Chapter 39 California Is Doomed..And It’s Coming To A City Near You!

May 8, 2019

Moving to Mexico:  USAdios.com

Chapter 39:  California Is Doomed..And It’s Coming To A City Near You!

Before I get into my new article, please take a look at our house in Mexico.  If you want to really know why we are leaving California, this is one of the main reasons: our house in Tulum.  And we built it so we could have guests.  We built two 1 bed/1 bath units on the first floor.

If you are looking for a great place to stay in Mexico, our home in the five-star resort at Bahia Principe, Tulum has it all.  Beaches, golf, dining, entertainment, cenotes, pyramids and much more all just outside the front door.

And at $80 USD per night for a unit that sleeps four, it’s also a great deal.  *Each unit has one big bed and one smaller pull-out bed in the living room. 

We have two units available right now.  Click the links below and then contact me for more information and availability.

https://www.airbnb.com/rooms/29243562?s=51

https://www.airbnb.com/rooms/29244518?s=51

Now, on to the article.

TRIGGER WARNING: 

THIS ARTICLE CONTAINS SOME POLITICAL ITEMS.

READ AT YOUR OWN RISK!

YOU HAVE BEEN WARNED.  J

As I have stated many times in this blog, we are leaving our home state of California and moving to Mexico.  We are not alone.

The exodus from the Golden State is in full swing.  In 2017, more people moved out of California than moved in.  The nightly news may not mention this, but there are hundreds of articles online like this one:

https://www.yourcentralvalley.com/news/california/california-exodus-are-some-people-fed-up-with-the-golden-state-/1745163376

According to the State Legislative Analyst’s Office, California lost 6 million residents between 2007 and 2016.  The people who are NOT leaving (yet) are the super-wealthy and the working-class poor.  Right now, it’s mostly the middle-class and retirees who are the ones leaving in droves.  They are being squeezed too hard by the cost of living, the high taxes, the traffic and they are frightened of the increase in crime. 

The middle class carries the weight of the tax burden in the USA.  They are the backbone of our economy.  The poor don’t pay as much in taxes because they simply don’t make much.  *Granted, they pay too much as a percentage of their income, but overall, their contribution to the tax base is much less. 

The USA likes to punish the successful; the more you make, they more they take.  I think a consumption tax, or a flat tax would be much fairer for all, but the politicians like a much more complicated and complex system that they can manipulate.

The rich don’t pay much in taxes because they have corporations, shadow accounts, write-offs, etc.  Many of them pay a lower percentage of their income than their least-paid employees. 

Take a look here:

https://www.moneytips.com/how-the-mega-rich-avoid-paying-taxes

https://www.marketwatch.com/story/81-million-americans-wont-pay-any-federal-income-taxes-this-year-heres-why-2018-04-16

When the backbone of the state departs, the bloated government will lose their main tax base.  When retirees with disposable income leave, there is even less spending.  The party in California is ending. 

Think of California as a restaurant.  Don’t waste your time making too much or this analogy, but in a restaurant, you have the owners, the patrons and the staff.  The owners and the staff have no reason to be there if the patrons don’t visit the restaurant.  If the staff keeps demanding higher wages and the owners keep raising prices, the patrons may leave.  When the patrons leave, the owners will eventually shut down the restaurant and move on to greener pastures.  The staff will be let go and left with nothing, yet they will still need to feed their families.  Will the owners feed them?  No, they will leave.  And the staff will not be far behind. 

39% of California is of Hispanic heritage.  Perhaps, Mexico is slowly retaking the state.  I would encourage that.  I love Mexico.  Bring it on.  But, jeez…what a mess they will inherit. 

Fewer middle-class workers will slow up the real estate market.  The rich don’t use traditional financing for their mansions and most of the poor don’t need mortgages.  The middle class uses “conventional financing” to buy a home.  Conventional loans make up over 90% of all home purchases in the USA.  It’s the middle class that drives the real estate market.

https://www.thebalance.com/fannie-mae-vs-freddie-mac-3305695

When buyers stop buying real estate and property values begin to take a dump again, this new gut-punch will make 2008 feel like a back rub.  I have been a real estate appraiser for over twenty years.  I have seen this happen several times in my career, but this is different.  There were always natural hills and valleys in the market, but overall, values continued to climb ever higher.  We are facing a slight lull in real estate as I write this, yet the market remains red hot. 

This time the hot real estate market will not last and when it crashes, it will cripple the state.

California real estate was a sure bet for decades.  There are many who will still gobble up what little inventory we have.  However, many of these are not born-and-raised Californians.  Many move here for work.  Our area is famous for tech jobs, but there are many different vocations available.  (“Foreign-born” residents account for about 30% of the state’s population.)

So, when they lose that job, they will default on the mortgage and move back home to mom’s basement in Michigan.  Their move here was a prospective one.  They have no real ties to the state so if their plan fails, they just split.  We saw what happened in 2008 when people defaulted on their mortgages in large numbers.

Imagine 30% of the state’s population leaving over a short period of time.

This time, the “change” will not come dressed as a financial change, it’s a change in values.  However, the end effect will be the same:  financial chaos.

Our new governor…let’s call him Damien…has been in office for about three months.  Rather than focus on the promises he made to cure the ills of our state, he took a trip to El Salvador to figure out why their people migrate here to California.  I have a feeling he did not fly Southwest or stay at the El Salvadoran Motel 6.  We probably footed a major bill for that trip.

https://www.latimes.com/politics/la-pol-sac-skelton-gavin-newsom-el-salvador-20190401-story.html

People from poor, oppressed nations have always migrated to a place where they believe there will be better opportunities for their family and a safer way of life.  That’s not even high school math.  Come on, Damien! 

His solution:  surfing. 

https://www.pressdemocrat.com/news/9484985-181/gov-newsom-says-surfing-can?sba=AAS

I have no words. 

Look, Damien himself does not surf (and neither did the Beach Boys, but that is another story).  What a sad joke he is playing on us and them.  El Salvador has one of the highest murder rates in the world, rampant poverty and political unrest.  But hey…SURF’S UP!  And they have totally awesome right-hand point breaks!

It doesn’t take a genius to see that he’s simply adding a little foreign policy experience to his resume for his 2024 or 2028 presidential run.  I saw this coming when I still lived in San Francisco and he was eyeing the mayor’s seat and his buddy’s wife’s “seat”.  He got both.  When his ex-wife later dated a Trump, I’ll bet that stung.  I’m pretty sure his old friend laughed at the well-deserved retribution.

Readers will say, “This blog is too political!”  Get over it.  I’m simply pointing out that politics are ruining this state and I can’t wait to leave it all behind.  This is not a political rant.  It’s a cry for help.  The values of my state have shifted so far that we have lost our collective minds.  And I’m not saying they have shifted left or right.  I’m saying they have shifted insane.

For example, imagine if you pulled into the proposed “Navigation Center” in downtown San Francisco, right next to the Ferry Building at the end of fabled Market Street to ask for directions.  My friend, you would remain lost because San Francisco calls a “homeless shelter” a Navigation Center.  There are several of these already existing in the city and they don’t give directions.

If you don’t think this is planned, you are a fool.  Control the words, control the culture.  And people buy into it on both sides. 

https://www.prageru.com/video/control-the-words-control-the-culture/

Just one more reason to get out of here while we can.  We are already in our 50’s.  How much longer should we devote to this sinking ship?  None.  Zero.  We’re done.

And guess what?  Our house will probably sell in one day because there are still so many hanging on to the disappearing dream of California.  The smart people are leaving now before real estate prices drop.  Even my wife’s hairdresser complained that she was losing all of her longtime clients; many moving out of state. 

“I’m thinking of moving to Mexico!”  She said, ironically.

I grew up surfing in Santa Cruz, California so I know how to catch a wave and what it feels like to be in the right spot at the right time.  We are there now.  A large wave is rising, cresting and rolling over itself as we are propelled forward.  Many of our friends will catch similar waves, but they will be smaller, and their ride will be shorter.  I am predicting this now.  Check back with me in 1-5 years to chart progress.  It won’t be good, and yet I pray I am wrong.  I was born here.  I don’t want to see my state burn.

There are approximately 40,000,000 Californians.  Where will they all go? 

They are invading nicer states like Nevada, Texas and Idaho.  Many are reaching much farther across the nation for Georgia, Tennessee and The Carolinas.  Others, like us, are leaving the nation all together.

There has been pushback for years from other states about the California exodus/invasion.

https://www.sfgate.com/expensive-san-francisco/article/move-bay-area-to-pacific-northwest-oregon-boise-13120449.php

And it’s only getting worse. 

What they don’t like:

  1. They say we can’t drive.
    1. We can drive.  It’s just that many of “us” are not from here so you can’t judge a Californian that way.  What they truly mean is that we are aggressive drivers, assholes on the road.  They are correct in that respect. 
  2. They say we complain about their weather.
    1. We do.  Our weather is the best, yours sucks.  Get over it.  There are other places in the world with weather like ours but no place on the planet has our atmospheric diversity.
  3. They get tired of us asking for a good Mexican restaurant.
    1. Roger that.  Mexican food is our favorite.  It’s simply the best food on the planet.  Well, there’s sushi…and Chinese food…and French, Italian.  I guess there are a lot of “best foods” depending on what you ate last.  But Mexican is popular because it is not only good, it is cheap and simply to make.
  4. And most of all, they hate the fact that our California bank accounts drive up their real estate prices.
    1. I can’t argue this one.  We are Wal-Mart squeezing out Mom and Pop shops.  And when we drive up real estate, we drive up the cost of living as well.  Unfortunately, earnings never keep up, so people suffer. 

You see, one benefit of owning a home in California for the last 20 years is that if you bought right, your home tripled in value and it’s almost paid off.  That is a LOT of disposable income that you bring to your new state where you can swat the competitive local buyers like mosquitoes in bidding wars for your new home.  It’s not a fair fight and our neighbor states hate us for it with buckets of envy.  I do not blame them one bit.

But, I remember in the 1980’s when Texas oil hit the skids and the only guy in Texas making money rented U-Haul’s.  Back then, there were scores of Texans raiding California for construction work, under-cutting local contractor prices and living in trailers for months at a time to keep costs down.  Our family company lost a lot of business to the Texans during that period.  I imagine no one in Texas will bring this topic up.  They may just pull their collective cowboy hats down to hide their eyes for a few. 

Trust me, after the next California economic crash (which will affect the world) there will be scores of vulture capitalists swooping down to invest and the whole thing will start over again.  That is, IF the government does not turn California into a no-man’s land like Chernobyl.  The business laws of our state are crippling, and businesses are leaving, too.

I suppose the same thing could be said about us moving to Mexico.  But we did not buy a property that local Mexicans were vying for.  There was little to no competition for our place because it was undeveloped dirt on a resort with lots of undeveloped dirt left to this day.  Sadly, we don’t even have any real Mexican neighbors.  We live in a community of expats.  But that was not the plan.

This place was not going to be our retirement home.  It was to be an investment property, a rental.  Things just worked out differently.  We will see how long we stay there.  I predict it may not be too long before we look for something more rural and in a community of Mexican people where we can truly get immersed in the culture.  I hear San Miguel Allende is nice.

But then, we could be competing for a property with Mexicans and we’ll be the big, bad Californians that we ourselves despise.  I suppose there is no winning in this.  We come from a state that was hyper-successful for decades and we capitalized on it.  I won’t apologize for that any sooner than I will ask for help when we have troubles, which we have had, many times. 

No one offered to help when business was slow, and bankruptcy loomed.  No one offered help when my mother was dying and needed to be moved to a new home.  No one offered to help when my wife suffered corporate burn-out and I had to carry the weight of our finances for years.  They let me tighten my belt and keep pushing forward.  So, I don’t want to hear any whining now that I am headed to the land of sun and tacos a little earlier than most.  I paid for it with my life.

Risk can equal reward.  It can also equal ruin.  Everyone has the same choice:  W2, or W-you.  I gambled on myself when no one else would.

Maybe we can alleviate this issue by building a new house with a Mexican contractor. 

Hmmm, did that once.  Never again. 

He was a decent guy and the place looks good, but it took 16 months to get the final punch list of “to-do” fix-it items completed.  Maybe we’ll just buy some land that nobody wants and put a prefab home there, have it delivered by helicopter from Oregon where they make homes from hemp.  *Hey, Oregon…you can stop pretending.  Everyone knows you just wanted to get high.  You and everyone else.

Perhaps we could use some of the sargassum to build a brick home.  That might make the locals smile.

Apparently, the adobe brick process makes the dead fish smell go away.  That’s helpful.

Side note:  Don’t you think the Mexican government should deal with the sargassum issue in the Mayan Riviera before they build the new train?  There will be far fewer tourists if the beaches remain El Stinko.

Let’s wind this up. 

California is doomed, a sinking ship.  The passengers are jumping off in record numbers and fleeing to cheaper states.

Our government is the worst.  Our weather is great.  Our own citizens want to secede.

Our happiness is #50 out of 50 states.  See here:

https://www.usatoday.com/story/news/nation-now/2018/03/01/california-ranks-last-quality-life-new-report/384853002/

I will miss our beautiful home, our friends and family and the good times we spent raising our son here.  That’s it.  They can keep the rest.

Adios, Cali.  It was fun while it lasted.

6 thoughts on “Chapter 39 California Is Doomed..And It’s Coming To A City Near You!”

  1. Born and raised in Orange County, I left So Calif almost 20 years ago. The 1984 Olympics ruined it. Now Austin TX is becoming the next So Calif. Moving out of the US is looking better and better.

  2. Hey James, Great article! I am in a very similar situation as you… currently living in Puebla Mexico but have lived in Lafayette, CA for the past 20 years. We own (paying a mortgage) on our house and are currently renting it out. We thought long and hard about selling this up coming summer but decided to hold off another year and sell next summer. In your opinion, do you see the market turning within the next year?

    Cheers,
    Phil

    1. Hi Phil, Tom Collins here. 🙂

      We definitely see the market turning south soon. I’ve lived here in Walnut Creek since 1995 and I have never heard from so many people saying the same thing: Goodbye, California. That’s why we timed our exit with our son’s college attendance in the Fall, and May is typically the best month for our home to sell (homes in our area, anyway.) We are selling our house now and will be accepting offers on the 13th after our two open houses are completed and the market is well aware of our house. So far, so good. Like I said, many people still believe in the Cali dream and our area is highly desired. Good for them, good for us. But I would never advise anyone to buy or live here these days. Wait until after the next huge crash, invest hard (if you have the stones…I don’t anymore) and then wait it out. The last one in 2008 cost us 11 years of zero growth here at our house. No more.

      Thanks for reading and commenting. Let me know if you ever head to Tulum.

  3. Great article! We had Chilis en Nogada for dinner last night with a side of street corn, fresh as can be salad and coconut ice cream for dessert. Will be sorry to leave Mexico next week but will be back sooner rather than later. Hope you keep writing about your journey & life in your adopted country! Safe travels! Julie

  4. We”ve been trying to move to San Miguel de Allende for the past 12 years, but can’t sell our house in Baja California Sur, where we built 25 yrs ago, so we are just going to rent a house there for the summer to get away from our awful heat and humidity in BCS. There are a lot of great places for sale right now in SMA and according to my real estate friends there (Mexicans), the market has softened slightly, so it’s a good time. It’s still a very special place and the Centro won’t change, due to being a UNESCO city, but the outskirts have grown greatly in the 20 yrs I’ve been going there. I am currently in Mexico City on my way back to BCS after just signing the rental contract!

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