Rich Karlgaard:
One-third of Los Angeles residents now tell pollsters they are sick of their city. The percentage of L.A. malcontents has doubled in only two years, according to polls cited by Anne Taylor Fleming, a local essayist.

Of course, one learns to take any poll analysis with a grain of salt. But my gut tells me this one has it right. The radio talk shows in L.A. these days yap constantly about the prices of houses, car commutes that never end and the breakdown of public services. What religion is to contemporary U.S. national politics–a bitter and hardening divide–illegal immigration is to California politics. Los Angeles has become the Fallujah of this ideological war zone.

This column will leave the touchy subject of illegal immigration to the experts. Except to say this: Stricter border control, okay, but the only way out of this mess, the only permanent and peaceful answer to illegal immigration, is capitalistic reform south of the border. Mexicans need reasons to stay in Mexico: economic growth and jobs.

As for the 33% of L.A. residents who hate their city and want to move out: Go for it! Now! Yes! There will never be a better year than 2005 in which to sell your house and pick up stakes. Here’s why.

• The gap in house prices between greater Los Angeles and interior America is wider than ever. Go to and see for yourself. Click on home price index. Type in $1 million and select Santa Monica, Calif., an upper-middle-class L.A. suburb, as your base-comparison city. Now select equivalent nice suburban areas across the country and see what comparable houses cost. Here’s a sample: Scottsdale, Ariz., $348,000; West Chester/Chester County, Pa., $321,000; Overland Park, Kans., $190,000. You can see that L.A. residents are paying a high price for misery.

• Get out now because house prices on the urban coasts have peaked. That’s the consensus of experts, based on ratios such as house prices to local incomes and mortgage payments to local rent prices. While I’m usually skeptical of expert consensus, this smells right. Rising interest rates have started to put the brakes on house appreciation. The number of “for sale” signs in California is exploding like spring pollen.

• For most people the quality of life in interior America is better. Okay, that’s just one columnist’s opinion. But I do travel about the country a great deal, giving speeches. Whenever I ask for a show of hands on how the locals feel about the economy–local and national–Texans, Minnesotans and New Mexicans invariably are bullish, while New Yorkers and Californians are bearish. I suspect the crushing costs of living on the urban coasts has something to do with this. That and the sense, especially in California, that the public infrastructure is falling to pieces.

• The sophistication gap between the coasts and interior America is shrinking. Sinclair Lewis, in 1930, became the first American novelist to win the Nobel Prize for Literature. He came to fame by skewering small towns (in Main Street) and medium-size heartland cities (in Babbitt). Prohibition was the Blue State-Red State divide of the 1920s, and satirists such as H. L. Mencken had a field day portraying the self-righteous sobersides of the prairies (who often drank homemade corn liquor behind the barn at night). That was then, but the image lingers. The truth is, Google, FedEx and free trade (which makes possible the dispatch of ripe avocados to Fargo, N.D. in the dead of winter) have made heartland living a much richer experience than it was a generation ago. This development is one of the underpromoted stories of American life and is utterly lost on Blue Staters. The last publicly expressible prejudice in the U.S. is that of Blue State sophisticates sounding off about Red Staters. The Red Staters, comfy in their $400,000 five-bedroom homes on two acres, don’t much care.

College Towns Will Boom

Where to go in the Red States? For my money the best qualityof life at the cheapest price is to be had in university cities. That $1 million house in Santa Monica will cost you $280,000 in Charlottesville, Va.; $187,000 in Austin, Tex.; $134,000 in Knoxville, Tenn.; $193,000 in Provo, Utah; $203,000 in Athens, Ga.; $213,000 in Gainesville, Fla.; $246,000 in Fort Collins, Colo.; and $197,000 in Tucson, Ariz. Add another 50% to get into the better school districts–hey, that’s still cheap compared with California or New York. Even in pricey California you can find bargains in the Red Counties in the foothills west of Merced, the newest University of California branch.

Real estate investments in these university cities have a good chance of growing for four reasons.

• All of the cities mentioned above are situated in states that will outgrow the U.S. general population between 2000 and 2030 (see the Web site). The U.S. as a whole is expected to grow by 29.2% during the same period.

• University cities tend to be the faster-growing cities within the fastest-growing states.

• Employers hoping to tap younger, cheaper talent in IT, biotech and nanotech–but wanting to avoid the still-cheaper but riskier bets of offshoring to India and China–will find it in American heartland university cities. “Outsource to Wisconsin” will become a recurring theme in the decade ahead.

• Broadband wireless, such as Intel’s Wi-Max and Qualcomm’s CDMA standard, will soon close what information gap remains between America’s big and small cities.

More here.