Sunday, February 05, 2006

Views from San Diego

Views from San Diego
As I write this blog, I am returning from a meeting of the ABA Tax Section in San Diego, California. The Section met here two years ago, but returned ahead of schedule due to hurricane damage in New Orleans. I always find San Diego to be an attractive place to visit – especially given the usual weather differential from my native Iowa. This visit did not disappoint, as we enjoyed sunny days with shirtsleeve temperatures, with cool evenings requiring a sweater. It was quite refreshing - though I imagine the weather man needs therapy to deal with the boredom.

A few observations:
- California does have a well-earned reputation as a place with some oddities we don’t encounter in the Midwest. For example, we don’t put our pets in doggy day-care, with webcam monitoring and e-mail reports of their social interaction with other dog guests. My pal Joe does that on occasion, and he thinks it is rather funny himself. (Your dog has to pass a test in order to be accepted into their program. I think it involves passing certain foreign language literacy requirements. Though this sounds very cool, I doubt my dog Snoopy would dig it that much, though he is every bit as special as Joe’s dog.)

-Economic opportunities created here come from an immense amount of wealth built up in this area of the country, and people who are willing to spend it. Proximity to lots of people with spendable cash helps to stimulate the economy in ways that rural America can only dream of. We spent one afternoon in Temecula, a wine-growing region about an hour north of the city. People were spending freely on wines that were pretty good, but not outstanding. This was our own version of Sideways, except (a) I was with my wife of 22 years, not a buddy; (2) we didn’t really get in any situations that were troublesome or funny. It was a splendid way to spend an afternoon, and I took lots of pictures for my pal, Gene, who is growing his own vineyard in Nebraska.

- High real estate prices there have caused people to make adjustments in their expectations for the size and location of their homes. I understand it was not uncommon for an hour each way to be spent commuting. Some commute from Mexico, meaning long waits at the border to go through security. Those hard-working folks put up with a lot to comply with our laws, especially when many others don’t. But there are barriers to development in this part of the country that we do not face in the Midwest – steep terrain, limited access to water, and transportation systems that are stretched to the breaking point. I also see lots of large homes being developed. When comparing the price of housing generally, one needs to adjust for creeping improvements in amenities and size. We are building larger and better houses than 10 or 20 years ago.
- The beautiful weather, access to the ocean, and dry climate are amenities that appear to be free goods for everyone, but residents ultimately pay for them by higher housing prices. You can accept a lesser home and a longer commute to enjoy the so-called free goods. So, perhaps even the sunshine is not really free.
- Signs of overbuilding of condominiums here are appearing, as may also be true in other places. My pal, Joe, who is an attorney here reports that 5000 units have been completed already in the past few years, and 10,000 more are in development. With prices of $300/sq ft. and more in many buildings, that sounds pricey. (These are not even ocean front prices.) It takes a lot of income to support those price levels. Ultimately banks, material providers, and construction workers need to be paid; they don't acccept sunshine.


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