I don't understand the personal economics of California

[marko]

I Lot's of folks lease these cars (rich or not) .

But leasing a luxury car can run anywhere from $1000 to $2500 a month. It's still not cheap, but as noted elsewhere, you can sleep in it if your landlord throws you out!

 

[daylatedollarshort]

I do think though that some of it there might be due to car clubs or exotic car rental agencies. We tool around the Bay Area and SV and still never saw as many exotic cars as our trip to San Diego.

When we saw the exotic car rental agency, we realized we were seeing the same cars only with different drivers every day. And the cars were always on the road because people were paying to rent them not have them sit in their driveways.

 

[explanade]

There are two reasons I can think of for seeing so many high end cars in San Diego.
1. The dotcom millionaires of the Silicon Valley move there after making their fortunes.
2. Housing is so expensive, most folks just rent and can therefore afford to spurge on a luxury car.

San Diego isn't really a place to get rich, it's more a place to go after you get rich.

I sent both my sons to San Diego for college. It's got to be the most desirable area in the country to live. You gotta spend some time there to realize it. Both my boys, after only 4 years of college living there, are determined to end up some day living there. In the meantime, they are making their FI happen in less desirable areas of the world. One in San Francisco and the other in New Zealand.

Been surfing Redfin from time to time.

A townhouse with the same floor plan as mine, but not fully renovated, recently sold for over a million. Less than 1400 sq. ft.

There seems to be a lot of nice looking renovated properties inland for around $400 sq. ft. But I gather these aren't the most in demand areas.

Got to do a road trip down there ...

 

[rodi]

I do think though that some of it there might be due to car clubs or exotic car rental agencies. We tool around the Bay Area and SV and still never saw as many exotic cars as our trip to San Diego.

When we saw the exotic car rental agency, we realized we were seeing the same cars only with different drivers every day. And the cars were always on the road because people were paying to rent them not have them sit in their driveways.

I'm not sure that's true. I see the same Maserati, with the same driver, about 3 times a week when I'm returning from the beach after walking the dog. (This is in La Jolla - which *is* technically part of the city of San Diego).

The same can be said for some of the fancier cars (bentley for example) in Mira Mesa/Sorrento Valley - the same driver each time.

I think the fancy car thing is a cultural aspirational thing. I saw fresh grad engineers buy BMWs within 2 years of graduation... they didn't have huge salaries - but saw everyone else with BMWs and felt entitled... Debt at an early age. Not a good path to ER.

 

[bld999]

Yep. That sounds like a good representative sample. We can now safely extrapolate these observations over the 38 million people that live in California.

I live in a hair shirt liberal neighborhood full of subies and assorted beaters; across the lake is Redmond, where you can see maseratis at the convenience store. Which impression do you want? I can get you either...

 

[LoneAspen]

Silicon Valley is an interesting place when it comes to cars. As somebody posted earlier, Tesla is definitely the "it" car. And at the last company I was at, one of the founders who's worth many tens of millions did extensive research and even made a spreadsheet when he was ready to buy his next car, and he got a Volt.

As a car guy who loves sports car and exotics, I just shook my head.

Unless somebody is in sales, marketing, or is an exec, I think it's actually discouraged to drive a high-end or flashy car. The last company I worked at minted many multi-millionaires upon their IPO and I don't recall one person (seriously, not one) who got what I'd consider an ultra high-end car like a Ferrari, Lamborghini, Bentley, etc.

Before I started my new job, a friend of mine who was already there cautioned me against driving the new car I'd bought into work because the CEO and co-founded wasn't in to flashy cars.

Screw him. I worked hard for what I have, I can afford it, it's not eating into my financial reserves at all, it's a much nicer daily driver for the horrible Highway 101 commute than my other car which is a beater, it's my life, and I'm driving it. If he doesn't like it, he can shut his pie hole or fire me. Either works for me.

Car culture here in northern CA is just weird, bordering on nonexistant.

 

[marko]

Before I started my new job, a friend of mine who was already there cautioned me against driving the new car I'd bought into work because the CEO and co-founded wasn't in to flashy cars.

My old boss was VERY much into cars. Had Bugattis, Maseratis and Bentleys among half a dozen others. Not only was 'being a car guy' a good career position to take (or fake) the boss would buy you high end cars to drive.

And, yes, I decided to RE anyway......

 

[Peter]

One thing to consider is that salaries in urban-area California are higher than most of the rest of the country, but car prices are the same. So any given car will cost less as a proportion of income.

And don't forget stock options. There's a calibration scale that reads "enough for a nice car, enough for a house, enough to never need to work again". Many people can be found at the first level.

 

[daylatedollarshort]

Silicon Valley is an interesting place when it comes to cars. As somebody posted earlier, Tesla is definitely the "it" car. And at the last company I was at, one of the founders who's worth many tens of millions did extensive research and even made a spreadsheet when he was ready to buy his next car, and he got a Volt.

As a car guy who loves sports car and exotics, I just shook my head.

Unless somebody is in sales, marketing, or is an exec, I think it's actually discouraged to drive a high-end or flashy car. The last company I worked at minted many multi-millionaires upon their IPO and I don't recall one person (seriously, not one) who got what I'd consider an ultra high-end car like a Ferrari, Lamborghini, Bentley, etc.

Before I started my new job, a friend of mine who was already there cautioned me against driving the new car I'd bought into work because the CEO and co-founded wasn't in to flashy cars.

Screw him. I worked hard for what I have, I can afford it, it's not eating into my financial reserves at all, it's a much nicer daily driver for the horrible Highway 101 commute than my other car which is a beater, it's my life, and I'm driving it. If he doesn't like it, he can shut his pie hole or fire me. Either works for me.

Car culture here in northern CA is just weird, bordering on nonexistant.

Maybe it is in part a cultural kind of purchase. We are starting to see a lot of Teslas. I guess those are viewed at more environmentally correct.

 

[haha]

Agree. Nice places attract wealth. Wealth is often displayed via nice cars. Same as Scottsdale, Palm Springs, Palm Beach, Naples, etc. it's the American Way. We can speculate all we want about whether "they" can afford it or not, generally they can.

+1. My Dad was LBYM, and he was always telling me how many people with nice cars were hocked to their eyeballs.

He was wrong, and likely a bit jealous.There are just plenty people around with seriously big dough.

Ha

 

[LOL!]

Be careful when evaluating what you call "luxury cars". I know that I paid less for a Lexus than my wife did for her Camry. I live where a Lexus is considered a beater car. There are so many that came off of 3-year leases every year that they are darn cheap. Same goes for MB, BMW, Audi, Cadillac, Porsche, etc.

So in SoCal, it may just be that the cars are kept washed and waxed, so are not rusted out nor dented up. I know I cannot tell a 7-year-old BMW from a new BMW.

BTW, when I lived overseas, a BMW was an everyman car and not a luxury car. It may not have had leather seats, but it was inexpensive.

Yes, some people get leases and loans, but some people just buy nice used cars.

 

[marko]

+1. My Dad was LBYM, and he was always telling me how many people with nice cars were hocked to their eyeballs.

He was wrong, and likely a bit jealous.There are just plenty people around with seriously big dough.

Ha

+1 There's a whole world out there of folks who haven't worked in several generations.

And LBYM is a relative position as well!

As noted earlier, places like San Diego, Palm Beach etc tend to attract that kind of crowd, so one would expect a certain amount of concentration.

 

[Danmar]

So looks like people can try to impress other people by their cars both ways, eg on the upside and on the downside. I generally own cars that are commensurate with our net worth but are not ostentatious. Total auto investment maybe 1% of net worth. Probably a little under my neighbours in Paradise Valley while over at our Lake house. None of this is intentional or in the least bit important to me. I just like driving nice cars.
A funny thing happened at our Lake House yesterday. We had a tradesman coming over to give us a quote on some work and my wife told me to put my car (BMW M5)
in the garage so he wouldn't see it. Couldn't hide her X3. She was worried he would quote more when he saw the Beemers. I didn't think so but did it anyway.

 

[aja8888]

Maybe it is in part a cultural kind of purchase. We are starting to see a lot of Teslas. I guess those are viewed at more environmentally correct.

Tesla is a nice product, and very stylish and impressive from a performance standpoint. I would guess that those who buy them are seeking the status and the style/performance. Hey, they cost $100K and you have to wait for one.

They are really not a very good "green" car due to the electricity they consume (lots of discussion on this in the forum). Most Greenies seem to buy the Prius at 1/5 the cost of a Tesla.

We don't see many Prius's (Preii?) in this part of Texas. I have only seen one Tesla on a parking lot at local business. We like our pickup trucks here, and we have lots of oil.

 

[Ronstar]

I've noticed a huge difference in car types between Scottsdale and the southwest suburbs of Chicago. There are a few Bentleys, Ferraris and other exotic cars roaming Chicagoland, but they run amuck in Scottsdale. Great weather for exotic cars, and seems like a social requirement for the upper class. More trucks and SUV's in Chicagoland, probably due to the weather.

 

[skipro33]

That's what Whitey Bulger did!

Sounds like you were so focused on the cars that you missed the large and growing homeless population in SD.

Homless in SD isn't the same as homeless in, say, Michigan. Very easy to live without a roof over your head there. Much like Hawaii. I would bet that the homeless in SD are that way by choice. I know I'd rather be homeless in SD than working full time in San Francisco. I wouldn't live there for any job they have.

 

[Sunset]

I've noticed a huge difference in car types between Scottsdale and the southwest suburbs of Chicago. There are a few Bentleys, Ferraris and other exotic cars roaming Chicagoland, but they run amuck in Scottsdale. Great weather for exotic cars, and seems like a social requirement for the upper class. More trucks and SUV's in Chicagoland, probably due to the weather.

The Chicago snow means the Ferrari keeps getting stuck due to the low clearance, so not a good choice.

 

[Ronstar]

The Chicago snow means the Ferrari keeps getting stuck due to the low clearance, so not a good choice.

Very true. It doesn't make much sense to pay $300k for a car that you can only drive for 6 months out of the year.

 

[rodi]

One thing to consider is that salaries in urban-area California are higher than most of the rest of the country, but car prices are the same. So any given car will cost less as a proportion of income.

I'm not sure that blanket statement is true for San Diego... I worked for a fortune 50 company based in Chicago. The salaries in San Diego were EXACTLY the same as Chicago and Pennsylvania. Nor Cal got a salary differential, but not SoCal.

 

[googily]

Come to DC, where the current status car is a shiny new Suburban, so people can think you are a politician being ferried around.

 

[nash031]

There's a military factor. Lots of officers out here, and lots of youngsters who go on long deployments and come back with a sh&%load of money in their pockets that they don't know what to do with...

That and we don't feel compelled to fly somewhere sunny on vacation every year because we already live where you come to vacation.

 

[audreyh1]

Thorstein Veblen:
.
.

Is he the one who coined the term? He must not have approved of the practice, otherwise he would have dressed a little better.

 

[brewer12345]

I don't get the sportscar thing at all. You cannot tow a trailer, haul a load of free firewood scrounged on craigslist or go down Forest Service "roads" with those things. And I would hate to think what a trip with the dogs or a successful deer hunting trip would do to the upholstery...

 

[Gumby]

Many, many years ago, when I was a young lawyer, I was second seat in a trial. The lead lawyer was the oldest partner in my firm. One day, as we walked to court, opposing counsel pulled up in a black Porsche 911, with the flare fenders and whale tail. I said something like "Wow, look at that car. [Lawyer X] must have a lot of money." The old partner replied "we can conclude only one of two things - either he spent a lot of money or he borrowed a lot of money. We cannot conclude that he has a lot of money." Point well taken.

 

[brewer12345]

Many, many years ago, when I was a young lawyer, I was second seat in a trial. The lead lawyer was the oldest partner in my firm. One day, as we walked to court, opposing counsel pulled up in a black Porsche 911, with the flare fenders and whale tail. I said something like "Wow, look at that car. [Lawyer X] must have a lot of money." The old partner replied "we can conclude only one of two things - either he spent a lot of money or he borrowed a lot of money. We cannot conclude that he has a lot of money." Point well taken.

Hilarious! I went to high school at a place where a fair fraction of the teachers were Jesuits and about 50% of every graduating class becomes attorneys (*shudder*). Such a dry observation would have been very familiar during those 4 years.