Surf’s up

Aerial photo: Santa Barbara, California

Image via Wikipedia

Before we bought our first home in 1992, my wife and I with an infant child rented one home after another in Santa Barbara, not an easy thing to do since many landlords discriminate against children even as they demand exorbitant security deposits. During 1984 to 1986, we were fortunate to rent an ordinary, 1200 square foot tract home on a bluff one block from the Pacific. During a period of rapidly rising real estate prices, it probably would have sold for about $30,000, and during the peak of the real estate bubble exceeded $1 million. I expect that now it would sell in the neighborhood of $750,000. I walked past the house recently and it looked almost the same as when we rented it, perhaps a little larger with an addition to one side. You can actually see the area where we rented in the above picture. The green strip at the lower right is the park I mention below.

Homes in the same tract, facing the ocean directly across the street from a park along the bluff have mostly been remodeled upward in size to match their multi-million dollar price tags. Mitt Romney plans to upgrade his La Jolla property from 3000 square feet to 11,062 square feet. La Jolla is one of the most desirable addresses in California and his property includes ocean frontage. Reportedly the property cost $12 million three years ago. After the upsizing, let us assume the property will be valued at $20 million in round numbers. Since the annual property tax rate in California is 1.25%, Romney will be paying around $250,000 per year. That amount would buy a comfortable home in most of the US.

All coastal property in California is scarce and very valuable due to the demand and because of the restrictions imposed by the California Coastal Commission, a body brought into being by the will and an initiative of the California voters in 1972 to preserve the coastline from excessive development. Romney claims that he needs the enlarged house because of the size of his family, and he chose La Jolla because he enjoys the sound of the surf. From the two years we spent renting near the coast, I can share his enthusiasm for the sounds of the waves. With the windows open at night, our rental was in an area quiet enough to hear the wave action. I know of no other sound on earth that is so relaxing.

Regarding his need for so large a home to house his extended family, I have some doubts. His children are all adults and they have children of their own. Romney’s adult children do not need to live with him because they are unemployed or because they have unpaid student loans, at least to my knowledge. Unemployment and unpaid student loans are the two principal reasons today that adult children are moving in with their parents. Romney jokingly once told an audience that he shared their unemployment. The truly unemployed are not living in $12 million homes that are too small.

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