What'll Happen In California

I've sat and watched over the last three months.....probably twenty different news reports talking of the state pension cuts, the real estate going up on the market, and people making the decision to leave California.  I've come to four observations.

1.  A lot of the state or local employees who had the five-star pension deals are now waking up to realize....yes, the state can cut the pension deal by 50-percent.  I watched the affect on one lady (65 years old) who had $49,000 a year coming in, and then got the letter that the cut would be bringing her down to $19,000.  Taking that and her social security.....she'd do OK, but not living in California. 

So you imagine thousands upon thousands of life-time Californians (some even grew up there in the 1960s), who now look at a marginal pension, high property taxes, and a difficult landscape.  Why would you stay?

2.  This crowd has taken to an evaluation.  Staying there?  I have my doubts.  I think a wave has started, and as each week passes and people see 'Joe' moved to Vegas....'Jean' moved to Idaho....and 'Marvin' moved to Mississippi....the enthusiasm to take the marginalized pension, and just vacate the state.  This means that you will put the house that you've had for twenty-five years or more up, and take the profit to be part of your new lifestyle.

3.  So, as these houses come onto the market.....in the first stage.....people will flock in and buy them.  A year or so into this wave....more houses are on the market than buyers.  People are now sitting on a owned property....living two states away....and finding that selling is next to impossible.  Then they discover a year later, that renting is now difficult, unless you take a 40-percent cut on rent. 

4.  So then you get to the thrilling part of the game.....you have a home....you can't find renters....you can't find buyers, and you got fewer and fewer cops around.  You wake up one day to hear from a neighbor that some idiot and his family got in and are living in the house...squatting.  You try to get the cops and authorities to react....they won't.  Someone starts to collect data....finding 15,000-plus squatters existing in southern California (my guess in five years).  The number will be escalating every week. 

5.  While all of this is going on....companies look at long-term planning and realize the taxation issues, the crime, and the reckless behavior of political folks are making this a lose-lose situation....so they start to planning on leaving as well.

When you and look at the 2025 to 2035 era approaching....California isn't the place where anyone would really want to live.  It's a hopeless situation with all those folks planning great retirements five years ago, and now are in some stage of leaving the state to survive.