U-Haul Economics (California's Meltdown)

Marketwise Black Box ^ | 10/25/03 | Rick Ackerman

[Russian Sage]

Your point is well taken, but if those moving to California overwhelmed the number leaving would not the rates be reversed for the same reason you proposed?

My point is that the California intrastate business is so large that the interstate business might be relativly unimportant.

There are probably a whole lot more folks moving between LA and SF (or within LA) than LA and LV. A truck that sits in LV for only a day or two could have easily been rented in California. It wouldn't matter what the LA/LV balance was. If there is more money to be made with capital residing in California you will make taking the capital out of California less attractive (more costly) to the renter.

[wheelgunguru]

Your home you sold probably doubled in price

Most of the people I know are unable to profit from the rise in housing prices because they have no where else to live.

If their house appreciates 200%, that means that corresponding property also appreciates. If they were to sell high, they would still have to buy high. No net gain.

One couple I know sold high ($210,000) but bought higher ($350,000).

Now, I do know some farmers who have sold to developers and are making a mint. But we're losing some prime farm land.

[Joe Hadenuf]

Thats all true.

But what is interesting, when someone does put an existing home on the market, it's gone fast, and offers above the asking price are almost the norm....And many are bringing mulitiple offers.....

[wheelgunguru]

when someone does put an existing home on the market, it's gone fast, and offers above the asking price are almost the norm....And many are bringing mulitiple offers.....

How true. I have a friend who put his house up for sale. Somebody from the Bay Area got into a bidding war with a local. The house sold for more than asking, and faster than they expected.

But then they had no place to live. They're renting from his dad (yuck!) until they can afford to buy, again.

[singsong]

Not to burst the bubble but the reasoning behind the pricing is based on the unit's chance of return. The COR (chance of return) is based on two factors. Population and changing demographics.

Not correct. The chance of return depends only on the differnce between inflow and outflow rates which equals the rate of empty truck returns. You did not get to the example about Chicago and Detroit. They are not comparable cities either. Operating costs, like garage, may have something to do with it but not much because trips in both directions incure them. Population only influances how many destinations will LA folks go to and from not the chance of return.

[ReagansShinyHair]

Well, when we left California for the midwest last summer, we had a LOT of company heading East along the way.

We saw one guy heading the other way. Though he drove a nice Durango, he didn't bother to rent a U-haul...he had jury-rigged a large, old trailer with plywood boards on all the sides. It was having trouble making it.

It was eerie, the way everyone was heading east, and very few were heading west.