Living in the Inland Empire of sunny Southern California definitely has its perks. It's seventy degrees outside without a cloud in the sky.....in the middle of FEBRUARY. If I got in my car and drove west for half-an-hour, I'd be at the beach where it's just as sunny and warm. If I drove for the same amount of time going opposite direction, I would end up at a ski resort that's half-buried in fresh powder.
OK, so maybe I'm exaggerating about that fresh powder. The point is, I could go surfing in the morning, ski in the evening, and never be more than 50 miles from my house. If I still don't have your attention, maybe you can relate better to this....We play golf 12 months out of the year! Sure, sometimes it gets a little chilly and I'm forced to wear long pants, but I try not to complain too much. Sometimes I hear about these crazy ice storms on the east coast that get so cold, entire states loose electricity. The only reason the media even reports this stuff to us is to update us on how it's affecting the economy. Maybe that's because the only news station I ever watch is Bloomberg Television. I have to admit it though, one of those storms really did affect all of us. I mean granted, it was only like sixty degrees out here, but my stocks were frozen solid for like two weeks!
Now, before you start thinking about buying a one-way ticket to California, and possibly turn your wife into a "golf widow," I should tell you about a little phenomena we have going on out here. Just in case you ask.........I'M NOT TALKING ABOUT THE EARTHQUAKES! I'm talking about money. Depending on what state you're coming from, uhh, well, uhhhhh, just make sure you're RICH!!! I'm sure you heard all the buzz about "the crazy housing market" out in California. Yeah, well it's true and let me just say that we deserve every little bit of that sunshine we get because we're paying for it! This, ladies and gentlemen, is our ICE STORM! It might be eighty degrees outside but it sure is c-c-c-cold out there!
So, what is the phenomena that drives California's real estate market anyway? From an economic standpoint, it seemingly defies traditional behavior, usually characteristic of a natural market. For the record, I use the term "natural market" loosely because outside influences, like the government (ie.The Federal Reserve), do exist and can greatly impact the over-all climate of the industry. However, take away government involvement, and real estate could arguably be one of the last true "natural markets" remaining. To better describe Cali's real estate, I found this colorful description that I quoted from an anonymous author:
"California's real estate market has grown into a living, breathing creature that can no longer be controlled. It has broken free from the rest of the country and has become an entity, in and of itself. Now, it makes it's own rules! As it continues to grow, the basic laws of economics cease to apply to it. It doesn't know who Ben Bernanke is, nor does it care. Millions of residents slave, day-in and day-out, hoping only to appease the harsh demands. It decides where people live, where they work, and how far they will commute to get there. "
I'm kidding, I just wrote that. Anyway, the point I'm trying to illustration is that in many areas of California, there is no longer a balance in the residential market. Where I live in the Inland Empire, your standard "starter-home" ranges from $450,000-$650,000. How does that happen when the average college grad entering the workforce is LUCKY to make $60,000? The answer is simple. There are no starter homes in the Inland Empire (or Los Angeles). Even with the recent decline in prices, housing is still well out of reach for younger buyers. As long as people continue to demand housing at current prices, the Inland Empire will not cater to first time home buyers.
So unless they move away, people are forced to rent instead of buy, right? WRONG!!! Believe it or not, somebody came up with an ingenues way to turn the DESERT into a suburb. I know what you're thinking...
"Why didn't I think of that?"
Apparently, just by installing a few sprinkler systems here and there, you can actually grow grass in the DESERT! If you're one of those guys who has to have the greenest lawn on the block, the DESERT is the place for you. You can get your very own 5ft. X 10ft. yard in one of our lovely "cookie cutter" housing developments. If you already live in California, I provided a link to a site that has a tool to show you how well you could be living if you were in another part of the country. Enjoy!
Cost of Living - Cost of Living Calculator from CNNMoney
(In searching for some pictures to help illustrate my "housing creature" I found this and wanted to share it with you. It was much unglier than the creature I was talking about!)
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