California Vs Out of State (really, but why?)

[Osazee Edebiri]

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

[Chris John]

I'm a big appreciation guy, for sure.  However, I feel like people pooh-pooh cashflow way too much on this site nowadays.  Cashflow allows liquidity, plus a reinvestment opportunity that isn't as easy to find in a property that you are waiting to appreciate.

Appreciation in a house is great, but you have to refinance or sell to access it.  It quits growing exponentially and starts growing linearly if you don't.  Also, if you do refinance it and buy more and the new properties are also "appreciation plays", you now have to bankroll multiple properties each month with a negative cashflow to survive.  Granted, if you have diamond hands and can hold for decades, you'll make a fortune, it's just having to kick 8k each month to hold multiple properties that's the problem. 

Additionally, are you subtracting your monthly cash infusion from your ROR?  Are you calculating the opportunity cost of using present dollars to simply cover mortgages instead of investing it at 15-25% and calculating that growth too?

However, cashflow gives you the opportunity to reinvest again and again very easily.  It's liquid every single month.

If you bought property A for appreciation and property B for cashflow, it's totally unfair to compare property A to property B.  In theory, if invested correctly, property B should have allowed you to buy properties C - G, for example.

When you now compare property A to properties B-G, the results should be a lot closer.  Plus, you've had liquidity the entire time.  Also, you've been able to diversify your risk across properties and locales.

I'm not saying cashflow is better, I'm just saying there's definitely a place for it and I'm not sure it's always considered.

[Aaron Gordy]

@Osazee Edebiri  Agreed on many points but I think that speculation should be reserved for Vegas. Finding cities that have the largest number of engineer job openings is not sufficient. If that was the case then places like Santa Monica would be off the radar when we both know that is a great place. Learn from history as history repeats itself. Austin has been a job creating machine for many decades and not necessarily with engineering. I would suggest look at places where creative types like to go.

[Carlos Ptriawan]

Quote from @Aaron Gordy:

@Osazee Edebiri  Agreed on many points but I think that speculation should be reserved for Vegas. Finding cities that have the largest number of engineer job openings is not sufficient. If that was the case then places like Santa Monica would be off the radar when we both know that is a great place. Learn from history as history repeats itself. Austin has been a job creating machine for many decades and not necessarily with engineering. I would suggest look at places where creative types like to go.

 Then invest in Austin and Santa Monica.

There're another place like Santa Monica and Hawaii too where the home price is rising because of their unique niche industry (eg: movie industry and tourism) and landscape. 

The thing about 'engineer job' is it's a worldwide phenomenan not just happening in US. The same thing that happened in San Jose also happened in Bangalore India , Singapore and other tech cities. Whenever there's a new tech center growing, the home sector explodes.

Bay Area would be there almost as forever as technology revolution is still far from ending, in fact it's just beginning. Austin is playng catching up.

Want cash flow ? go to Indiana or Alabama market and Ohio where cap rate is high.

[Kerry Noble Jr]

bring that 1M to my city and in 15 years im sure it would be more valuable. 

[Carlos Ptriawan]

I also want to add that not every city in CA is having "sustainable appreciation". This is one thing to consider when you try to invest.

Case in this example is Sacramento,CA ; currently it has only 800 engineers job wanted with 1,000 house for sale. So ratio is 1:1 , compare to 10:1 in Bay Area. The mortgage to median income ratio in Sacramento is actually also higher there than Bay Area although from nominal price it seems Sacramento is cheaper than the Bay. 

After interest rate hikes, Sacramento felt more dramatic price depreciation because the local economy can't support such price appreciation.

If you ask me where to invest for sustainable appreciation between Kansas City and Sacramento, I will select KC.

[Patrick Drury]

@Osazee Edebiri
If you're not able to invest locally or are not able to get the returns, you are looking for you should invest out of state. I would recommend looking in the Midwest. Columbus OH is a great place to start looking in the Midwest. It's a nice balance of cash flow and appreciation. Also, it has lots of job opportunities and population growth. On top of all that it's landlord friendly. 

[Greg R.]

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

CA property tax is actually really low compared to other parts of the country. Look at the percentages. 

[Tony Kim]

Quote from @David Song:

Quote from @Dan H.:

Quote from @David Song:

Quote from @David Song:

Quote from @Osazee Edebiri:

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

This question has been debated on BP for over a 

This question has been debated on BP over a decade. About 10 years ago, I made the decision to stay in CA Bay Area, rather than OOS. Looking back, that decision certainly paid off big time. I am curious about those folks decided to go OOS 10 years ago, how are they doing. I am sure they are doing fine, with the nationwide appreciation in the recent years. But I would love to know if they regretted their decision.

Around 20 years ago we purchased two OOS properties. I loved the location of both but especially one on the sand at Gulf Shores Alabama. The other was lake front in Alabama. We sold them both because our San Diego RE was performing far better. Two hurricanes hitting the Gulf Shore RE in consecutive years was also a factor on us selling that property. The properties were not appreciating like San Diego. the cash flow was going in the wrong direction because the STR rents were not going up as fast as the property tax and insurance. Our insurance on the Gulf Shores property went up something like ten fold in just a few years (going from memory). There were two large claims for the damage from the hurricanes.

There are times that I wish we had kept the Gulf Shores property, but it is not because I believe it would have produced better return than the San Diego properties.  It is because a duplex like that does not exist in Southern Ca and, if it did, it would be >$10m.  

Our San Diego properties have produced great returns.  The rents compared to purchase price is incredible.  The appreciation has been incredible.  The property tax is very reasonable especially on the longer hold properties (thanks prop 13).  The insurance has increased at reasonable rate.  

Thanks for sharing your experience. Personally, I know friends who sold their Bay Area property and move to Las Vegas. They missed about 1 M in appreciation over the last decade. That is for only 1 property.

 Today, I see a lot of new investors repeating the same investing philosophy that those OOS advocates made 10 years ago. They only believes in cash flow, not appreciation. They believe cash flow is real, appreciation is just a dream.

At least from my investment experience over the last 13 years, the real world outcome is contradictory to their belief.

Cash flow is superficial, appreciation is the real deal. Your investment outcome will largely dependent on the regional appreciation, not its cash flow. Cash flow can be affected by accidental incidence, like a stolen AC, a bad tenant, etc. Whereas appreciation is not. Ten years ago, if you buy a property in Bay Area, no matter how bad the cash flow was, and how bad the tenant was, you will at least triple your property value. 1 M property purchased in 2012, 200k down, now 3m. How much return is that? What kind of cash flow can compare to that kind of appreciation?

The best investment is usually with the least cash flow, contrary to what is preached on BP.  The only regret I have is that I should not focus that much on cash flow 10 years ago. Instead, I should have bought property with negative cash flow in better neighborhood.

Ouch, that must have hurt really bad. I guess if they decided to relocate to LV to start purchasing performing properties, it would sting a bit less, but I'm guessing they didn't do that. I've seen several indicators showing that LV is off-the-charts overpriced right now. But I guess that isn't as bad as what a certain buddy of mine did, which was to sell his home in Los Angeles and move his family into an apartment about 5 years ago in anticipation of another GFC-like correction. God help him.....I don't think he will ever get the chance to win an argument for the rest of his life after that stunt.

I also decided years ago that OOS just wasn't for me and it wasn't a long-term solution to build wealth. 

[Carlos Ptriawan]

I will be very direct here. Biggerpocket is one of the worse places to ask for investment advice because most folks are "sell-side" and they try to promote their city without using data or even basic algebra. Even the podcast is not that great as the approach is inaccurate I think. But I found much better qualified-investors/QP level investors from this site also ; my investment is better since I'm more using qualitative data and not people opinion.

Real estate is actually very easy, you just need to buy where there's an economic boom and expansion.

[Brandon Goldsmith]

I would choose a market that is on the rise and also gets positive cashflow. Appreciation is great but I usually recommend that the properties at least break even if that's the play @Osazee Edebiri

[John Williams]

Quote from @Osazee Edebiri:

Quote from @John Williams:

Appreciation is always a gamble - the past will not necessarily look like the future (especially in California). If you can still find cash flow, that is a different story. However, if you are betting on appreciation alone, you should be able to service the debt/expenses in some capacity just in case your assets don't appreciate as fast as you'd like. 

In my market, you can leverage $1,000,000 and pick up 15-20 solid homes that produce decent cash flow and appreciation!

 See that sounds cool at first, but 15-20 homes vs 1, 2 or 3 California homes for $1m. How much rent do you get on a home that cheap? These are roughly 50 to 65k houses?

 You're looking at a quality $200k home, B-neighborhood, that rents for $1500, and that has appreciated between 10-25% / year over the last 3-6 years

[Matthew McKee]

Quote from @Osazee Edebiri:

Quote from @Matthew McKee:

Quote from @Osazee Edebiri:

Quote from @Matthew McKee:

Quote from @Carlos Ptriawan:

Actually there's no such this as CA vs out of state.
This is all just mathematical equation dude. So lets have this exceltable how the house appreciation performs since 2009 :

Bay Area    6.9%
San Diego  6.5%
Kansas City 3.2%
Nationwide Average 3.1%
Typical Inflation every year 2.9%
..
Indianapolis,IN 1.8% (just for illustration ,not accurate)
Birmingham,AL  1.5%  (just for illustration,not accurate)

 There's a metro that's accelerating double in the inflation rate, that's where you see the highest acceleration. The highest acceleration is equal to a lower cap rate equal to lower cash flow.

In the other spectrum, there're cities where it's lacking appreciation, so you can still always have higher cash flow/higher cap rate in that city.

In another question: what makes the city appreciates a lot? economic booking and highest supply/demand ratio.

In the year 2300, if Silicon valley moves to Boise Idaho, Boise Idaho will appreciate double as well. 

So it's not about "where", but it's about "economy". Higher economic output triggers higher appreciation, it happened everywhere regardless it's San Jose, NYC, Singapore, Berlin, or London. 

It's a function of math.

this is an astute breakdown.

At the end of the day, no one has a crystal ball. If the numbers makes sense, a deal can work in any market but who knows what that market will become in 15 years. 

 Right, but if that was truly the case people wouldn't associate such a negative connotation with investing California vs any other state. 

Biases are largely formed from historical data or common rhetoric, biases are also personal opinions often shared by a number of people. Yes California is an intimidating market and the current tenant/landlord laws make it even more so but numbers don’t form biases and the future isn’t chained by the past.

I’m mostly just being philosophical but I do believe every market has the potential to be flipped.

 Agreed, but real estate investing is based on past data mixed with calculating future projections in order to pick where to currently invest. If Apple or Tesla builds a big corporate office in a podunk town, the values will go up. 

Yeah, we’re saying the same thing. I should have refined my statement. I was referencing the 15 year metric as originally posted. It’s much more likely to get reliable information pushed 3-5 years in advanced than 10-15 years.

[Alex Olson]

Kansas City is a great 1031 Exchange market because it allows you to go from your initial investment in a high appreciating area like the Bay Area and in just a few years take your extraordinary gains that you made from the sale and put it in a market like KC and reap appreciation, cash flow, and land lord friendliness (together with low taxes). Of course I am partial to KC but I think a lot of midwest markets are good for this. I have just heard that KC is hard to miss on an investment from a location standpoint but that some growing cities do have many places that need to be steered away from. Hope that helps!

[Jay Hinrichs]

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

property taxs are not high in CA..  they are high in TX  IL and other states but not CA.  And not sure about volatility either although 08 meltdown cental valley and  Eastern LA got hammered at the same rate that  PhX  LV  FLA  GA got hammered .  Tenant rights is an issue though on the West coast.  It will be interesting to see where it all goes in the coming years.. I grew up in Cupertino and well my parents bought our home in the mid 65s for 25k  and well its worth probably 3 mil today.. so thats one positive about what has happened in Ca.. and I have benefited personally in the appreciation game in CA.. I bought a property ( Bare land ) for 30k in 96 in Sonoma county never touched it and sold 2020 for 2 mil.. thats not bad. I could have bought a rental for 30k some where and probably made net 400 a month maybe  or 5k a year profit times 24 years thats 120k profit and the rental is worth 80k today in those markets and probably would have spent 40k over those 24 years minimum on cap ex.. So which is better ???

[John T.]

Past performance is no guarantee of future performance.

[Tony Kim]

Quote from @Jay Hinrichs:

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

property taxs are not high in CA..  they are high in TX  IL and other states but not CA.  And not sure about volatility either although 08 meltdown cental valley and  Eastern LA got hammered at the same rate that  PhX  LV  FLA  GA got hammered .  Tenant rights is an issue though on the West coast.  It will be interesting to see where it all goes in the coming years.. I grew up in Cupertino and well my parents bought our home in the mid 65s for 25k  and well its worth probably 3 mil today.. so thats one positive about what has happened in Ca.. and I have benefited personally in the appreciation game in CA.. I bought a property ( Bare land ) for 30k in 96 in Sonoma county never touched it and sold 2020 for 2 mil.. thats not bad. I could have bought a rental for 30k some where and probably made net 400 a month maybe  or 5k a year profit times 24 years thats 120k profit and the rental is worth 80k today in those markets and probably would have spent 40k over those 24 years minimum on cap ex.. So which is better ???

Biggest mistake my parents made was to sell their prime Manhattan Beach home. Per Zillow and Redfin, the house is now worth an estimated $5 million. If they had kept the home, they would be paying property taxes based on an assessment value of around 500K IMO. Talk about low property taxes! Of course, they had no way of knowing MB would be the de facto location for rich people living in Southern California. But it's amazing how this false narrative about Californians paying high property taxes keeps getting perpetuated (kinda like California being broke). What makes property taxes even more insanely low in CA is if you are 55 or older, you can sell your primary home and buy a new one and transfer your base year value to avoid a sudden jump in taxes based on your new assessed value.

[Jay Hinrichs]

Quote from @Tony Kim:

Quote from @Jay Hinrichs:

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

property taxs are not high in CA..  they are high in TX  IL and other states but not CA.  And not sure about volatility either although 08 meltdown cental valley and  Eastern LA got hammered at the same rate that  PhX  LV  FLA  GA got hammered .  Tenant rights is an issue though on the West coast.  It will be interesting to see where it all goes in the coming years.. I grew up in Cupertino and well my parents bought our home in the mid 65s for 25k  and well its worth probably 3 mil today.. so thats one positive about what has happened in Ca.. and I have benefited personally in the appreciation game in CA.. I bought a property ( Bare land ) for 30k in 96 in Sonoma county never touched it and sold 2020 for 2 mil.. thats not bad. I could have bought a rental for 30k some where and probably made net 400 a month maybe  or 5k a year profit times 24 years thats 120k profit and the rental is worth 80k today in those markets and probably would have spent 40k over those 24 years minimum on cap ex.. So which is better ???

Biggest mistake my parents made was to sell their prime Manhattan Beach home. Per Zillow and Redfin, the house is now worth an estimated $5 million. If they had kept the home, they would be paying property taxes based on an assessment value of around 500K IMO. Talk about low property taxes! Of course, they had no way of knowing MB would be the de facto location for rich people living in Southern California. But it's amazing how this false narrative about Californians paying high property taxes keeps getting perpetuated (kinda like California being broke). What makes property taxes even more insanely low in CA is if you are 55 or older, you can sell your primary home and buy a new one and transfer your base year value to avoid a sudden jump in taxes based on your new assessed value.

 yes porting your tax base is a CA exclusive from what I know and those in other states probably have no clue why would they..  But yes 

talk about some of the best RE tax treatment in the country thats right up there..  you sell for massive gain in the Bay Area you go to gold country buy a 1million dollar home and still pay tax's on a 500k base.. how good is that.. this is one thing that keeps CA residents from retiring in other states. Not to mention all the outdoor pursuits and wine country and weather :)

[James Hamling]

Quote from @Osazee Edebiri:

Quote from @Zach Cohen:

I am a new investor in the San Diego area and I am weary of investing here/ California for multiple reasons.... the income tax on rentals is high... like the above poster stated the tenants can essentially squat here with out paying rent and landlords have no rights... and this is not the same California of even 5 years ago. The state is overrun by crime and homelessness, people are leaving this state in a mass exodus as are corporations. 

Agreed, some nasty issues, but do you think there is another state that beats California in 15 years and why? 

Stating the negatives of Cali doesn’t mean that other states will beat it in 15 even with those issues.

 Another state that beats CA with 15yr Len's, there is about 42 of them, take your pick. 

Look, first and foremost, look at your median home price. It's so high, how much appreciation can happen? To argue they can considerably appreciate is to argue that wages can by 3x/4x national average in CA. Why would any co. with half-a-wit have there operations in a place where production cost will be a multiplier higher? 

Silicon valley is in process of relocation, along with countless other CA based operations for this exact fact. 

CA is arguably seen it's peak. There is a long list of major issues starting to pop up, water is just 1. Not to mention there is a very real probability that CA will no longer be "CA" in 15 yrs, very good chance it will be 2 separate states. It's at the final mile for this to happen and the water issue could be the final straw that breaks the issue. 

Countless other states that have a lot of growth happening, and on the horizon to come. CA, are we to believe it has another 30% growth over next 15yrs? How? 

[Jay Hinrichs]

Quote from @James Hamling:

Quote from @Osazee Edebiri:

Quote from @Zach Cohen:

I am a new investor in the San Diego area and I am weary of investing here/ California for multiple reasons.... the income tax on rentals is high... like the above poster stated the tenants can essentially squat here with out paying rent and landlords have no rights... and this is not the same California of even 5 years ago. The state is overrun by crime and homelessness, people are leaving this state in a mass exodus as are corporations. 

Agreed, some nasty issues, but do you think there is another state that beats California in 15 years and why? 

Stating the negatives of Cali doesn’t mean that other states will beat it in 15 even with those issues.

 Another state that beats CA with 15yr Len's, there is about 42 of them, take your pick. 

Look, first and foremost, look at your median home price. It's so high, how much appreciation can happen? To argue they can considerably appreciate is to argue that wages can by 3x/4x national average in CA. Why would any co. with half-a-wit have there operations in a place where production cost will be a multiplier higher? 

Silicon valley is in process of relocation, along with countless other CA based operations for this exact fact. 

CA is arguably seen it's peak. There is a long list of major issues starting to pop up, water is just 1. Not to mention there is a very real probability that CA will no longer be "CA" in 15 yrs, very good chance it will be 2 separate states. It's at the final mile for this to happen and the water issue could be the final straw that breaks the issue. 

Countless other states that have a lot of growth happening, and on the horizon to come. CA, are we to believe it has another 30% growth over next 15yrs? How? 

 this is always a fun debate.. I bought my first house in 1979 in MIlpitas CA for 70k new construction. Value today probably 1mil easy.. I bought my next home in palo Alto for 185k in 1985.  the value by 1991 had shot up to 500k . it was a small 3 and 1 900 sq ft ranch one car garage.  I bought a home in the Napa valley in 91 for 480k it was a bank repo I paid 5k down and 10k to join Silverado CC which was mandatory.. so I did not need to sell PA to move.. But I though heck how could that 900 sq ft home go up past 500k no way no how..  fast forward to today and well the people that bought it did a 500 ft addition to the primary added a bath and well last I saw it sold for just under 3 million..  Can 3 go to 4 can 3 go to 5 mil.. who knows..  500k went to 3 million.. I cash out at the 500k and of course that equity help build that next run in real estate we did.. But no way to predict the future as we know.

I was just in San Jose Cupertino for a meetup and driving around my old hood  ( apple headquarter 1 mile away those facilites are not going anywhere anytime soon and soooo much new construction of huge facilities of tech companies i never heard of .. not to mention google and facebook and all the others.. Sure some have departed for Texas .. But one thing I think is true once you sell out of Ca its damn hard to go back because of appreciation in that area. 

[David Song]

Quote from @Tony Kim:

Quote from @Jay Hinrichs:

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

property taxs are not high in CA..  they are high in TX  IL and other states but not CA.  And not sure about volatility either although 08 meltdown cental valley and  Eastern LA got hammered at the same rate that  PhX  LV  FLA  GA got hammered .  Tenant rights is an issue though on the West coast.  It will be interesting to see where it all goes in the coming years.. I grew up in Cupertino and well my parents bought our home in the mid 65s for 25k  and well its worth probably 3 mil today.. so thats one positive about what has happened in Ca.. and I have benefited personally in the appreciation game in CA.. I bought a property ( Bare land ) for 30k in 96 in Sonoma county never touched it and sold 2020 for 2 mil.. thats not bad. I could have bought a rental for 30k some where and probably made net 400 a month maybe  or 5k a year profit times 24 years thats 120k profit and the rental is worth 80k today in those markets and probably would have spent 40k over those 24 years minimum on cap ex.. So which is better ???

Biggest mistake my parents made was to sell their prime Manhattan Beach home. Per Zillow and Redfin, the house is now worth an estimated $5 million. If they had kept the home, they would be paying property taxes based on an assessment value of around 500K IMO. Talk about low property taxes! Of course, they had no way of knowing MB would be the de facto location for rich people living in Southern California. But it's amazing how this false narrative about Californians paying high property taxes keeps getting perpetuated (kinda like California being broke). What makes property taxes even more insanely low in CA is if you are 55 or older, you can sell your primary home and buy a new one and transfer your base year value to avoid a sudden jump in taxes based on your new assessed value.

 Too many examples like that. Most Bay Area investors I personally know are strongly against OOS investing, whereas BP thinks OOS is the smartest invention in the world. One old couple who owned an apartment in San Bruno told me that they lost everything in their Las Vegas apartment, whereas the san bruno one performed way better during the 2009 recession.

Looking back 13 years, if I invested anywhere other than Bay Area, my net worth would be less than half, probably 60%-70% less. The OOS advocates today, making the same argument that persisted on BP for over a decade, still do not realize that their theory has already been proven wrong by the recent history. Nobody can predict future, but the past 10-year history has already been written. It’s not hard to do a retrospective analysis and find out that any Bay Area investors over the past 10 years are big winners. 

[David Song]

Quote from @James Hamling:

Quote from @Osazee Edebiri:

Quote from @Zach Cohen:

I am a new investor in the San Diego area and I am weary of investing here/ California for multiple reasons.... the income tax on rentals is high... like the above poster stated the tenants can essentially squat here with out paying rent and landlords have no rights... and this is not the same California of even 5 years ago. The state is overrun by crime and homelessness, people are leaving this state in a mass exodus as are corporations. 

Agreed, some nasty issues, but do you think there is another state that beats California in 15 years and why? 

Stating the negatives of Cali doesn’t mean that other states will beat it in 15 even with those issues.

 Another state that beats CA with 15yr Len's, there is about 42 of them, take your pick. 

Look, first and foremost, look at your median home price. It's so high, how much appreciation can happen? To argue they can considerably appreciate is to argue that wages can by 3x/4x national average in CA. Why would any co. with half-a-wit have there operations in a place where production cost will be a multiplier higher? 

Silicon valley is in process of relocation, along with countless other CA based operations for this exact fact. 

CA is arguably seen it's peak. There is a long list of major issues starting to pop up, water is just 1. Not to mention there is a very real probability that CA will no longer be "CA" in 15 yrs, very good chance it will be 2 separate states. It's at the final mile for this to happen and the water issue could be the final straw that breaks the issue. 

Countless other states that have a lot of growth happening, and on the horizon to come. CA, are we to believe it has another 30% growth over next 15yrs? How? 

I do not know if you have invested in Bay Area before. In terms of salary, one of my tenant renting a 3bed1.5bath house in south San Francisco, earns over 320k as a fresh college graduate. Majority of my tenants earns over 10k per month, even with construction job and cleaning job. Annual family income of 120 k is considered low income and eligible for subsidized housing.

I used to hire a migrant demolition guy, who left US about 5 years ago. His son and daughter remained in US. His son, jose, took over the operation at the age of 19 years old. He earns about 8 k/mo by doing demo job and some excavation job. His wife can easily earn about 3-5k. Those are 20 year old non college educated kids. 

What lies in the future is open for debate, but what happened in the past is already clear. At this moment, I still believe that Bay Area is the best RE location in the US. Bought 4 properties this year, over 3 m total.

[Carlos Ptriawan]

Quote from @Luka Milicevic:

Quote from @Karen Margrave:

Like it or not, no place is like CA. We have coastal areas, mountains, lakes rivers, cities and beautiful country properties. Plus the weather is to die for! Those things alone keep CA a high demand area to live and invest in. Personally I HATE the politics of CA, but let's not go there. 

 "let's not go there" is the whole reason people are leaving. 

Other states don't have those features, but they do have others-for example TN has beautiful country properties that people can actually afford. Did you know Somalia has one of the most beautiful, untouched beaches in the world? Would you live there? 

Dude I want to leave California too.

I want to move to Alabama Mansion with an Alabama home price, income with Bay Area salary and stock options paid by Mark Zukerbergh ; and Hawaiian tidepool backyard.

Can I do that :) LOL

[Bruce Woodruff]

Quote from @David Song:

We all know that in the past, Cali was the bomb. We're talking about the next 15 years...... Lots of variables here, way too many to really have even an informed opinion.

[David Song]

Quote from @Bruce Woodruff:

Quote from @David Song:

We all know that in the past, Cali was the bomb. We're talking about the next 15 years...... Lots of variables here, way too many to really have even an informed opinion.

Almost identical debate 10 years ago. For the future, each person shall make their own investment decision. I am simply saying my decision is stay within Bay Area. That was my decision 10 years ago. That is also my decision today.

In another 10 years, we shall come back and revisit this debate. I am sure there will be another batch of new investors claiming that Bay Area is too expensive.

[Bruce Woodruff]

Quote from @David Song:

Exactly. You gotta do you. And there are bigger things than just money in play here, which will drive a lot of these decisions.