Why Millennials are stuck living at home with parents: The impact on first time home buying, renting, and the 2015 housing market. Big jump in foreign EB-5 visas.

The Federal Reserve conducted a study on Millennials and tried to ascertain why so many of them are living at home. Is it too much student debt? Lower incomes? Or is it that home prices are simply unaffordable? The study finds that all of these factors have a big impact on why many Millennials are living at home and why the first time home buyer market is performing so badly. It also gives us insight into the shifting building demand of new construction. Many builders are focusing their energies on multi-unit structures to cater to an audience that will look for rentals or lower priced condos. There is a heavy renting trend undertaking this country. We are seeing a record numbers of young people living at home with mom and dad heading directly back into their childhood rooms to rock out the NES and attempting to pass Super Mario Brothers once again. There are major implications for housing because of this new structural change. First time home buying is down dramatically. Construction is catering to a lower income cohort. Let us look at what the Fed found in their report.

The massive number of young adults living at home

One of the interesting findings is that the trend of young adults living at home has continued on an upward slope going all the way back to 1999. Even the toxic mortgage days of Housing Bubble 1.0 didn’t really shift this figure by much. But the homeownership rate increased which means that the push came from older cohorts or young buyers that had the misfortune of buying near the top (and of course many were burned in epic fashion).

So let us look at the findings:

living at home

Nearly half of those 25 years of age are living at home with parents. The rate is up to 30 percent for those 30 years of age. These are dramatic increases from 1999. There has been paltry data on the makeup of housing composition because some were saying that many were shacking up with roommates. That does not appear to be the case:

living with parents

If you were placing a bet, you would be in a good position putting your money on those 25 years of age living at home with parents. The first time home buyer market continues to perform pathetically. Of course, with investors pulling back we now have the FHFA trying to push for 3 percent down payment loans to get the juices flowing again. We are already at 5 percent down payments so this move to 3 percent will likely offer minimal help for younger Americans.

One of the better graphs from the Fed report is the combination of all these factors into one spot:

Fed Housing Report

The homeownership rate of the 30 year old cohort has tanked starting in 2007 with the market implosion. That is very clearly illustrated by the green line above. Why? These were the folks buying with toxic mortgages and timed the market very poorly (or simply had bad luck). The rate of those young adults living at home has gone up unabated since 1999. Of course the increase in home prices has been driven by investors and this will simply make it harder on a cohort with lower incomes and much higher levels of student debt.

It is safe to say that many more young Americans will be renting deep into their adulthood. It is also safe to say given the current cost of college that many more young Americans will be coming back home to live with mom and dad. The Fed’s findings are simply reinforcing this trend.

Given the boom and bust nature of housing, we already see that the rate of price increases is slowing down very quickly:

case shiller index

The pattern seems to be clear. Prices ramp up. The economy hits a hiccup. And prices come trending lower. This even happened in the 2010 to 2012 period. Look at where we are at right now. And the recent run up in 2013 was largely driven by a fickle group in investors.

Millennials are living at home for the following reasons:

-Heavy levels of student debt

-Lower wages

-Inability to afford current home prices and in many markets, current rents

So how this sets up for a pent up demand for expensive homes or nicely painted crap shacks is really beyond the data. The demand will be from older Friskie eating households, investors, and foreign buyers. It was interesting to see the number of EB-5 visas being pumped out largely to those from China:

“(WSJ) To finance the concrete-steel platform, Related tapped a little-known and at times controversial federal visa program known as EB-5, which offers green cards to foreign families who invest at least $500,000 in U.S. projects that create at least 10 jobs per investor.”

It doesn’t even have to be 10 jobs necessarily but the hours have to work-out to the equivalent of 10 jobs. I’ve heard of people buying places like yogurt stores or fast food chains. Not exactly 10 great paying jobs but enough to keep young adults living at home with mom and dad. Since real estate volume is low margin in some markets, even having a few hundred buyers in one area can shift prices dramatically:

chinese EB-5_0

eb-5

“(WSJ) These investors aren’t coming for the investment,” said Yi Song, a New York lawyer who works with Chinese clients. “They are coming here for their children to obtain a better education and to get residence as an insurance policy.”

The EB-5 program was virtually non-existent in terms of volume even just a few years ago. That is no longer the case.  But again, the demand isn’t coming from younger Americans that are suddenly making so much money that they are buying real estate. Short of better paying jobs, the first time buyer market is going to have a tough time.

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91 Responses to “Why Millennials are stuck living at home with parents: The impact on first time home buying, renting, and the 2015 housing market. Big jump in foreign EB-5 visas.”

  • Look, I’m just gonna put this out there.

    I just had family out for Thanksgiving, and a son home from the military, stationed up north. Both came from environments that are around 15 degrees out right now. It was in the 70’s here earlier this week when they left, and they didn’t want to leave. Son can’t wait to get stationed here. Best friend and mother are considering the move.

    It doesn’t get any more simplistic than that. There is a ton of stuff to do here, and it’s warm out. You can smoke weed practically legally. The scenery is beautiful and the sunrises and sets are unparalleled. Demand = price and that’s Econ 101. You have and will continue to pay more to live here, and for those that can’t hang there are places call Texas, Arizona, and Florida.

    • And your point is?

      Let’s see, there’s a ton of stuff to do here and it’s warm out with beautiful things to see, and yet, here you are, not out there, but here looking at a screen, presumably inside, trying to convince us how great it is out there whilst you’re not out there yourself. Things that make you go hmmm.

      • What’s making me go hmmm is your response here. What on earth is your point? The Realist said California is attractive to a lot of people for many reasons, including the weather. This is evident if you look at, I don’t know, the housing prices? You know, the ones this blog is about.

        And you feel like you really got him/her because you pointed out that s/he is using a computer to type on this blog. Because everybody is only ever inside or outside? What are you even saying?

      • You’re plenty aware of “what my point is”. And it doesn’t need convincing, the 20 million people here already speak for themselves.

      • Actually, he said it *was* nice weather earlier in the week, when they left. I’m not in California, but my understanding is that half the state is getting blasted with a massive rainstorm today. I’d stay in and post on blogs, too.

        Even California’s not 70-degrees and sunny every single day.

      • Lazy, there are only 4 places on earth with Mediterranean climate. Los Angeles, Santiago, Perth, and Athens. California has the best economy of those, and the most entertainment in the world. Can you name a better place in the world to be? Humidity and snow are obviously automatic disqualification.

        The rain will be gone Saturday. Notice how it is gaining national attention?

      • There are actually quite a few places that have a Mediterranean climate throughout the, well, Mediterranean. I get your general sentiment, though, and I agree. There are very few places with a Mediterranean climate and a lot to do. And coastal So Cal is one of them.

      • But you are clearly a superior person if you choose to live in California rather than those “inferior” places known as AZ, TX or FL. It works the same way as leasing a Benz makes you superior to the guy who bought his Toyota. We should all know these superficial and farcical rules by now.

        I for one left So Cal for Florida. State taxes went from 13% to 0%. Property taxes were cut more than 50%. Twice the value on my home purchase here than back in CA. Kids have far better schools here than in their “premiere” district back in California. Gosh, I am doing pretty well for a guy who “dumbed” himself down to Florida.

        But it’s that kind of arrogance and ignorance from many Californians that tell me California is now unloveable: people have so convinced themselves that they live in some little slice of heaven that they will literally over-leverage themselves time and time again and never learn the lessons. I don’t want to live in that kind of culture. I’ll take “dumb” Florida any day.

      • And your point is?

        KR gets it. The message you’re “just putting out there” boils down to this place is different and therefore the issues raised by this blog are invalid. Of course, you didn’t write that exactly, but that is the inference you’re making. We’re not stupid.

        My point? It’s obvious to anyone willing to consider it.

        If this place is so different and great, then it can speak for itself. If it needs something to just be ‘put out there’ then maybe it’s not so different after all.

        It’s evident that there is a contingent of folks who comment here who can’t stomach the idea that maybe this place isn’t so different after all. We know who they are. The ones emotionally and financially invested in pushing the idea that this place is different.

        Instead of being out and about enjoying this place in all its proclaimed greatness from being different, they’re on here trying to convince everyone else how different and resultantly great it is. It certainly does make one go hmmm.

      • You’re basically right, KR. It does take a superior work ethic, drive, love, and education to be able to cut it in CA. It is relevant in the superior pricing, beauty, technology, and appeal of CA. Enjoy FL, it’s easier over there.

      • And your point is?

        It’s interesting that “Realist” would go down the ‘can’t hack it here’ route considering that his or her comment hinged on examples of people wanting an “easier” climate. Somehow everybody else in all of the global world-class cities of the world are getting by just fine with the horrors of living in more dynamic climates.

        I did get a good laugh when I read the suggestion that there’s a superior work ethic in SoCal. I suppose that and the weather wasn’t enough to convince the likes of Toyota, Northrup Grumman and Occidental to stay here.

      • I didn’t say easier climate, there is no easier climate than CA. I said an easier life due to lower cost of living and smaller metro areas.

        And you can pour all the Hater-ade you want onto the subject. It doesn’t change the glitz, glamor, dream chasing and desirability of CA. Some people don’t like the elitist attitude of Californian’s, oh well…I say f–k em. Too bad so sad.

        “Somehow everybody else in all of the global world-class cities of the world are getting by just fine with the horrors of living in more dynamic climates”

        That line cracks me up the most right there. All my family and friends are so jealous of our weather, always commenting on it. And at least once a week this time of year, I’ll throw a pic of the cars outside temp gauge on FB or IG, and it’s always good for a few snark comments from the cold northern winter folk. So yes, they do live there but there are so many unhappy and grumpy people it’s terrible. They are all either complacent, fear change, or fear the unknown. It’s quite sad, really.

      • And your point is?

        “You’re plenty aware of “what my point is”. And it doesn’t need convincing, the 20 million people here already speak for themselves.”

        If we’re to be plenty aware of your “point” and it so loudly speaks for itself (the premise being that the mere fact of someone living somewhere signals how much they love living there), I ask you, what is the point of commenting on this blog (a post which doesn’t refer specifically to SoCal) to overstate what you think is so obvious? If enough commenters feel so compelled to “just throw it out there”, maybe it’s not so true after all. That’s been my point all along.

        “I didn’t say easier climate, there is no easier climate than CA. I said an easier life due to lower cost of living and smaller metro areas.”

        Note that the word easier was in quotes to demonstrate an interpreted meaning.

        “And you can pour all the Hater-ade you want onto the subject.”

        Ah yes, the classic when left without a specific rebuttal, simply apply a label.

        “It doesn’t change the glitz, glamor, dream chasing and desirability of CA.”

        It doesn’t change “glitz, glamor, dream chasing and desirability” of anywhere else either.

        “Some people don’t like the elitist attitude of Californian’s, oh well…I say f–k em. Too bad so sad.”

        Hubris.

        “So yes, they do live there but there are so many unhappy and grumpy people it’s terrible. They are all either complacent, fear change, or fear the unknown. It’s quite sad, really.”

        Would these happen to be any of the same “global world class” cities full of “so many unhappy and grumpy people” that fellow commenters so often use to measure up Los Angeles?

      • son of a landlord

        I’ve lived in Santa Monica for 27 years now, and I’ve always disliked its weather. Too hot and sunny. But at least it’s not like the broiling heat of the Valleys. A Woodland Hills resident told me the area is aka Woodland Hells because of their 100 degree plus summers. Ditto Pasadena’s horrid summers.

        I’m in Seattle now, visiting. It was in the mid thirties this morning, and now in the upper 40s. I call that brisk and invigorating. Loved walking Seattle’s downtown yesterday morning, with a gray sky overhead and crisp 40s air. (Sky is clear blue today, btw).

        I say in SoCal despite the weather, not because of it.

    • Well said. People will always attempt to live in paradise whether they can afford it or not. Supply and demand 101. This isn’t rocket science!

      • “Supply and demand 101. This isn’t rocket science!”

        The first statement you have ever gotten right, even if I had to take out of context to make you right…

        Economics is not only not rocket science, it is not science. It is mythology at best.

      • There is nothing mythical about concepts 5 year olds can understand. Stop trying to confuse this with science, this is just plain common sense.

        What?, didn’t you say you were a finance guy. Based on your comments that past few years, you have very little credibility advising others regarding anything pertaining to finance…especially when it comes to CA RE.

      • Core Issue: The SoCal RE market is manipulated beyond imagination. Ad homenim attacks on What? do not change that fact. Whether LA is in fact paradise on earth does not change that fact. Is this manipulation that has capital chasing SoCal single family homes at a completely irrational rate sustainable? No. In the absence of momentum provided by said manipulation are the price gains of the last few years sustainable? No. It doesn’t matter that the South Bay, South OC and other prime areas will likely weather the storm. As a percentage they are not where most people live. The suburbs and the IE will revert to market forces the moment the leveraged hot money makes an exit. Just because some of us didn’t anticipate the FED turning a natural dead cat bounce into Bubble 2.0 doesn’t mean the “new math” is here. No one reasonable is expecting a 50% drop in SoCal prime. Likewise even a RE bull should see that a 2 year 30-40% run up in the valleys and the IE in this economy is preposterous. Not once in history have such gains held at a macro level. These same arguments were made during Bubble 1.0 and were proven spectacularly wrong. What’s different now except a worse consumer economy and even more leverage in residential RE?

      • Have you ever actually taken econ 101? The funny thing to me is how people use the “it’s econ 101” when they have never sat in an econ 101 class. Common sense was lost a long time ago. To say that this or that is common sense when talking about the contrived market is rather silly. The “market” looks to a group of mediocre economist to determine if prices go or prices go down. To QE or not to QE. How is that common sense. Everything else discussed on this board at this point is neither science nor common sense… If anyone actually sat through a real econ 101 class, they would see rather quickly how non common sensical the supply and demand theory really is. I know I did…

      • @What? NZero:

        I am not talking about a contrived market at all, that is a topic for another conversation. I am talking about the supply demand housing imbalance that is present in any DESIRABLE part of CA and looks like this will only get worse as time goes on.

        a. Desirable areas are built out…there is no more land to build. (Supply)
        b. People will NOT sell for a myriad of reasons, I won’t go into them. (Supply)
        c. Many people only want to live in said premium areas for xxxx reason. (Demand)
        d. Prime CA housing is a safe haven for international money. (Demand)
        e. CA is almost unrivaled with climate, things to do, natural beauty, etc. (Demand)
        d. High paying jobs are abundant near desirable areas. (Demand)
        e. etc, etc, etc.

        See where this is going? Even without a contrived market with Fed intervention, all the above points still exist. Remain in denial at your own peril.

      • And your point is?

        “@What? NZero:

        I am not talking about a contrived market at all, that is a topic for another conversation. I am talking about the supply demand housing imbalance that is present in any DESIRABLE part of CA and looks like this will only get worse as time goes on.

        a. Desirable areas are built out…there is no more land to build. (Supply)
        b. People will NOT sell for a myriad of reasons, I won’t go into them. (Supply)
        c. Many people only want to live in said premium areas for xxxx reason. (Demand)
        d. Prime CA housing is a safe haven for international money. (Demand)
        e. CA is almost unrivaled with climate, things to do, natural beauty, etc. (Demand)
        d. High paying jobs are abundant near desirable areas. (Demand)
        e. etc, etc, etc.

        See where this is going? Even without a contrived market with Fed intervention, all the above points still exist. Remain in denial at your own peril.”

        Wasn’t this the same guy that leading up to the last bubble was posting full on skepticism about this market in this place?

        Apparently this time is different, but that time this place wasn’t different, but now this place is different. A lot of buts.

        Good to see you posting again, What? NZero, you’ve got to stop making so much sense all of the time with all of that perilous denial.

      • One by one, just for fun…

        a. Desirable areas are built out…there is no more land to build. (Supply)
        + Yet population density increases so there is still room for inventory to grow. So supply increases. What has not been increasing for the vast majority is liquidity. Wage growth is stagnant. Family formation is still down. So it would seem demand is nowhere outpacing supply, except for the FED manipulated specuvestor market you claim is no factor.

        b. People will NOT sell for a myriad of reasons, I won’t go into them. (Supply)
        + People WILL sell for a myriad of reasons. i HAVE gone into that on this board several times 🙂

        c. Many people only want to live in said premium areas for xxxx reason. (Demand)
        + Many people want/need to put gas in their cars. that hasn’t stopped it’s price from cratering.

        d. Prime CA housing is a safe haven for international money. (Demand)
        + Agreed. That said in the absence of FED enabled specuvestor competition me thinks the hot money would rather pay less for the properties and maybe by 2 instead of one. I don’t often see people pay more than they have to for an asset just because. that pesky market manipulation you say doen’t matter comes in to play yet again 🙂

        e. CA is almost unrivaled with climate, things to do, natural beauty, etc. (Demand)
        + I know some exquisitely beautiful escorts who could make $4K a night during last decades boom. Now it’s hard for a porn escort to get 2k. Those pesky market forces again…

        d. High paying jobs are abundant near desirable areas. (Demand)
        + Thought you said incomes don’t matter??? Your so called high paying jobs (which are not THAT abundant even in Prime SoCal as the median #s show) don’t support the current prices. Contradicting yourself yet again I see….

        [ NZ drops mic. Has a Coke and a smile ]

      • Your points are not supply and demand related in an economic sense they are conjecture at best. I could make the exact same points about the oil market and guess what? Oil is plummeting. Why? Because oil is one of the most manipulated markets in the world and all the silly justifications for price based on supply and demand mythology fall apart rather quickly when the puppet masters pull a lever. You can believe whatever helps you sleep at night but don’t waste your time trying to convince someone who actually studied economics that supply and demand determines price.

        @And your point is
        Lord Blankfein bought a house since then and has been trying to reassure himself that he made the right move. QE Abyss is now in the same boat as well. It is amazing to me how the story changes when some of these guys make the leap and then start spouting off that the air is fine before they even test their parachute…

      • You two are seriously off your rockers, but I’m on an ultra bear blog so I should expect that. We have one LA hater and one guy hoping for the big tank so he can buy for pennies on the dollar. Not sure what comparing desirable socal housing has to do with the cost of oil or porn escorts…those are laughable to say the least.

        Just like your buddy Jim Taylor admitted he was wrong, I did too. Being an ultra bear and constantly hoping for the doomsday scenario will cloud your vision. Thankfully I see much clearer now. You guys should give it a try too. Peace.

      • And your point is?

        NZero, on point (d)… Any thoughts as to a stronger dollar’s impact on foreign purchasers of U.S. real estate? I haven’t heard or read much discussion around the potential implications. Has it not become more costly for users of foreign currency to purchase dollar denominated assets? Is it possible that now could be a good time for those folks to take profits and stay liquid in USD or exchange into a weaker currency? Do you think USD is going to appreciate further in the near term?

      • @what?

        Make sure. that after you buy a house don’t write the same like Lord B.!

        Keep the same tone because the FED is the same regardless if you buy or not.

        Same warning for NZ….

      • “Not sure what comparing desirable socal housing has to do with the cost of oil… ”

        That is the problem.

        @flyover
        I really never really liked Kool-Aid. I will not purchase until it makes financial sense to my situation. Given the Bernank comment “not in my lifetime”, it somewhat unlikely that it will make sense anytime soon…

      • “We have one LA hater and one guy hoping for the big tank so he can buy for pennies on the dollar. Not sure what comparing desirable socal housing has to do with the cost of oil or porn escorts…those are laughable to say the least.”

        Now I see your just trolling. Never have I said i hated LA nor do I expect pennies on the dollar purchases. The only “laughable” thing in this thread is your willful ignorance of downside market forces ability to affect your asset. Porn escorts and oil are EXCELLENT analogies as one is a “luxury item” the other is a necessity and BOTH can remain “in demand” while there prices plummet. Your narcissistic view of “desirable” (the more you use this word the more you sound like an elitist prick, but I assume that’s what you’re going for) SoCal and absolute refusal to debate the broader macro market is intellectually dishonest and would get you kicked off a junior high debate team. You’re basically “little r” Robert with a better vocabulary. Almost nothing you’ve stated passes empirical examination nor have you respond to empirically verifiable thesis.

        To sum up, you’re a douchebag who lucked into a market bottom who thinks he’s a genius. Much like “little r” that leaves me with nothing else to say to you.

        And for the poster who wondered if my attitude will change once I get a house, I a assure you it won’t. Because I will only buy when I am comfortable with the price, location and my payment. After that I could care less where prices go as it will be my home not an asset/ATM.

      • $And your point is?

        I think foreign nationals will always look to buy in international cities like LA because of the security, not just economic but personal. American police exist solely to protect the upper class and they’re hedging against lower class revolution in their home countries. That said they make up an incredibly small percentage of the macro market. What Lord Douchefein doesn’t seem to grasp is that MOST people in SoCal don’t live in his definition of “prime” areas. Whatever the dollar does, whatever oil does is completely secondary to how much longer the FED can juice RE markets. They have much more power to influence liquid assets like stocks. We were going to have a dead cat bounce in REno matter what. The FED took the opportunity to juice it so the banks could clear inventory to private equity. But they could only do so because the dead fat bounce was gonna happen anyway. Bubble 2.0 will have no dead cat bounce to juice as the real correction from Bubble 1 never took place. Now will this destroy equity in the uber wealthy “prime” areas (the more I use that term and imagine neighbors like Lord Douche, the more I’m sure I never want to live in “prime”), probably not. But the suburbs, inland areas and lower income coastal areas WILL adjust. People are hanging on by threads and indebted to hell. Lord Douche’s idea that their won’t be sales is preposterous, especially among the REITs with the failing SFH rental model. Now if he means some are so upside down and hopelessly delusional that they’ll get foreclosed before they can sell he’s probably right. Once again the SoCal RE market is HUGE! Ultimately no one cares about small prime neighborhoods. It’s the suburbs and areas where working people live that move the macro numbers.

      • And your point is?

        “You two are seriously off your rockers, but I’m on an ultra bear blog so I should expect that. We have one LA hater and one guy hoping for the big tank so he can buy for pennies on the dollar. Not sure what comparing desirable socal housing has to do with the cost of oil or porn escorts…those are laughable to say the least.”

        Lots of labeling going on there. That’s what often happens when one is out of ideas. By the way, there’s three of us in this discussion with you.

        “Just like your buddy Jim Taylor admitted he was wrong, I did too. Being an ultra bear and constantly hoping for the doomsday scenario will cloud your vision.”

        I’ve always found the Jim Taylor tanking comments to be nothing more than amusing. It’s the other side of the same coin the ‘this place and time is different’ crowd has been passing around. Labeling others with a different viewpoint as an “ultra bear” doesn’t add any value to the discussion.

        “Thankfully I see much clearer now. You guys should give it a try too. Peace.”

        You were once lost but now am found. This time is different. Comes across as awfully hypocritical.

      • And your point is?

        “I think foreign nationals will always look to buy in international cities like LA because of the security, not just economic but personal. American police exist solely to protect the upper class and they’re hedging against lower class revolution in their home countries. That said they make up an incredibly small percentage of the macro market.”

        NZ, what I would like to know is how much of the foreign national activity is speculative versus all of the other reasons so commonly given such as escaping from volatility in the homeland. I’m not sure this can truly be known, so I’m uncomfortable with fully relying on the conventional suggestions.

        And yes, much ado is often made of the potential impact from this buyer class to the overall market. As an aside, it’s interesting to note how much of the Chinese investment (and/or speculation) activity in Arcadia and Irvine lie outside of the so-called prime coastal beach communities zone. Did they not get the memo that the only area worth living is west of the 405?

      • @and your point is:

        You are off your rocker too, are you happy now? Not sure if you are new to blog, or just another one of the bears posting under a different user name. They tend to do that quite a bit, maybe it’s some weird force multiplier thing. But whatever you like to do.

        Myself and many others have stated time again that parts of socal really are different. That is why you pay a premium to live here. You can either accept this fact or just keep living in a world of denial. It’s been different here for decades, get over it. I’m not saying it’s right, it is what it is. You or I don’t make the rules, we just need to understand how to play by them. As witnessed on this blog, some people are having a really tough time with this.

        Happy Holidays to All!

      • And your point is?

        “Myself and many others have stated time again that parts of socal really are different.”

        Yes, indeed you have. So why do you and many others continue to repeat the same thing on a blog that exposes a skeptical point of view? If it were really true, you and many others wouldn’t need to keep trying to convince the rest of us. But here you all are, just throwing out there that local exceptionalism is the only answer one needs.

        “That is why you pay a premium to live here. You can either accept this fact or just keep living in a world of denial. It’s been different here for decades, get over it. I’m not saying it’s right, it is what it is. You or I don’t make the rules, we just need to understand how to play by them. As witnessed on this blog, some people are having a really tough time with this.”

        For whose benefit do you keep repeating this message? For yours? Or do you think you’re a messiah?

        You never directly answer the questions. What you do is provide subtle attempts of non-sequitors about things like commenter handle usage or labeling others as “bears” in denial. The closest you actually get to directly answering the question is that you’re now a reformed believer.

      • And your point is?

        “This place really is different.”

        Getting less actual property with a subjectively valued set of opportunistic benefits for a higher price, what you term as a “price premium”, has never been in debate. It’s well established as a factor in large cities and their environs.

        What’s not different about this place is that it’s just as exposed to price corrections to the downside as any other place relative to its gains on the upside. There does not exist a one-way valve between Los Angeles and the rest of the world. In that regard it is most certainly not different. Really.

    • I am just gonna put it out there.

      Since Baja, Mexico is not the prime real estate hub of the northern hemisphere, there is clearly a lot more to real estate than weather.

      I am gonna put it out there again. There is a net efflux of native Californians out of the state, so clearly even those acclimated to this climate can and do leave.

      Let’s put it out there some more. California is the one place where if you don’t speak the language, you can somehow get by and get generous benefits courtesy of the tax payer. This, more than weather, leads to immigration here.

      And finally, let’s not forget CA is fairy tail land. There is no New England puritanism at work here. You make $30,000, go lease a BMW, why not? People leverage themselves here to dangerous levels thinking things will always be sunny.

    • Exactly because of the growing impediments in California real estate raised in this blog twice a week or so, I sold my piece of California. Understand that I haven’t live there for years, but did own a nice home with an ocean view! Weather is a silly reason to stay in California if you aren’t bound by a job or career. If you are a homeowner and aren’t there for a job or career, or are possibly retired, you have or had one of those few rare opportunities to cash out, make perhaps a lot of money, and just possibly have a nice bank account balance. In today’s volatile economic environment, that added security is worth a lot. Hoping that prices will continue to rise and that there will be NO further economic or real estate setbacks, is foolish!

    • @The Realist,

      You are wrong about the weather. Illegal aliens are about 10% of the SoCal population. Once these illegal aliens reach SoCal, they largely have unperturbed amnesty and sanctuary. If illegal aliens were to disappear from SoCal, the vacancy rates in residential housing would be a very Detroit-ish 12% to 15%. Imagine what would happen to housing costs in SoCal if that were to happen.

      • 1) Please elaborate about how I am wrong about the weather.

        2) You say “IF illegal aliens WERE to disappear from SoCal, the vacancy rates in residential housing WOULD be a very Detroit-ish 12% to 15%. IMAGINE what would happen to housing costs in SoCal if that were to happen.”

        They are not going anywhere so none of your statement is relevant.

    • I met a retired financial director from Montana or North Dakota (I forgot the exact place, but it was in that part of the country). I asked her why she decided to retire in Las Vegas. She said the climate played a role as well as the absence of state income taxes. Texas doesn’t have state income taxes, either, but look at their property taxes (around double what you pay here). In other words, she retired here for the same reasons I did.

    • It’s a good thing the sunrises, sunsets and mountains are beautiful, since you spend so much time looking at them while stuck in that godawful traffic.

      I’ll take Texas any and every day over that place.

    • Farmer John and Forest Lady

      In Texas they put you in jail for smoking weed, same for Arizona. Santa Cruz mountains is where these young folks are, and of course, in their room in your house. Many young folks are content with this lifestyle. At least they are not partying with the three friends, Jack, Johnnie, and Jim(which has many proven ill health affects.)

  • Some articles to drive the point home:

    Odd how they left CA out of this one:
    http://www.marketwatch.com/story/residents-in-these-states-cant-pay-their-mortgages-2014-12-10

    http://www.marketwatch.com/story/buying-a-home-is-now-twice-as-affordable-as-renting-2014-12-11
    General theme: Lets ignore the Asset price or taxes and focus on monthly payments only. My favorite quote from this one: “The allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into homeownership.” Ummm….yeah….

    Foreclosure starts rise:
    http://www.marketwatch.com/story/foreclosure-proceedings-rise-for-first-time-since-2012-2014-12-11

    Feds bet on 3% down to revive housing:
    http://www.marketwatch.com/story/feds-hope-3-down-mortgages-will-boost-struggling-housing-market-2014-12-09

    I want the Fed to raise rates, but I still don’t see how they are going to able to do so. Sigh.

  • Anyone have updated comments on the Callabassas, Conejo Valley area. Amgen impacts and whether there are enough $200K earners to support 2006 prices again. I’m 35, have said income. Have been very blessed/lucky. Most of my friends with MBAs barely reach that level. How are these prices possible. Any thoughts uch appreciated

    • I am in a similar situation as you here in TO. Don’t know how people think its a good idea to sink that much money into a tiny home for $500+K. Amgen layoff should have an impact in my opinion. Not the same as Defense Layoffs of the 90’s as they were other large Defense contractors here in LA area. There isn’t any large Pharma companies that i know off that can absorb that many workers. Estimating that out of 3000 layoffs atleast 1000 live in Conejo Valley and atleast half own homes. THat means about 500 houses have to make a decision soon on what to do.

  • I have to agree somewhat. My work takes me all over the world, but mainly Northern Europe. I meet people constantly from London, Rotterdam, Amsterdam, Oslo, Copenhagen, Stockholm, Hamburg. most are seaside locations yet When the subject comes up of where I am from, and I say ‘Los Angeles’ the reaction is usually a big smile on their face and a comment like “I loved it there” “Oh my gosh you have such nice weather” ” do you go to the beach” “I went there once in 1995” …….

    • And your point is?

      I get that too sometimes, and then I remember that it’s one thing to visit some place and quite another to actually live there.

      Another thing I wonder about is how much of it is a result of Hollywood’s embellished self-promotion in popular media.

  • Changes to the Dood Frank Bill are up for vote today. Basically the banks can go back to doing what they did before and we go back to insuring them with tax payer dollars if they fail.

    http://www.huffingtonpost.com/2014/12/11/omnibus-vote_n_6309588.html

    • I meant Dodd-Frank bill, of course.

    • And so it goes again, Wall St. just won the day. Now they get to gamble on risky business and we (taxpayers) have to bail them out when they fail. Again. Elizabeth Warren and the Tea Party actually agree on this. Too bad.

      • Basically it goes like this — we taxpayers give Wall Street our money to gamble with and if they win they get to keep the winnings and we get our money back. If they lose, we lose all of our money, and then we give them more money to make up for the winnings they didn’t get and to fund the FDIC again. Did I get that right?

        They say Elizabeth Warren may pass up on running for Pres. because she believes she can effect more positive change in her current position. Integrity is the word for that I believe. True great American too.

      • “Elizabeth Warren may pass up on running for Pres. because she believes she can effect more positive change in her current position.”

        Mostly I suspect she knows she would get lambasted in a national election (even a party primary), at least at this point, and that running now would be a distraction away from whatever momentum she is establishing.

  • The weather is irrelevant. If it were relevant, then we would expect to see LA prices higher than New York or San Francisco. And yet this has never been the case.

    • I disagree. The SoCal beach cities are often starting at just short of 2 million for a teardown. Try Manhattan Beach, Malibu, Santa Monica, Corona Del Mar, LaJolla, Pacific Pallisades, … That is as high or higher than teardowns anywhere else in the country. The SF loving media likes to pretend SF is the highest, but 2 million teardowns are not as common as premium SoCal beach cities.

  • My goal is to get my 26 yr old to the sheepskin (he’s a little late) with no debt. We might subsidize an apartment or a room somewhere in his last year – he needs to be on his own, for his own sake, for his own development as an independent free-standing human being.

    I think this is the real tragedy. His generation is trapped in perpetual quasi-adolescence, and it is all coming from without – from the invisible freaking hand, don’t you know. Apart from being a little late, we have done everything right. He has done most things right.

    What, me bitter?

  • Everyone hates us for our weather. Don’t fret. We’ll have an earthquake soon enough and the haters will be all grins.

    At least part of the point the Doc is making is we have most of our biggest generation unable to participate in the economy in a meaningful way as they enter their most productive years. We can either get them involved or suffer their wrath. An army sitting around with nothing to do is a bad omen. They always find something. They do seem to be coming around to realize GenX leadership will need to be enlisted. Hopefully it’s their good side. Either way I have no doubt revenge will be had against our apathetic hypocritical elders.

    Prop 13 goes. If you have 6 digit retirement income then no social security payments until you actually need them. On. And on. And on.

    • And your point is?

      Nobody hates us for our weather. Some people do indeed like our weather but most are net indifferent because they recognize climate as only one out of many components to the reality of living in a certain area. When the next quake hits, those people won’t be grinning, they will just feel relieved to not be directly affected.

  • Maybe I’m missing something but the topic of this article is National as is the data. Regardless of supply/demand views on LA or Southern California there is a major secular shift here. If residential housing were organically strong the government/Fed/banks wouldn’t be working so hard (5+ years now) to raise and maintain valuations. All it used to take to galvanize housing were a few rate cuts. We are far beyond that now and the situation isn’t exactly taking off and in my opinion not even stable without continued rate accommodation and other support.

    • Slim, I agree there has been a lot of manipulation, and cannot think what more they can do. We’ll see.

    • And your point is?

      Thank you for pointing that out. That’s why I responded to the first comment of ‘just throwing out there’ things about SoCal. DHB wasn’t even writing about SoCal yet we still get comments about how this place is different and everyone wants to live here.

      The secular nature of what we’re observing should matter to anyone with a position in real estate anywhere, not just in this country, but also globally. The oft repeated rhetoric that this place is different and everyone wants to live here is a distraction.

      Couldn’t agree more that TPTB have thrown everything they have at the wall to get something to stick and this reality is the best we’ve been able to get from it. Just considering the scope of intervention and changing of the rules in the past few years is mind boggling.

  • Most people buying a home in SoCal and Irvine lie about their annual income to the IRS. All of these chinese and other self employees business men and women write off a lot of expenses, trade in cash, and avoid taxes. This makes the local average income seem much lower than it actually is. And it’s why they come to the housing market with 40%to 80% down.

    Household incomes earning 200,000 to 400,000 in Southern California are very realistic and bery common! But on paper it’s going to show those people pay themselves $75,000 year to avoid taxes, but they have a lot of cash flow and plenty of opportunity to buy these homes.

    As for the people living with mom and dad, tough luck! The world is not going to hand you more money or a better job. No one’s going to magically take your student loan payment away. If you want to house in Southern California you better get out of that house and away from your HS video game collection and start your own business or find another way to make the money you need. If you’re going to sit around and wait for housing prices to drop then you are about as intelligent as a crackhead. Enjoy your bedroom with your parents.

    Sure prices in California fluctuate but if you look over the long term and at least with the 5 or 10 your horizon they don’t go down and stay down. Inflation always keeps housing higher than it is today. We have an influx of new people wanting to come to California. There are no signs pointing to lower housing prices. Demand is still high.

    I’m not a realtor I’m a realist.

    • So what you are saying is Chinese are largely committing crimes in mass by lying to the IRS? Great to know! Also Chinese money was still flooding in during 2007 to 2010 when prices fell.

      Only 6 percent of households according to the Census make more than $200k per year instead of you pulling stats out of your ass. Then again you are a realist making up your numbers. $200k to $400k? You realize how dumb you sound?

      • J … There so many more factors that go into purchasing a home then reported home income on the census.

        It’s not only the Chinese who have generous accounting practices. It’s almost everybody who has a small business. Doctors, lawyers, IT professionals, almost anybody who doesn’t work on a W-2 basis. There are numerous to ductions and tax write off they can take that make their income appear much lower than it actually is. That’s not talking out of my ass that’s just general knowledge to anyone in the accounting field.

        What I’m trying to say is the census that you hold is the gospel is not telling you the entire picture. It’s telling you reported earned income. So the doctor earning 500,000 a year and subtracting 300,000 in “medical expenses and hiring relatives” and 100,000 in office expenses is reporting a 100,000 income. Buried within the expenses his money that he can use for his personal use. that will include multiple cars, education, dining out, travel, home office, and all other daily living expenses. So that hundred grand he has leftover could almost be 100% used to pay for a house if you need it. But it appears to the IRS he only earns 100 grand. And the census says 100,000. If you don’t understand this concept of how upper-middle-class avoid taxes the. your are most likely not in this class. If you want to talk about another business that’s easy to shift money it’s owning a restaurant. So many expenses, how do you know what was really for the restaurant and what was for you. And in this low tax bracket a chance of an audit is realitivey low.

        Also if you think $200,000-$400,000 is a lot of money in Irvine you clearly have no idea what people make. Someone from India who is an IT professional will probably earn 150k and his wife another 150k. That’s 300k. You’ll have some people that have two incomes of 100K which is at the low-end of 200K, and you will have some people that are doctors were decent lawyers that are easily individually earn 200K-300K again with the other spouse earning usually 100K.

        This isn’t middle America Kansas. People in SoCal earn a lot of money. And they spend a lot of money. People scraping by working at Starbucks, automotive dealership, or at the mall are not going to be able to for a home in the area.

        So are you stick to your census, while I walk the streets. When I go to the million-dollar plus open houses in Irvine (which is almost any new home) I look around and see who shopping for them. I asked the sales agents who buys these homes. And it’s the same answer over and over again, dual income professionals, doctors, lawyers, etc. they also say a lot of people come with cash in hand. Foreign investors who want to buy up the homes. And that stump you talk about between 2007 or 2010 really was only 2009 and part of 2010 it took a long time for prices to come down and then they shot right back up.

        Doesn’t matter if you believe me or not, and the census may not be on my side, however the reality is all the houses they’re building are selling. There’s a waiting list for almost 9 months for many million dollar plus homes. If everybody was broke and nobody was earning 200,000+ a year those houses would not be selling.

        I think the moral of my story is even though someone says they earn 100k a year doesn’t mean they don’t have access to a lot more money and cash flow.

      • son of a landlord

        I’ve a friend who teaches adult education in New York City, in Chinatown, to mostly Chinese students. Many of them immigrants. He’s even dated a few of his students.

        He says it’s common for Chinese immigrants to operate cash businesses, and keep the cash in strongboxes, rather that put it in a bank. Up to tens of thousands of dollars in cash, hidden away at home or in the office.

        Chinese immigrants don’t trust banks or governments. They prefer to keep their money (the amount and whereabouts) secret, if possible.

      • ESL much Sean? First, pull your hand out of your pants and stop thinking about Irvine. “I walk the streets” like what? A night walker? I thought this article was about national real estate. Suddenly, you turn it into an Asian wet dream. Given your grammar, maybe you yourself are hiding money from the IRS. Those most suspicious of others are usually guilty. Thanks for your data lacking ramble boner fest on Irvine.

    • Paragraph three…..totally.

      • What I’m trying to say is the census that you hold is the gospel is not telling you the entire picture. It’s telling you reported earned income. So the doctor earning 500,000 a year and subtracting 300,000 in “medical expenses and hiring relatives” and 100,000 in office expenses is reporting a 100,000 income. Buried within the expenses his money that he can use for his personal use. that will include multiple cars, education, dining out, travel, home office, and all other daily living expenses. So that hundred grand he has leftover could almost be 100% used to pay for a house if you need it. But it appears to the IRS he only earns 100 grand. And the census says 100,000. If you don’t understand this concept of how upper-middle-class avoid taxes the. your are most likely not in this class. If you want to talk about another business that’s easy to shift money it’s owning a restaurant. So many expenses, how do you know what was really for the restaurant and what was for you. And in this low tax bracket a chance of an audit is realitivey low.

        I’m one of those people who is self employed and employ 10 people I can tell you anything that is not business related is classified as a draw on profits. Paying your house, traveling, cars any expense that is not related to the operation of the business is illegal and will find yourself in big trouble with the FED and local govt including fines/and or prison time. Not only that but take into account that they can go back 5 yrs and they have a lot to look at. Don’t have receipts for something you claimed. Penalty. Questionable accounts. Penalty. They can be as arbitrary as they choose. You want to play that game? Knock yourself out. Do people do it? Of course. I hate paying FICA/Med/SS/UE state/county/yr end taxes but I pay them. I sleep better at night.

    • And your point is?

      I’m not sure about the premise of the assertion that people are sitting around living with mom and dad waiting for house prices to fall.

      From what I can tell, many millennials are getting on with life and making adjustments that increasingly don’t include prioritizing home ownership.

  • I get tired of hearing all the California haters in the comments here. I get it! You don’t think Cali is worth it! But for many of us, it is worth it. And lest you think what happens in California is inconsequential… remember that 1 in 5 people in the entire USA call California “home.” What happens here has the power to trip up the entire US economy. Hell, the so-called “red-states” are dependent on our Tax contributions to fund them. Check it out: http://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/#methodology

    • I absolutely don’t hate California. But, I do know the routine! The economy and the real estate market will go into another recession or worse, and then a lot of people who live material lives, will simply walk away from their mortgages and debt again. I’m tired of having to pay for bailouts, debt forgiveness, or provide relief for those who can’t perform simple math and understand that they are living beyond their means. This problem is not confined to California, but is certainly exacerbated in California because of its cost of living and housing.

    • And your point is?

      This blog is all about providing a skeptical point of view which clashes with the idea that living here is not necessarily “worth it” to many people.

      What doesn’t make sense is that if it’s “worth it” to you then why bother subjecting yourself to the idea that it’s not?

  • Oil to Tank Hard in 2014!!!

  • I love reading the insight from this blog. The data provided is a real eye opener to what’s going on in the housing market especially for someone living in SoCal. I also love the fact that Yahoo loves to publish article that’s on the complete opposite of reality like this one here…makes me chuckle everytime I read another Yahoo article…

    https://homes.yahoo.com/news/millennials-are-moving-in–under-35-homeowners-to-dominate-the-housing-market-next-year-210147425.html

  • Actually, supply and demand have nothing to do with real estate prices. Prices are 400% inflated because of massive valuation fraud by agents, appraisers, banks and investors, all sanctioned by the government. Former appraiser here.

  • The 3% down payment from FHA is now official. From todays LA Times.
    —————————————-
    Hoping to broaden the pool of home buyers and boost the real estate market, Fannie Mae and Freddie Mac are launching mortgage programs with down payments as low as 3%.

    The move, targeting buyers with good credit but little cash, has drawn fire for encouraging the kind of risky lending that caused the mortgage meltdown and financial crisis. But Fannie and Freddie executives said the programs contain proper safeguards.

    The loans, unveiled Monday, reverse a trend of tighter lending standards by the government-sponsored mortgage giants since their taxpayer-financed bailouts. The programs allow only fixed-rate loans on single-family homes used as a primary residence.
    We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers. – Andrew Bon Salle, an executive vice president at Fannie Mae

    “We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers,” said Andrew Bon Salle, executive vice president for single-family underwriting, pricing and capital markets at Fannie Mae.

    The programs could give a boost to first-time home buyers, who have largely stayed on the sidelines of the housing market rebound. First-time buyers this year made up the smallest share of the housing market in 27 years, according to the National Assn. of Realtors.

    “First-time home buyers have had trouble, and a lower down payment always helps,” said Mark Goldman, a mortgage broker who teaches real estate at San Diego State University.

    A Federal Reserve survey released in August found that 45% of renters delayed buying a home because they couldn’t afford a down payment.

    Sam Khater, deputy chief economist for housing data firm CoreLogic, predicted that the new loans would inject a bit of fuel into a housing recovery that’s stalling out. But the main problem facing buyers is sluggish growth in their wages, not down-payment requirements, he said.

    Fannie and Freddie purchase about half of all new home loans from banks and package them into securities for investors. But lenders still have to make the loans, and some remain skeptical of any 3% down-payment program.

    “The idea that you can get a mortgage with just 3% down is something that can get us back into bubble territory,” Russell Goldsmith, chairman of City National Corp. in Los Angeles, said in a recent interview.
    —————————————

    Sounds like City National is saying we are not yet in bubble territory?

    • It was only a matter of time before we saw these mortgages again. I have no doubt there will be plenty of people who will sign up for one. Looks like the big tank will have to be postponed once again.

      • you may recall that beginning in June 2013, all Mortgage Insurance connected to FHA loans went into effect for the life of the loan, and that did not seem to slow down the home purchasing activity. Granted that over 50% of all home purchases in 2013 were at least 20% down, but it surprises me that a Mortgage Insurance of $300 – $600 per month additional cost for the life of the loan has not scared people off from buying. I think most hope that they can get simply refinance in the future?

      • QE Abyss: I also don’t know why halfway intelligent person would commit to paying PMI for the life of the loan (typically 0.5% to 1% annually), or even paying PMI at all at current prices. At the same time, though, most people who only have 3% down should probably not be buying a home, and it can probably be surmised that such buyers may not have the best judgment. From that perspective, it’s not all that surprising that someone with poor judgment would commit to paying PMI for 30 years. Obviously this would exclude people in certain situations (doctors in residency, etc).

      • Responder, I disagree. I purchased a few homes back in my 20s with very low down payments. These homes rose in value, and I am now wealthy. That was the smartest financial decision I ever made … purchasing high quality real estate with low down payments. My advice is anyone who can pull down a high quality property with a low down payment should do that. In the long term, inflation is guaranteed, thanks to the FED. In the short term, you may make or lose money. In the long term, you will be up big.

      • @jt: You didn’t state how old you are now or when you bought the homes, so you may have purchased at an opportune time and it worked well for you. Good for you, that is awesome. In any case, it doesn’t sound like you had to pay PMI for 30 years, if at all, and you probably didn’t buy around the peak of the market (like a current buyer is likely doing).

        I think most people would agree that house prices are high right now, historically speaking, with the possible exception of 2005-2006 (although some prices today have even exceeded those ridiculous prices). If you were to buy a home today, it might be wise to consider the following: 1) you pay (much) more interest with a lower down payment; 2) you are paying hundreds of dollars per month for nothing (PMI); and 3) there is a good chance you are over-paying.

        Even though a house will be worth more in 30 years than today, think about all the money you are hemorrhaging along the way! Based on the foregoing, buying a So Cal house with 3% down in the current market seems like an exercise in questionable judgment.

    • Brain Of England

      > jt: My advice is anyone who can pull down a high quality property with a low down payment should do that. In the long term, inflation is guaranteed, thanks to the FED. In the short term, you may make or lose money. In the long term, you will be up big.
      _____
      Mr Wealthy, I think you too complacent at these high prics. It’s the same story… “investors can perceive vast sums of money and value where in fact there are only repayment contracts, which are financial assets dependent upon consensus valuation and the ability of debtors to pay.” When global markets turn, worldwide prime is going down, and banks will write loads of new mortgages on prime, at much lower purchase prices. Keep on believing Fed has ability to stroke inflation… which unless it’s money/wage inflation, is a drag on prices.

      I did some research into EB-5, but came to the conclusion it is not going to have anything but a fleeting effect, before prime housing markets begin correcting.

  • There was a story on ABC 7 this morning about a Guinness world record set in Wolcott, CT yesterday for “Most Christmas Carolers”. The anchor made it a point to say “I guess that’s what people in those states do”. Well yeah, duh, when your cold and bored sh*tless you come up with things to do, I guess. You don’t see that in CA.

    While I’m all for caroling and have nothing against it, ain’t nobody got no time fo dat out here. People are too busy at

    Venice
    Santa Monica Promenade
    The Grove
    The Americana
    Long Beach
    Battleship Iowa
    Del Amo
    Old Town Pasadena
    Six Flags
    Knotts
    Disneyland
    Universal
    Getty
    MOCA
    Tar Pits
    Sunset Strip
    Space Shuttle
    Rodeo Dr
    Laker game
    NASCAR experience
    ocean fishing boat trip

    Ouch my fingers hurt now from all that attraction typing

    • You’ve never lived in an actual real city, have you?

    • son of a landlord

      In my 27 years living in Santa Monica, I’ve hardly been to ANY of those places. I’m sure that’s true of most Angelinos. TRAFFIC is horrendous. How many people want to spend hours sitting in traffic to see some tourist trap? Even the places worth seeing are only worth seeing once.

      I live a few blocks from the Santa Monica Promenade. Years go by without me ever going through there, it’s so packed. What is it, really? Three blocks of over-priced clothes boutiques, and some pretentious outdoor dining.

      Venice? I hate driving from SM to Venice. And the streets are getting more congested because car lanes are being converted into bike lanes throughout the westside.

      I’ve been to Knotts Scarey Farm a few times on Halloween. It’s okay, aside from the traffic. It’s a parking lot the last several blocks to the site.

      Tar Pits? Seen ’em once, in the 1990s. Hardly worth seeing twice.

      Went to Disneyland in the late 1980s, not since.

      I’ve often driven down the Sunset Strip. It’s a congested street, impossible to find any street parking. Valets everywhere. But really, it’s just another street with pretentious outdoor dining and clubs. Not much there if you’re not looking to get high or impress the impressionable.

      L.A. really is overrated. The main reason I stay is because most of my friends and acquaintances live here. The people are nice. The weather, traffic, and cost of living are not.

  • Interesting. I have lived in several cities in America and abroad. LA is easily my favorite. Weather is a big part of it. It’s not for everyone. I have seen many people move here from back east, suffer through culture shock for a couple of years and then move back. Whenever I talk with my friends from back east during the winter they inevitably ask: “how’s the weather?”.

    But really this is about excluding a huge potentially productive segment of our population from participating in our economy.

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