You are welcome to visit west LA anytime and see for yourself that the millionaires are not fleeing... I literally showed this response to the 2 people sitting next to me who happen to also be the some of the millionaires you speak of and have a much deeper understanding of this state’s economy than I do and they laughed out loud.

This fleeing nonsense reminds me of when people claim they are going to move out of the country if so-and-so gets elected president... and they never do. Bunch of click bait BS.

But I honestly hope you are at least partially right. It’s getting a little too crowded here and there are few houses I have my eye on that I would love see go up for sale 🙂

There are other forces at work above and beyond taxes. Got this in the mail yesterday.. Tech Companies pouring into the Westside.. Amazon took significant space in Culver City. One of Oracle’s 3 NA hubs is in Santa Monica. Adding to the traffic and demand for RE. I think there will be a correction. Hoping so a bit. Last correction in 2009 saw our neighborhood down 20%. Recovered that by 2011. I want to buy something else (in addition to what I have) in that window. Housing downturns are ok..

I don’t consider my house to be an investment.. It’s where I live. The fact it has gone up is a bonus, but I can’t spent the $$ tied up in my house.. 😀

In the 90s I remember hearing about people leaving California, and my first thought was that they left because they couldn't make it. I think this is a very common perception. But the more you live and learn, the more you realize that there are other reasons why people leave a place like California. In our case, we owned our home 2 miles from the ocean, owned a good business, and really had no financial pressures to leave. A big part of it was because we felt that our daughter was on the fast track to junior college, as she was unable to get AP courses in HS. I guess we all think our kids are special, but we really felt like she was being held back in California. Evidently Google agreed. So leaving was much more about the lack of opportunity than anything else.

If we were to move back, which we can afford to do, the decision would be a lot harder. If you are thinking about this move, consider the following:

1. A decent home in a decent area is going to cost you over $1 million. If you want a nice home in a nice area, plan on $1.5 to $2 million minimum. And that $1.5 million dollar home is not going to be anything to write home about. These are going to be places within a few miles of the ocean. I don't see any reason to live further away than that, because it is too hot and boring.

2. Property taxes on a place like that are going to run you $15k to $20k per year, if not more. Your ability to deduct those taxes on your federal return is going to be severely limited. See below.

3. You can only deduct the interest on the first $750k, so if you get a loan above that the interest in not deductible on your federal return.

4. To afford a place like that you better be making over $250k. The state is going to hammer you to the tune of about 13.3% state income tax, the highest in the nation. But it is graduated, so on $250k maybe you are paying 10%. If you make over $1 million add another 1%.

5. On your Federal return you can only deduct a maximum of $10k on state and local taxes. So assuming the situation above, you are going to have at least $20k in state income taxes, plus $20k in property taxes. Of the $40k, only $10k is deductible. Plus the mortgage interest on that loan is partially non-deductible. The bottom line is your tax bill is most-likely going way up, unless you are coming from NYC.

6. Next, you are going to have to send your kids to private school unless you live in a really good area. Plan on another $20k to $60k per year per student, starting in elementary school. This only gets worse as you get to High School. You will need suitcases of unmarked bills to get into an elite university.

7. Speaking of that, you now know the games that have been played in California regarding higher education. I read that 4,000 applicants with perfect SATs and 4.0+ GPAs were turned away from Stanford last year alone. So if you are planning on your bright kid getting into one of the top schools, good luck with that.

8. If for some crazy reason you have to commute to work, and you don't live within a few miles, god help you. Los Angeles has the world's worst traffic 6 years in a row. How bad is it? Your blood pressure is going to go up considerably. You could be nicer than the Pope, but you are going to learn about your darker side after spending 2 hours in your car. Make sure you have a really good car too, because you are going to be living in it. The last time we visited northern California it took us 4 1/2 hours to go the equivalent of a 1 hour drive. The good news is traffic is pretty light at 3am most of the time.

9. I hope your Spanish is good, because more people are fluent in Spanish than English in the state. In 1980 when I moved to California the non-Hispanic white population was 80%. Today it is 38% and dropping like a rock. You have lots of choices for Mexican food though.

10. A recent study found that the top 1% of taxpayers in California pay 50% of the taxes. If you are one of the 1% don't expect any sympathy from the other 99% of voters, many who illegally immigrated from south of the border. Of particular concern is something called Prop 13. This proposition limits the amount your property tax can go up each year, and it has created a real distortion. On the same street some people pay a few hundred in property taxes while others pay over $10k. As California's financial situation deteriorates (see below) the money is going to have to come from somewhere. Raising property taxes is going to be an obvious target. Now you might think that they would raise the taxes on people paying hundreds and cut the taxes on people paying $10k, but that isn't how California works.

11. California is extremely mismanaged, financially. How mismanaged is the worlds 5th largest economy? According to a January 2017 study, California state and local governments owe $1.3 trillion as of June 30, 2015. On top of that the Bay Area Council Economic Institute pegs the cost of California's unfunded infrastructure needs at up to $737 billion. Why does this $2 trillion matter? Well, with the top 1% paying half the taxes, money will need to be raised to pay for these obligations, and the 1% are the ones with money and very little political power. With so many poor people coming to California from socialist countries south of the border, their attitude is to take from the rich to give to the poor. And yes, even illegals can vote in California. If you belong to the 1%, you officially have a target on your back.

12. The state is prone to earthquakes. In the 30 years that I lived there we had a few big ones, but overall I would say it is an overblown concern. It shakes for a while, but I would personally rather deal with an occasional earthquake than annual hurricanes. But if you are going to sink $1.5 to $2 million into real estate in the golden state, understand that earthquake insurance is brutally expensive. In fact, unless the fault line runs right under your house the chances of you getting any payback from that earthquake policy are slim and none.

13. The weather is really good. The women are even better.

You might think I am joking, and this post is nothing but an exaggeration. So yes, California has some positives. And it has a cool factor to it. All the big tech companies are there, and it has entertainment to boot. But a lot of people find some of the above reasons too much to handle, and that is why they leave. It isn't because they cannot make it. They simply decide that living in a place like California is just not worth it. It is all personal choice. Hey, if you can deal with the above and are happy, more power to you.