July 12, 2024

California real estateCalpers  suffers a $367.5 Million loss over just a five year period on a Arizona real estate deal.

Bloomberg News recently reported that the California Public Employees’ Retirement System was part of a group of investors in a 10,200-acre desert land deal in Arizona that was purchased for $400 million five years ago. This same land parcel was just sold for $32.5 million.

The land had been planned for a 42,000-home community when it was purchased in 2006.

Raw land purchases are always speculative by their very nature. However, California taxpayers must wonder about the size and timing of this deal. I would think that the directors of Calpers would be conservative by nature. Perhaps this was just an unfortunate blunder?  Calpers also made a $970 million investment in Newhall Ranch, a master- planned community north of Los Angeles, that filed for bankruptcy in 2008, thereby wiping out Calpers’ total investment.

At least the California public employees will not have to worry about any ramifications from these huge real estate loses. In California any short-falls in the Public Employees’ Retirement System is automatically made up by the State taxpayers.

This prime example is a strong reason why California should scrap their defined benefit retirement program in favor of the traditional 401k programs that dominate the private sector. In California, such a common sense solution to this problem is pure fantasy. I say to the big government proponents, here is another costly example of why big government (State or Federal) is not the answer. Let the workers be responsible for their own investments, with the choice in a 401k to invest in cash, cd’s, stocks/bonds etc.  If the double their money, fine. If they lose, I for one as a California taxpayer should not be on the hook to make up their loss.

San Diego California real estate agents

 

 

1 thought on “California Real Estate Sales Loss

  1. Wow, that’s absolutely heart-breaking for the CalPERS members. But investing in raw-land is always riddled with high-risks, it’s unfortunate that the fund managers didn’t exercise more caution. C’est la vie.

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