[bugglebeetle]

> “The reason why Texas and Florida are doing well and California isn’t, it’s the cost of housing and high taxes,” said Sung Won Sohn, an economist at Loyola Marymount University in Los Angeles. “We have lost a lot of small businesses.”

This former is the crux of the problem: California entered into a suicide pact with real estate speculators in the 70s, from which it seems entirely unwilling to extricate itself. It’s an incredibly destructive drag on the state’s entire economy that prevents new business formation and labor mobility.

[instagib]

Housing non-eviction laws and policies also are rough.

I tried to look for a home there once. I watched a homeowner break in with a ladder after being evicted then the realtor showed for the viewing then stole his ladder and left.

Another said their house was for sale but the garage was occupied by people who broke in and they could not be evicted until summer was over and before it became winter. The home owner was unavailable to speak to due to health issues related to the struggles.

Found a decent place then looked up the history of the property to find it had many owners and were re-sold due to a sober living halfway house next door.

I have several other examples and many news stories similar including long commutes, higher prices/taxes, etc made moving there or owning a home to rent out a non-starter.

[mistrial9]

laws affecting this and other situations vary from county to county by a lot. It is a factually mistaken to say this is occurring in every place in California.

[ChuckMcM]

You may find this web site enlightening, I certainly did (https://taxfoundation.org/data/all/state/tax-burden-by-state...) This paragraph in particular for me

Since we present tax burdens as a share of income as a relative ranking of the 50 states, slight changes in taxes or income can translate into seemingly dramatic shifts in rank. For example, Oklahoma (10th) and Ohio (24th) only differ in burden by just over one percentage point. Tax revenue growth during the pandemic, however, has not only increased overall tax burdens but also expanded variance among states. In our last pre-pandemic analysis, the 20 middle-ranked states differed by less than a percentage point on effective rate, but in 2022, the difference between New Hampshire (16th) and Maryland (35th) is 1.8 percentage points. While burdens are clustered in the center of the distribution, states at the top and bottom can have substantially different burden percentages: the state with the highest burden, New York, has a burden percentage of 15.9 percent, while the state with the lowest burden, Alaska, has a burden percentage of 4.6 percent.

[TMWNN]

What a great data resource. Thank you for sharing it. That spread between CA/NY and TX/FL really puts things into perspective.

And before someone else rushes in with "Oh yeah, California subsidizes all the hillbillies in the red states!": No, that is not true. Only CT, NJ, and MA's citizens on average paid more federal taxes during 2015-2021 than they received back from Washington. <https://news.ycombinator.com/item?id=38839499>

[davoneus]

Typical; someone with only half of a story pushing an agenda. You can look at the data yourself(*) No state pays more outright than California. Followed closely by NY, Mass, Ct, NJ. Look at per-capita income, and California is receives less than 44 other states. Lets see how does that compare some of those "red" states?MS(#8), Al(#7), La(#11), Ar(#15), Ky(#2), SC(#13), Tn(#16), Wv (#5), Oh(#21), Tx(#36), Mt(#19), NC(#20)?

Don't know about you, but the data sure tells another story doesn't it? I damn well don't live in CA (midwest), but don't believe anything on the 'net until you verify it yourself. Too many people pushing an agenda.

(*) https://rockinst.org/issue-areas/fiscal-analysis/balance-of-...

[TMWNN]

I love how you cited the Rockefeller Institute's URL, as if you're the first one to do so; the whole point of my pointing people to the Rockefeller data was so they could see for themselves. I also can't believe that you actually said "No state pays more outright than California"; anything else would be a surprise given how large the state's population is.

In any case, as I said in my previously cited comment, what matters is the net per capita amount, the difference between how much a state's citizens[1] pay to Washington versus how much they and their state get back from Washington. Californians overall benefited more from federal spending than they paid in federal taxes over the years I cited, just like every other state except three. That's not exactly the "California subsidizes all the hillbillies in the red states" mantra that is so often repeated online.

[1] Not the state itself, which does not pay a cent to Washington.

[SamoyedFurFluff]

This doesn’t quite ring true for me in Florida at least. Most recently, floridas cost of housing is raising ridiculously due to home insurance, with several homes refusing to be insured by anyone for any price. On top of that, assessments on condos and other buildings are raising the costs of high rises as well due to government regulations them to get inspected and implement necessary repairs (after HOAs and condos associations have been skimping on necessary maintenance for decades…)

[bugglebeetle]

The problem of the parasitic drag of real estate speculation is spreading to every major market in the U.S. We’re quickly on track to things getting as bad as they are in Canada. But California has been leading the pack for some time because of some especially stupid laws it passed decades ago.

[marcinzm]

This should be all accounted for in rent. California rent seems to be 50% higher than Florida.

[jajko]

Isn't Florida often hammered by hurricanes? On top of rising sea levels. Compare it to more desert-like California (which has earthquakes but maybe once a century, which then gets some vague misrepresentation in insurance risk calculations).

Insurances generally want your money unless stuff is just too risky. But some folks are eager to build real estate literally on top of dynamite factory if that land would be cheap enough.

So, why are those houses un-insurable is a good question for a start.

Also, OP writes their observation specifically about California.

[jandrewrogers]

California has a substantial wildfire and flooding risk, in addition to its large seismic risk.

[seanmcdirmid]

Most of the wildfire risk is outside of the cities, so it’s not like it is going to influence most homeowner policies. Likewise with flooding.

[jandrewrogers]

Wildfire risk is absolutely in the cities, at least in SoCal. Firestorms move through the canyons in residential areas. Quite a few neighborhoods in San Diego, for example, have been razed to the ground since I lived there, including one I used to live in. These weren’t on the edge of town.

[seanmcdirmid]

There are homes in LA that are at risk to wildfires, in canyons as you say. But that still doesn’t account for most homeowners in the area.

[text0404]

it absolutely does: https://www.bankrate.com/insurance/homeowners-insurance/carr...

[seanmcdirmid]

Ya, Florida is undergoing an insurance crisis right now. It’s not a safe move either.

[nostrademons]

Sort of? California's economy is shaped like a pyramid scheme in many regards, and land speculation is one of them. It also filters down into local tax revenue (housing prices must continually increase for municipalities to balance their budget, because of Prop 13), the type of industries that can be located there (only the most high-margin can survive the cost of living), the sort of folks who live there (who generally want to get rich quick or admit defeat and move home), and the public discourse (which is always hyping up the next big thing).

But in general the bottom of the pyramid lies outside California. All that money that eventually ends up in the pocket of California real estate speculators? Most of it comes from the pension funds and 401(k)s of ordinary workers in the rest of America, which invest in the darling companies of the day not realizing that everything is temporary. Those $2M ranch houses in Silicon Valley are bought by folks bringing in $500K in stock options per year, which is all fueled by their employers being worth $2T.

California's problem today is that we're between pyramid schemes. Most of the old-line web/mobile/marketplace schemes have reached maturity and are nearing collapse, but new pyramid schemes like crypto and AI are just getting started. Until the dollars start flowing in earnest California will likely teeter and stagnate at the top.

[amluto]

There’s also the cost of utilities (which are entirely out of control in the investor-owned utilities regions in CA, and the CPUC seems to be asleep at the wheel). This obviously drives up the cost of everything else.

And, for small businesses, there are the frankly rather silly taxes on small businesses. Want to be a small business doing business in the Great State of California? You will pay $800/year (minimum) for the privilege. Does the state get any value whatsoever from this?

Want to employ anyone? Prepare for a whole pile of taxes, each of which is small, but you need to do an utterly absurd amount of paperwork.

Would it kill the state of California to let a business employ someone and fill out one form and pay one tax?

[freitzkriesler2]

100%. That prop is killing the state. There's plenty of land and no will to develop it.

California is dying because businesses can't pay their employees $75k and expect them to be able to afford a place to live.

[shuckles]

As much as I love California doomerism, the "suicide pact" is fraying and we should appreciate that. Split roll for commercial property tax assessments only lost by 2% on the ballot in 2020 which is a winnable margin. There are many statewide bills passed and proposed for loosening regulation. The legislature is working on reforming outdated insurance regulations that have precipitated the current crisis, etc.

The state has problems but they are not as structural and intractable as most people want to be believe.

[7thaccount]

I've had several offers to work in startups in California that don't do remote. Instead of just saying no outright I ask the HR person where the office is or look it up. It's usually near Silicon Valley and I have to explain that they'd have to pay me CEO pay to make up for the increase in living/home expenses. I mean...$1.5M to get a home similar to what I paid $150k for not that long ago is hard to justify.

[Jcampuzano2]

I was born in California and moved away because I wanted to experience other things after college. It's now 15 years later and plenty of offers have been given for me to move back, but not a single one would make up for my quality of life/cost of living hit I'd make moving back.

I'd have to make like 3x more than I do now to keep the same quality of life and nowhere comes close to that at the moment.

My whole family still lives there but I'd rather them move closer to me than me move there.

[ohples]

If high payed tech workers are being priced out, imagine how it is for people in other roles.

[jjtheblunt]

Yep.

I had for years a fantastic job in one of the inner engineering groups at Apple, loved it, loved the coworkers, the culture, and earned and saved very well, which is the point in mentioning this. but I quit to move far away eventually because I obstinately refused to pay exorbitant real estate prices to get a non shitty home.

Sadly I could understand how folks from outside the US have less perspective on what a shitty ripoff it is, but if you're from a well off suburbia in different parts of the US, it was clearly nonsense to buy there.

[newZWhoDis]

Exactly, and it’s not just the prices it’s the taxes. Sure you make more but you lose a huge % of that and what’s left over goes to insane prices, cost of labor, etc.

[newZWhoDis]

Exactly. Most of California is a huge QoL downgrade so the pay needs to be bonkers to compensate.

[ivalm]

Tbf, startup ceo pay is not that great. Except for maybe very late stage engineers often get paid more in base comp. And at late stage your startup should pay you enough to live in Bay Area.

[7thaccount]

True, but I was just trying to point out that they'd have to pay me a lot higher than they would ever do, to make it not a loss to me. Either you make it remote, or you maybe relocate to some place cheaper.