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Stay Put, Young Man

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Heres an interesting article that makes a refreshing change from the usual hateful Daily Mail.

http://www.washingtonmonthly.com/magazine/november_december_2013/features/stay_put_young_man047332.php?page=all

It is rather long so I've excerpted the key paragraphs below

If any young man is about to commence the world,” a reform-minded New York journalist wrote in 1838, “we say to him, publicly and privately, Go to the West.” Today, Horace Greeley’s advice comes down to us as “Go West, young man” and has been mythologized into a slogan of Manifest Destiny. But at the time Greeley wasn’t expressing any messianic desire to tame a savage continent. Rather, he was alarmed by how terrible economic conditions had become in New York.

...

Why are Americans by and large moving away from economic opportunity rather than toward it? It all starts to make sense when you think about “push” rather than “pull.” One “push” factor heavily touted by conservatives is state income taxes. Raise the state income tax, conservative dogma holds, and taxpayers will make an exodus to lower-tax states. But a Reuters report in February cast doubt on this hypothesis, pointing out that the rich typically stay put when state income tax rates rise. As for working-class Americans, moving to a state with low income tax rates hardly makes sense if you have to take a bigger cut in wages. Moreover, states with low income tax rates generally have high sales taxes, which, because they are regressive, punish working-class people the most.

A far more plausible push factor is the cost of housing.

Consider the mystery of the “San Berdoo” population boom. Between 2005 and 2009 the nation’s biggest county-to-county migration was from Los Angeles County to San Bernardino County. These counties are both in Southern California, but they’re sufficiently far apart (sixty miles) that they constitute separate labor markets. Before the recession, unemployment in San Bernardino and Los Angeles Counties was about the same. After the recession hit, unemployment in San Bernardino County rose higher, topping out at about 15 percent compared to LA County’s 13 percent.

Moving from LA to San Bernardino would not have improved your chances of finding a job. We’re talking about a city that declared bankruptcy last year. Nor would San Berdoo be the place to escape big-city crime; after it laid off cops in droves, it experienced a 50 percent increase in its homicide rate. Among the white population aged sixteen to twenty-four, 18 percent are neither in school nor have a job, a number that rises to 19 percent for Latinos and 25 percent for African Americans. Yet a huge flow of migrants continues from LA. Why? Mainly because housing is cheaper. Gloria Santellan recently wrote on the Facebook page of the Victorville Daily Press, a local paper, “I was paying $750 for a studio in the San Gabriel Valley area, and out here I was in a two-bedroom for $25 less!”

The underlying problem, however, isn’t the price of housing per se so much as its relationship to income. Since 2009, when the recession ended, the median price of a new house in the United States has risen 13 percent, even as median household income has fallen by about 4 percent. That doesn’t pose much of a problem for a migrating architect whose income is already well above the median, and who is likelier to have existing home equity that he can transfer to another state. But for construction workers, for example, it’s likely to be a big problem, and a reason why they can’t easily move to where the best-paying jobs are.

http://www.washingtonmonthly.com/magazine/november_december_2013/features/stay_put_young_man047332.php?page=all

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The more house prices rise in the south the more it seems,that people want to live there.

I know yesterday's/today's/tomorrow's buyers will later be considered victims of x-y-z reasons (and want bail-outs), and many will feel those buyers have no personal responsibility for continuing to buy houses at such stupid high prices because such houses are "reassuringly expensive".

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A far more plausible push factor is the cost of housing.

Consider the mystery of the "San Berdoo" population boom. Between 2005 and 2009 the nation's biggest county-to-county migration was from Los Angeles County to San Bernardino County. These counties are both in Southern California, but they're sufficiently far apart (sixty miles) that they constitute separate labor markets. Before the recession, unemployment in San Bernardino and Los Angeles Counties was about the same. After the recession hit, unemployment in San Bernardino County rose higher, topping out at about 15 percent compared to LA County's 13 percent.

Moving from LA to San Bernardino would not have improved your chances of finding a job. We're talking about a city that declared bankruptcy last year. Nor would San Berdoo be the place to escape big-city crime; after it laid off cops in droves, it experienced a 50 percent increase in its homicide rate. Among the white population aged sixteen to twenty-four, 18 percent are neither in school nor have a job, a number that rises to 19 percent for Latinos and 25 percent for African Americans. Yet a huge flow of migrants continues from LA. Why? Mainly because housing is cheaper. Gloria Santellan recently wrote on the Facebook page of the Victorville Daily Press, a local paper, "I was paying $750 for a studio in the San Gabriel Valley area, and out here I was in a two-bedroom for $25 less!"

San Benardino. Thought I recognised it. Ayatollah Buggeri now lives/owns nearby. He went and left all the opportunities in Yorkshire, including reassuringly-expensive house-prices and Gov offers of help-to-overpay for them, behind, irrc. (I was paying close attention at the time since my friends were about to fly out and travel through LA, staying in apartments/rooms found and booked on VRBO and Airbnb.)

very significant that San Bernardino thought about this but decided against it. I live only 6-7 miles from SB - the place is in a very bad state. Just too far from LA and Orange County to be viably commutable; local economy hammered first by the closure of an air force base (like so many UK provincial cities, most of its economy was and still is public sector) that was the region's biggest local empoyer, and then by the bursting of the house price bubble in 2008.

Unlike Britain, the Inland Empire had the HPC that in some ways it needed (the house my wife and I have just bought sold for $402k in December 2007, then $159k in January 2011, and we bought it for $166k last month). But the flip side of that is that property tax revenue fell through the floor, SB council went bankrupt in August 2012 and tens of thousands of the city's OOs are in NE and unable to get out. If SB had gone through with an eminent domain scheme, I'm sure the amount of money the original lenders stood to lose would have run into billions, possibly even tens of billions.

Edited by Venger

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The more house prices rise in the south the more it seems,that people want to live there.

People move to London/SE because there are jobs there.

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America is usually a few steps ahead of us in the economic cycle - I think the people in the article would prefer to live in LA, they just can't afford it.

Once the cheapest commutable house is out of your price range, the big city could have a million similar jobs on offer but few people will be applying for them unless house prices fall or wages go up.

There are lots of IT jobs going in Slough right now, but does anyone fancy living here:

http://www.rightmove.co.uk/property-for-sale/property-43051760.html

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America is usually a few steps ahead of us in the economic cycle - I think the people in the article would prefer to live in LA, they just can't afford it.

Once the cheapest commutable house is out of your price range, the big city could have a million similar jobs on offer but few people will be applying for them unless house prices fall or wages go up.

There are lots of IT jobs going in Slough right now, but does anyone fancy living here:

http://www.rightmove.co.uk/property-for-sale/property-43051760.html

I''ve always wanted to live in Slough, because Johm Betjemen didn't like it.

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The more house prices rise in the south the more it seems,that people want to live there.

I kind of reversed that trend by moving away from London back home to the North. Thank goodness I am not reliant on the local economy though.

You found your family and contemporaries who stayed and never left the North and have their homes bought and paid for when they were cheap and work was more reliable (though I know some who have MEW'd).

I was tempted to buy a house up here ten years ago for £32k, which was then less than a years salary. A similar house now would be double that.

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From those ONS links:

Over the same period, 235,000 people migrated out of London to other parts of the UK,

while 205,000 migrated into London.

Not a huge difference there, although it builds up over time.

The Daily Mail have their usual inflammatory take on this - February Headline: "600,000 move out in decade of 'white flight' from London: White Britons are now in minority in the capital"

There may be a snowball effect here, the ethnic mix of London makes it more attractive to foreign investors. Imagine this was the other way around and you were contemplating a move to say south africa, would you rather move to a city that was 90% black or one that was only 45% black?

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The statistics are meaningless to most people. A 2% difference in employment rates between the two areas? All the migrant cares about is whether they have a job. Increase in homicide rate? Most people are still unlikely to be murdered (and if they are, it'll likely be by someone they know so leave everyone you know behind ;) ). They are also unlucky stats - and most people feel they are luckier than the average. This coupled with considerably cheaper housing (paying less money for a better place is real and tangible) is why people migrate.

In the last decade, I have migrated from London to the North to Wales - and each time experienced a decent increase in quality of life. Housing was a key factor.

Edited by StainlessSteelCat

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That was for the latest year. It has slowed in absolute terms because over the previous 20 years so many left.

As a very rough calculation: using this wiki link.

http://en.wikipedia....phics_of_London

You'll see the population of London is roughly back to where it was last in 1951.

If just 45% of Londoners are now native, as a very rough estimate 55% of 8.2m net have left over 60 years.

That is about 75,000 people net leaving London every year for 60 years.

As I say, this meme of people from all over the country flocking to London to find their fortunes (or even just a job), is such hogwash, I'd like to know how it penetrated popular consciousness.

Yes towns like Northampton, MK, Basildon etc were massively expanded to take 'London overspill.'

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Rich millionaires flock there and out bid the locals who have to leave and commute.

Are there really an extra 200,000 millionaires every year though?

I suspect its more like a small elite buying and renting out multiple houses and most of the people moving into london having to rent

The proportion of London’s population in the private rented sector has grown in the last decade, while home-ownership and social renting have both declined. The home-ownership rate peaked in the capital as long ago as 2000, and so its relative decline precedes the credit crunch. Since then, owner-occupation has dropped more steeply than elsewhere in the UK, declining by 10 percentage points. And the rate of decline has quickened more recently.

http://www.cml.org.uk/cml/publications/newsandviews/127/478

So the old model was - move to London at 21, at age 25 or so buy something in an outer zone, stay until you are 30 or 35, sell at a huge profit and move out to buy a larger house/start a family.

The new model is - move to London at 21 and rent, at age 35 still renting, give up any hope of getting onto the London housing ladder and move out anyway.

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You and about 1 million others NET over the course of a decade.

Look at stats here that would turn people's minds against the popular misconception that people from all over the country are flocking to London seeking their fortunes:

http://t.co/fhaAKUyBTN

As other posters have noted nothing in the link says that is a misconception:

In the same year, 248,000 people migrated out of London (about 3% of the total population) to other parts of the UK, while 167,000 (about 2%) migrated into London.

Think it's the same as it ever was. In my experience most of the people i know from university moved to London afterwards in their twenties. And now in their thirties and having kids a fair few are moving out to the home counties (or further). That plus retirees moving to their "dream cottage" pretty much fits the stats.

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Are there really an extra 200,000 millionaires every year though?

I suspect its more like a small elite buying and renting out multiple houses and most of the people moving into london having to rent

So the old model was - move to London at 21, at age 25 or so buy something in an outer zone, stay until you are 30 or 35, sell at a huge profit and move out to buy a larger house/start a family.

The new model is - move to London at 21 and rent, at age 35 still renting, give up any hope of getting onto the London housing ladder and move out anyway.

So tell me is that the prime reason why people now move to London because they think they will make money on London property?.......if that is the case they are moving there for the wrong reasons. ;)

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