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Comment by newnewpdro | Hacker News Reader

By far the majority of renters I know in CA, in SF and Santa Monica, have largely abandoned any hope of homeownership and live incredibly spendy lifestyles while they can afford to be in the area.

Eventually, they will wise up, move out of their expensive rentals and turn frugal - likely outside of these cities with a good possibility of leaving the state.

In their absence, new young folks in their high-earning high-spending phase will move in, and the cycle repeats itself.

None of this is bad for California. The state, in the desirable cities, is a meat grinder drawing in a constant supply fresh, gullible, overpaid talent, working not just to pay high rents but high everything, including state income tax, while saving very little. When they get exhausted, they leave, and make room for more fresh meat.

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> supply fresh, gullible, overpaid talent, working not just to pay high rents but high everything, including state income tax, while saving very little

IDK, most people in know in California seem to be saving 30-50% of their post tax income. That's clearly not the case anywhere else in the world.

That's great, but maybe you know exceptionally high earners with good money sense?

Or maybe I just know exceptionally low earners with poor money sense.

Given the constant furor surrounding housing affordability in California's desirable cities, I'm leaning towards the former.

And 30-50% is A LOT more in absolute dollars than it is outside of Cali.

Would that mean that, since California + Federal taxes are something like 46%, post tax income is roughly 54% salary?

If so, they're saving only roughly 15-25% income?

> California + Federal taxes are something like 46%

49.3% is the top rate you'd pay in California at the highest bracket (or 50.3% if you make over a million) .

If your income is over 2 million a year you'd pay an effective rate of 44%.

If your income is $200K, your effective rate is about 34%.

at higher and higher incomes, it makes more and more sense to try and deduct income via investment costs (such as interest on borrowing). So your optimized effective tax rate would be a lot lower.

Most of the renters I know in the bay area rent a house with 3-4 roommates and pay reasonable rent with that split ($1400/month -> $1900/month each for a room in the house).

Then saving as much as possible and hoping stock or RSUs will get you the rest of the way there to buying something (or buying a 1 or 2 bedroom for ~one million once you find an SO and working from there).

"reasonable" is relative to what you get, and nothing in that area is reasonable. In no way is $1400 to $1900 per month reasonable for just a room. For that price you ought to get a 1500 to 2200 sq ft detached 3-bedroom or 4-bedroom house on a quarter acre lot.

Reasonable relative to income is what I'm talking about.

If you're able to get total comp from 200k -> 400k and save 50% of that or more per year into a total market index fund for ten years that's pretty good, especially if you start at 21 or 22 out of school.

The economics make sense even when you ignore the other benefits (great environment for cycling, running, general outdoor activities - huge amount of smart people to learn from and work with, huge amount of companies hiring, startup opportunity, high quality food, etc.)

It's still a shame though because if Prop 13 was phased out and housing was built we could have all of this without having to waste huge amounts of money on overpriced, run down, tiny little houses, but that's Moloch [0] for you and local NIMBYs operating in their own self-interest.

[0]: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

If you are in CA for a tech job, a good plan is to get established and experienced and then eventually move somewhere else that's nice and cheap and work remotely. You'll continue to earn lots, be able to buy a house pretty quickly and, depending on what your criteria are, generally have a high quality of life. I am speaking from experience here.

Obviously I'm not talking about people who move to the Bay area to start a business, etc.

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