak trees and wildlife (we see Eagles nesting in the trees) in a neighborhood full of the same - for less than $500K. Yes, there are even a TON of Trojans living here (I haven't met any Bruins yet). NWA reminds me of growing up in Orange County in the 60's and 70's. There is true economic opportunity in NWA thanks to its economic vitality, central location and easy access to the world via the airport (XNA) and its direct flights to the cosmos - LA, SFO, NYC, Washington DC, etc.

NWA has 95% of what I like (great local restaurants, plenty of nice stores, a cool art & music scene, fantastic college sports, great roads for riding my motorcycle and driving my sports car), and avoids 95% of what I don't (24-rush hour, crime, aggression, aging infrastructure, Paris Hilton).

O.K., Corvettes & Harleys outnumber Porsches & Ferrarris 200:1, but that's part of the area's charm.

Sure, I really do miss my friends and family, and the (sometimes) mediterranian climate of SoCal. And, I confess I secretly lust for a home in the hills above Newport Coast. If the real estate crash takes beachfront down to 1983 prices.... then I'll be back!

[brettdl]

We sold our Upland house in 2006, which we had bought in 2000. We moved to Chicago for a business opportunity and have kept the equity in savings since. If things work out, we'll buy in a couple years in the Midwest. If not, we might go back West after the shakeout is done. We would have sold in 2005, when we perceived the market had peaked, but my we had our second child that year and held on for one more.

[Liz]

I'm a third generation Californian. I can't stand what California has become - too many jerky people in too little space. You can't even escape up to the Central Coast (where I'm from) anymore because it it too expensive and overrun as well.

I bought in the Hollywood Hills in 2000 and cashed out in 2005. My husband (also a native Californian) and I have moved "down under". Dealing with immigration and adjusting to a new country has been a lot of work, but we love it.

We haven't bought yet but intend to do so in the next year. We will be able to buy an incredible piece of property for cash and we are only 40ish. I am also semi-retired thanks to the money from my house - a long way from practicing law in the LA hellhole.

California is a great place to visit . We go back twice a year to see friends and family. However, on our last visit, a couple deliberately rammed our car and tried (unsuccessfully) to pull an insurance scam on us, which didn't exactly make us miss home.

I think people don't realize how hard every day life is in California with the expense, traffic, crime and pollution as well as the general *sshol*n*ss. It doesn't have to be that way - take the money and run.

[srla]

I do what I have done, stay, rent, and invest my cash in assets that have better short-term prospects and long-term track records of appreciation than real estate. (Which, right now, describes everything from treasuries to certain stocks and funds.) Of course, I work here, so it's not like I want to pack it in for a farmhouse in NC.

[Kathryn]

It's not just baby boomers. I can't tell you how many times at work my co-workers start talking about leaving California and visit sites like Realtor.com looking at all the fantastic homes in other states. Many people have enough equity in their homes, that in another state, they could afford to buy a home outright and not even have to finance it. That's a huge draw for middle class workers struggling to pay morgages for tiny homes they don't really like anyways, with long commutes, crappy schools, and increasing crime.

With all the hype about the subprime mess, there hasn't been a lot of attention paid to how many of middle class people are leaving SoCal because they're priced out of real estate. I think that's affecting housing sales just as much as the subprime fall out.

[Martin]

I thought about "cashing out" in March, 2006. Within a couple of days, I calculated my 27 years of equity build-up amd. realized I could take the money and run (in a very expensive car) and buy (a terrific home) in another city. But I hesitated. Why?

The least imortant reason was career. The next one was proximity to everything that defines a major international city in terms of arts, beaches and driving access to literally dozens of nearby, but very different locations..

The more important reason is likely shared by the majority of long-term homeowners in the Greater Los Angeles area: family. This includes serving as a mentor to the younger generation after mine ...a major source of support to the elder generation before me ... and a peer best friend to family in my age group. They're all in Southern California. I wouldn't trade those roles no matter how congested traffic is or how foul the air may be. When it's time for the generation after me to buy their overpriced first homes, you can be sure I'll be on hand to give them all a hand too. Quality, you see, is not always an issue of location. It's about the things that matter most. And, truthfully, it's all here .... in Southern California.

[Martin]

I still own a 3 bedroom condo in Lake Forest, but in June I took a job in eastern North Carolina (Rocky Mount). We are able to afford renting a 22 acre country estate (complete with 3 acre pond and in ground pool with a groundskeeper included)
The weather is great, just a few bad days, and you can still go to the beach. (sorry Arkansas)
While shopping for homes here it is amazing what you can get. Its the good life, and i am getting serious about making the switch for good.

[george]

A small voice from someone who doesn't own real estate

I am software developer with six figure salary and am in process of moving to Utah as I am not sitting pretty here

If people who have houses here feel the need to cash/move out, what do you think the rest of us think

We have no chance in hell to own real estate in CA

Not to whine but I don't have 5-10 years to spare while markets correct themselves