Quote from @Steve K.:
Who buys a whole state though? Most people just buy individual properties.
I jest of course, but it's a silly thought to imagine states appreciating. If you want useful data in real estate you have to zoom in a lot more. It is also a silly (and divisive) exercise to imagine states appreciating differently than others based on their voting results, or even states being red or blue because no state votes 100% one way or the other obviously. Most states are solidly purple. It's necessary to reduce states to red or blue for the electoral college results, but that's about the extent of the usefulness of being so crude with the data.
Real estate data needs to be much more local than the state level to tell us anything useful, that goes without saying. For example most investors buy in cities, and just about every major city in the US is blue. So even if you're buying exclusively in "red states", you're probably still buying in a "blue city". A comparison of major red cities vs. major blue cities would basically be Oklahoma City and Fort Worth vs. every other city in the country, so how useful is that? If you really want to compare red and blue areas to see which appreciate better, you'd have to compare rural vs. urban areas because rural areas are mostly red and urban areas are mostly blue. Or you can compare the very most red or blue states to each other, like CA, VT, MA and DE vs. OK, WY, ID, and WV. It would still be pretty asinine though. Landlord/ tenant laws are also typically made on the municipal level more-so than the state level with some exceptions like the statewide rent control ban that we have in Colorado...
Sorry I just don't see how it can be useful to look at real estate from a state level and pretend that electoral college votes have much if anything to do with appreciation. There are so many other factors in play that are so much more important for appreciation than votes. Especially because the voting margins are actually super narrow in a lot of states, and really most are a shade of purple. 10 states swung from red to blue by less than ~5% of the votes in the past two elections, and a handful by less than 1%. If several thousand people had voted differently would those states appreciate any more or less?
I'll take the purplest state please.
Appreciate the breakdown. I've been on BP long enough to read the "California is a terrible place to invest" posts. California is a huge state - San Francisco Bay Area, Sacramento, Central Valley, NorCal (Sonoma, Napa, Eureka, etc), LA area, San Diego, and many parts of SoCal that I don't know about.
I don't dispute that it leans towards tenant friendly and has a lot of regulations. Rent control is much more localized. For example, San Francisco considers a multi-unit to be 2 unit or more, which includes having an ADU on a SFH property - that would be under rent control. If buying now, I personally wouldn't buy in S.F., Oakland, or Berkeley which are very pro-tenant. I think the other parts of the Bay Area are much better for investing. I just walked a 4 unit in a suburb of S.F. - that's not under rent control. Sacramento leans towards a little more landlord friendly from talking to agents there.
We have Proposition 13 which limits property tax increases to 2% a year (unless doing a significant renovation causing it to be re-assessed). Many long time investors are paying $2000 a year property tax on property valued at $1 million. It's unfair to new homeowners and investors, where the value is re-assessed upon purchase. How many other states have this type of property tax increase cap?
CA recently passed a proposition in Nov. 2024 banning rent control between tenants. Ex: Tenant A who's lived in a unit for 30 years paying $1400 a month rent moves out. New Tenant B who moves in can charged market rate rent at $4000 a month. There were efforts to prevent the huge increase between Tenant A and B. Luckily this didn't work - rise in insurance costs and other costs and expecting landlords to keep rents at year 2000 level isn't common sense.
On the flip side I've heard "Texas has high property taxes and you shouldn't buy there". I have CA investor friends recently buying multi-units and commercial property (for businesses) in Texas.
Thanks for coming to my TED talk :)
