A long time ago – circa 1999, two young executives pulled up stakes and headed west to California. Mattel had purchased Fisher-Price in 1993, and Marilyn was fully vested but growing a bit weary of her role as head of Global Strategic Planning. I had recently sold my second start-up and was intoxicated by the incredible economic growth oozing out of California’s technology companies. Businesses were going from seed stage to public in 6 months with no product and no revenue.

As we scouted for opportunities, one that looked very attractive was Tellme Networks, founded in San Jose by a teenager named Mike McCue, the pioneer speech recognition. Mike wanted Marilyn to run marketing but she turned it down. It later sold to Microsoft in 2007 for $800 Million.

I remember home shopping with our Alain Pinel agent. We were walking into million-dollar homes that looked like small, poorly-renovated guest shacks. We saw nothing that we wanted to live in – especially at four times the price we paid for our home in Orchard Park, NY. Every time we walked out of a house, the agent would stop us at the curb and say, “If we get in the car and leave, this house will sell before we come back.”

We ultimately nestled down in San Luis Obispo County, where Marilyn became CEO of Surveyor Corporation, and I joined the venture capital firm that was the lead investor. It was the hottest startup in the webcam space, founded by Howard Gordon, the engineer who created MP3 compression to enable streaming on the internet. At his first company, Xing, Howard wrote the speedy JPEG and MPEG compression schema. Howard and Marilyn were a great team, but when the bubble broke, the dreams of Surveyor were over. But, our dreams of living in California were not over. We were here to stay, started WAV Group, yadda, yadda.

Fast forward to today…

Kevin Hawkins, head of our PR division, asked me a question this morning for a client about new home building in Texas. As you may know, homebuilders are out of inventory and are now resorting to auctioning off homes that are not even built, with no guarantee that you will get the house you buy for that price if building materials go up. Kevin asked, “How long will homebuilders be out of inventory?” A long time, I replied. “Why do you think that?” he asked.

I shared my answer and Kevin suggested that I share it in a post – so here you go.

Blame California for Rapid Home Price Increases Nationally. People are leaving California and its long list of problems which include…..

Californians pay the highest tax rate in America at 13.3%, followed by Hawaii at 11%, NJ @ 10.75%, Oregon, Minnesota, DC, New York, and Vermont at about 9%. Seven states have no income tax rate: Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska.

Only Hawaii edged out California for the worst state for public transportation.

California public schools are among the worst in America.

California has the highest murder rate in America and is 14th highest in crime.

Dysfunctional sanctuary cities and immigration system

With a median home price in California of over $700,00, California is the least affordable state to live in America.

California has the highest average gas price in America at $3.68 per gallon ahead of Hawaii and Washington at around $3 per gallon.

California has now passed Hawaii has the highest energy price in America at .48 per KWH (and to make it worse, they are taking the last nuclear power plant offline in 2025 that will create a bigger problem of power blackouts).

California is in another drought – there is simply not enough water.

California has the highest homeless population – accounting for one in five of all homeless people in America.

California reportedly paid out $11 Billion in fraudulent EDD claims during the pandemic.

The San Francisco Bay area has 27 different transit agencies.

California went after Uber and Lyft drivers with AB5 to make the gig economy something other than what it is – a side job to afford living here.

White households in California have a median household net worth of $355,000 vs. black households at $4000.

California has the worst forest fires and earthquakes in America.

And to top off the list – California has the second-highest building costs and most difficult process for getting a permit to build or remodel a home. (Hawaii – in the middle of the Pacific Ocean costs a little bit more).

Add it all up…

California leads the nation in people leaving the state. According to Evan White of the UC Berkley Policy Lab, 267,000 people left California in Q4 of 2020. They took their home equity and traded it for homes in Texas, Arizona, Nevada, Oregon, Washington, and other western states that offer housing at 1/4th of the price.

Map of the US showing which states have most inbound and outbound residentsMap of US census data showing which state Californians move to


In conclusion, if you want to understand what is happening with housing in America, I would say that California’s mass exodus might be a leading cause. California leads at everything else: why not give them the victory here too.

And as a side note – I would be willing to wager that the dollars Californians save when swapping their $750k home for larger homes in Texas for $250k is heading straight into the stock market. Like the housing market – I would say that the stock market is overvalued too – but I will save that for another post.