Go West young man! The adage was true a long, long time ago when the West Coast of the United States represented a land rich in gold and sunshine and, well, opportunity. Does this still hold true today?
Recent news out of California tells of a contentious gubernatorial election emblazoned with debate about taxation, regulation, a high cost of living, and a state government deeply in debt, while boasting of a population that just won't quit. Today's California still seems to hold its appeal to many who call it home. But does it still offer the opportunity it once did?
A Trend Line for Growth
Dan Stephenson seems to think so. He is the founder and chairman of the Murrieta, California-based Rancon Group - an integrated network of real estate-related companies serving buyers, sellers, developers, investors, and owners of real property in Southern California.
"Southern California is still a very desirable place to live, work, and raise a family. The region's physical beauty and ideal weather are difficult to match anywhere else in America, and people will always want to locate here," he says. "We think California offers us and those that we represent.an almost unprecedented opportunity today. Those who understand the long-term viability of California are looking at this current situation and seeing underpriced assets.that will bring rewards to anyone with an appetite for some risk and a medium-term return as California reverts to its trend line of growth and prosperity. "
Deborah Sweeney, CEO of MyCorporation.com based in Calabasas, California, concurs. She says California continues to hold its allure with its large population, entrepreneurial spirit, and numerous new business start-ups driven by a high unemployment rate.
Seth Weissman, a partner with the law firm of Jeffer Mangels Butler & Mitchell LLP based in Los Angeles, accents the inherent characteristics of the state and its technological prowess: "With respect to clients who may be considering expanding to California, the marketplace offers a massive consumer base, access to leading technology providers - an expected driver for almost all businesses over time - access to media and entertainment providers, great weather, solid industrial infrastructure, and a highly educated employee base."
While many are still upbeat about California, others are cautiously optimistic about the state's fiscal solvency.
"There is an element of uncertainty with respect to state and local taxation, which could have both a direct and indirect impact on our clients. For example, were there to be a repeal of Proposition 13 for commercial properties, long-term owners of commercial real estate and their tenants could face unexpected tax increases, which would impact net income," explains Weissman. "Whether such a change would motivate those holding real estate to sell their properties and offer opportunities for other investors to come into the marketplace is unclear. One thing is clear: the recession has devalued California real estate, which makes it an excellent long-term opportunity for investors that have cash and patience. The recession has also motivated some lawmakers to try to find ways to incentivize businesses to come to California."
The downswing has actually ripened the opportunity for some. "The state's fiscal condition and resulting layoffs have led to significant unemployment, which leads people to start businesses - incorporate or form LLCs - and turn hobbies into new businesses," explains Deborah Sweeney, whose company helps start-ups become legal entities. "We have seen an increase in new business starts, which helps our business," she notes.
Dan Stephenson is in concert with this ideology: a downswing presents certain unique opportunities. But there needs to be some systemic change by government leadership in order to fully realize the potential of such opportunities.