Everyone wants to live in California, right? Well, we do have the best climate in the Country if not the World, so we do have something rare and valuable here. Does it create value?

Asking Price: $1,399,000

Address: 104 Capeberry Irvine, CA 92603

Rollin’ down Imperial Highway
With a big nasty redhead at my side
Santa Ana winds blowin’ hot from the north
And we was born to ride
Roll down the window, put down the top
Crank up the Beach Boys, baby
Don’t let the music stop
We’re gonna ride it ’til we just can’t ride it no more
From the South Bay to the Valley
From the West Side to the East Side
Everybody’s very happy
‘Cause the sun is shining all the time
Looks like another perfect day
I love L.A. (We love it)
I love L.A. (We love it)
We love it

I Love L.A. — Randy Newman

I drive a convertible; I rarely put the top up. When my family makes weekend plans, we don’t worry about the weather. The climate in Coastal California is nearly perfect, and I enjoy it every day.

Weeks ago I wrote Rental Parity and Beyond to describe the value created beyond rental cashflow. The narrow coastal band of properties in California have a unique and very high quality climate.

Cold

I grew up in Central Wisconsin. Like much of the country, there are four distinct seasons there, but in Wisconsin, the winters are particularly brutal. I remember one full week in February of 1985, the high temperature never got above zero degrees. Each day, the high would be -8 to -2, and the lows would drop down well below -20. One morning, it was -38 when I went outside to start my car. That is cold.

It is difficult to describe just how cold thirty-eight degrees below zero really is. Everyone knows how warm 80 degrees feels, and most know how much colder 40 degrees feels. That same change in feeling accompanies the drop from 40 degrees to zero degrees, and it happens again when dropping from zero to minus 40. Zero degrees is a very chilling cold. Any exposed skin is immediately “bitten” by Jack Frost. Forty degrees below zero is beyond cold. Exposed skin feels like it is on fire at those temperatures as the cold “freezer burns” your skin. Prolonged exposure results in a bone-chilling cold where the surface layers go numb and the chill penetrates deeply into your body.

There is no escaping cold weather. There is no time of day when you can go outside and be comfortable. You have to bundle up with layers of clothing, heavy coats and boots, and you rush from one artificially heated environment to another. Whenever you are exposed to the cold, you hate it — and you can’t help being exposed.

It is never cold in Irvine.

Hot

I lived in Las Vegas for a while, and I have spent much time in hot, arid climates. Someone described Las Vegas to me as “living in a hair dryer.” The deserts in inland California are much the same. There is good weather in these areas for 8 months of the year, but the summers are very hot and nearly unbearable. Extreme heat is very draining, and exposure can result in heat stroke and dehydration. I prefer heat to cold because when it is really hot, at least you can go outside in the mornings or evenings and the temperature is bearable.

It is never hot in Irvine.

Humid

I lived in Florida for 7 years, and I lived in humid areas of Arkansas and Texas for much longer. Humidity sucks. The moment you step outside, you begin to sweat. It is uncomfortable, particularly when it is also very hot. One thing that always bothered me about living in a humid climate is that you can never open the doors and windows of your house and let the air circulate; your house is hermetically sealed — like a coffin. (We aired out our place last weekend. Most of the day there was a dry 74-degree breeze blowing through.)

It is never humid in Irvine.

Wet

We get very little rain in Southern California, so we rarely have to change our plans due to the weather. When I lived in other areas, I always had to make back-up plans in case the weather changed. I spent far too many weekends watching rented movies as the cold and the rain ruined my plans for fun. Also, the lack of rain means fewer molds, pollens, mosquitoes, and other problems and pests of excessive rainfall.

I have always thought Eugene, Oregon, looked like a nice place. I caught part of a football game played there recently. It was cold and overcast, and there was a light mist. The announcers of the game said it had rained for 18 consecutive days there. WetTF! So much for Eugene, Oregon.

It rarely rains in Irvine.

Storms

I have lived in areas where tornadoes, hurricanes, intense thunderstorms and dramatic changes in temperature were common. I can remember one afternoon in Texas when a cold front came through and reduced the outdoor temperature by about 40 degrees in a few hours. I have evacuated to avoid hurricanes, hid in the basement to escape tornadoes, and experienced thunderstorms so intense that water seemed to fall in sheets from the sky.

We don’t get big storms in Irvine.

California Perfect

Coastal California has a narrow band of temperature variation with highs ranging from the 60s in the winter to the 70s in the summer. The closer you are to the ocean, the narrower this band of temperatures becomes. We have low humidity and little rainfall, and the closest we come to a storm is the Santa Ana winds that occasionally blow hot air out of the deserts.

The daily weather experience is fantastic. The mornings here are beautiful as we generally get a cozy blanket of clouds that keeps the morning cool. It isn’t a depressing overcast (except for May Gray and June Gloom) because we all know the clouds will burn off by late morning, and we will be bathed in sunlight the rest of the day. If you live close enough to the water, there is a sea breeze that takes the edge off a sunny summer day. The evenings are generally cool and crisp often requiring warmer clothing. I don’t own a heavy winter coat or boots anymore.

The best thing about living in a perfect climate is getting out to enjoy it. We have year-round outdoor activities with little worries about seasonality or bad weather days. I can’t remember the last time we had to change the family’s plans due to the weather.

You do get very sensitive to small changes in temperature when you live in a perfect climate; eighty degrees is hellish hot, and sixty degrees is an Arctic blast. It is the Goldilocks climate.

As I mentioned in the opening, I own a convertible, and I rarely put the top up. There are times I will run the heater in the morning or the AC in the afternoon to take the edge off, but I still greet the morning air in January or the afternoon air in August with the top down and the wind in my hair. I couldn’t do that living anywhere else.

Add Value?

Does this great climate add value to Coastal California real estate? Indirectly, it certainly does. Many wealthy and powerful people make our area their home because of the weather, and they build companies and stimulate the economy by their presence. This raises everyone’s standard of living through higher wages, higher rents, and higher home prices.

Are home prices higher because “everyone wants to live here?” No, but believing that is true makes people feel good and perhaps feel a bit superior. Many people really would like to enjoy our climate, but without a good job, the cost of living is so high that being here wouldn’t be very fun or desirable.

The climate is one of the main reasons I live here, and I am not alone. I knowingly sacrifice my standard of living to be here (there are plenty of McMansions I could afford elsewhere). Perhaps the effect of people like me adds some value to real estate, but the phenomenon would be very difficult to measure.

Added value or not, I plan to stay here and enjoy this climate as long as I can.

We have perfect weather in Irvine.

Asking Price: $1,399,000

Income Requirement: $349,750

Downpayment Needed: $279,800

Purchase Price: $976,500

Purchase Date: 12/15/2004

Address: 104 Capeberry Irvine, CA 92603

Everything is gorgeous…

These WTF listing prices are evidence that the housing bubble has not played itself out yet. As long as there are homeowners who really believe their properties have appreciated 40% since late 2004, we are not at a bottom. A spring rally brings out the clueless dreamers.

At least they get to enjoy the great weather….