Heating and Cooling LA

Have you ever heard of those crazy asinine questions that Google and other companies have become notorious for asking in their interview processes? You know what I mean… stupid crap, like this:

How many haircuts do you think happen in America every year?

OR

How many cars travel across a bridge each day?

OR

Estimate the number of tennis balls that can fit into a plane.

https://www.inc.com/business-insider/google-hardest-interview-questions.html

These questions are a bit of mental masturbation. It’s fun, it feels great when you finish, but the result is not super helpful in anyway.

Having been on both sides of these interviews in the past, it’s really not about getting to the right answer. It’s really about your thought process on the way there, and how you can dissect a super complex ambiguous problem. It’s also about how in tune you are with your rough estimations.

This type of thinking is super helpful to handle rough back of the envelope calculations for really weird and ambiguous questions. You know, like how much do I need to retire?

You’ve got to be able to dissect a problem, find reasonable solutions to each little piece and then add them all together and get to a reasonable answer.

The Discussion on A Bike Ride

The good folks from CountDown to FI came out to visit us a couple weeks ago. We all went on a bike ride, which happens to be my commute to work, when we started discussing how ridiculous living in LA really is. As we were riding, they made mention that it’s really nice where we live, and how we never really need heat or air conditioning.

We countered their comment with, “Yeah, but it’s really fucking expensive.”

But that comment garnered another question, “Can you justify the cost of living here, by allocating the heating and cooling costs of the entire area?”

Well, that’s a big stupid question, kind of like the ones asked in these ridiculous interviews. So, here we are… let’s walk though how we would think through something as dumb as, “What’s the heating/cooling bill for all of Los Angeles?”

Now for the cerebral self-pleasure!!!

How expensive is LA?

Living in LA is expensive, like super fucking expensive. One of the biggest parts of that expense is housing. Now, I know that it’s not NYC or SF at the moment, but really our dumpy 900 sqft house is on Redfin for ~$1MM, yeah… Stupid! (No, we don’t own it…)

The median home value in Los Angeles is $686,500. Los Angeles home values have gone up 6.0% over the past year and Zillow predicts they will rise 6.0% within the next year. The median list price per square foot in Los Angeles is $517, which is higher than the Los Angeles-Long Beach-Anaheim Metro average of $432. The median price of homes currently listed in Los Angeles is $799,900 while the median price of homes that sold is $687,600. The median rent price in Los Angeles is $3,650, which is higher than theLos Angeles-Long Beach-Anaheim Metro median of $3,197.

https://www.zillow.com/los-angeles-ca/home-values/

In addition to the cost of housing, you have to throw on an income tax rate of 9.3%.

and then sales tax of 9.5%.

That being said, we don’t need heat and we don’t need AC. So…

How much would each household pay to heat and cool the entire area?

Given all that expense, how much does the weather “cost”?

Let’s start with how big LA is. According to Wikipedia:

It has 88 incorporated cities and many unincorporated areas and at 4,083 square miles (10,570 km²), it is larger than the combined areas of Delaware and Rhode Island. The county is home to more than one-quarter of California residents and is one of the most ethnically diverse counties in the U.S.^[11] Its county seat, Los Angeles, is also its most populous city at about 4 million people.

That’s a good place to start. But what about how much it costs to cool the average house? Because lord knows those of us in LA don’t typically have AC. Well,

Realtor.com’s7 estimates place central AC cooling homes of over 1,200 square feet at an average cost about $245 per month.

Or $0.82/sqft/month

https://budgeting.thenest.com/much-cost-run-air-conditioner-23306.html

We won’t typically need AC much more than May, June, July & August, so 4 months. Let’s roll with that.

But we also need to heat the entire area, so what’s that run?

The annual cost to heat a 2200 square foot existing house of average energy consumption for different combinations of fuels and furnaces:

Natural Gas in an 80% furnace: $1215

Natural Gas in a 92% furnace: $1095

Oil in a 70% furnace: $2185

Oil in an 80% furnace: $2004

Propane in an 80% furnace: $3143

Propane in a 92% furnace: $2632

Electric Baseboard: $2485

Heat Pump with 6.65 HSPF: $1284 (includes electric backup)

Heat Pump with 7.5 HSPF: $1135 (includes electric backup)

average $1,908.67 or $0.87/sqft/year

https://energysvc.com/the-real-cost-of-heating/

Ok, so we have our heating and cooling costs and how much area we need to temperature control. Let’s start playing with numbers!!!

1 sqmi = 27,878,000 sqft

so 4,083 sqmi = 113,825,874,000 sqft or 113.8 billion sqft

Now, We know that cooling all that will be about $0.82/sqft/month for 4 months out of the year, or $3.28/sqft/year. So, our cooling costs come out to …

113,825,874,000 sqft * $3.28/sqft = $373,348,866,720

Well, we also don’t need heating so, our heating costs come out to:

113,825,874,000 sqft * $0.87/sqft = $99,028,510,380

Now we have a total temperature control bill of:

$373,348,866,720 + $99,028,510,380 = $472,377,377,100 (or $472.3 Billion)

Ok, That’s like a shit ton of money, to heat and cool this place, so now… Given that there are about 3 Million houses in LA:

At the census^[31] of 2000, there were 9,519,338 people, 3,133,774 households, and 2,137,233 families residing in the county. The population density was 2,344 people per square mile (905/km²). There were 3,270,909 housing units at an average density of 806 per square mile (311/km²).

https://en.wikipedia.org/wiki/Los_Angeles_County,_California#Demographics

So, what does it cost each household?

$472,377,377,100/ 3,133,774 = $150,737.53/yr/household

That’s a lot!!!

So yeah… given the median home price in the US is $279,000. Adding ~4 years of your share of heating and cooling the entire area, doesn’t seem like it’s that unreasonable.

What does this mean?

Well, this is a simple thought process through a very big and complex problem, so I guess the point is this.

When faced with a huge complex problem, try to slice it down to manageable solvable parts. Then once you have all the little pieces, just put them back together in a way that builds up to the whole.

Does this mean we’re going to buy a house?!?!

We do like living here. I guess I never really thought through part of why it’s so expensive to live here. But, given those numbers. It’s actually right in line with what you would expect to temperature control such a large area.

Yes, It’s expensive. We can whine and cry about it all we want, but we like living here at the moment. For a variety of reasons:

• Access to a world class airport.
• Endless activities and entertainment, free and paid.
• Unlimited varieties of cuisine from around the world.
• Access to the beach, and within an hour access to skiing.
• Moderate year round weather.

But, are we gonna buy something? Hell NO!

Our rent puts us in the rent to but ratio of about 35. Which means it’s way… WAY cheaper for us to rent here than buy. So, in the mean time. We’ll just keep enjoying all the perks of the weather and I guess I’ll continue my bike commute along the beach.