How California Became America’s Housing Market Nightmare
How California Became America’s Housing Market Nightmare
Noah Buhayar and Christopher Cannon November 6, 2019 Bloomberg Quote:
Some take aways: 1] CA has the highest poverty rate when adjusted for cost of living. 2] CA needs 3.5 million new homes, right now. 3] Cost Burden: CA has the highest share of households spending more than 30% of their income on housing. 4] CA has held the second highest home prices for decades [only behind Hawaii, for obvious reasons] 5] The cost burden hits all income brackets. 6] Job growth exceeds the growth of the housing supply. The Bay Area saw 5.4 new jobs for every unit of housing it built between 2011 and 2017. |
How much of this crisis is caused by NIMBYs? Like 95%?
I am still not sure if this is all NIMBY caused or if it has to do with high cost of business and regulation, leaving little return for developers. I understand places like the Bay (especially the peninsula) and San Diego are quite conservative when it comes to upzoning, which is odd, due to the region's uber liberal population. Oakland could really take advantage of this housing crisis and up zone it's entire western half and absorb a good 150,000 people, but BART will need significant help to deal. |
Saying California is a "housing market nightmare" is like saying Apple is a "valuation nightmare". Homeowners are sitting pretty.
Most people are existing homeowners, obviously, and benefit from strong property values. You wish you bought in Palo Alto or Flint? |
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San Diego and Silicon Valley are hardly "uber-liberal", BTW. |
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''Free Healthcare'' ''Everyone is equal'' ect. The Bay Area is famous for being super far left swinging, and this generally means that people favor more left leaning policies, like universal healthcare and government subsidies ect. I understand why current homeowners wouldn't want more housing, obviously. But a good chunk of the voting population is renters, who would most certainly want more housing units constructed so their rents go down and have more housing options. Also, sure- there are conservative areas of California. But they are the minority. To say otherwise is being intellectually dishonest. CA is one of, if not THE most reliably liberal states in the country. |
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Most of California isn't "liberal" and even most liberals don't support "housing for all" and "free healthcare". Yes, obviously most believe in equality, but that isn't a liberal take. The Bay Area isn't "super left". SF, Oakland and Berkley are "super left". Silicon Valley, which has the crazy home prices, is politically moderate. Actually the super left areas are some of the most affordable areas. Even lefty-leaning Marin has lagged, because it doesn't have tech. There are more homeowners than renters. Why would homeowners want cheaper housing? My aunt in Coastal CA, a retired nurse, has a modest oceanfront house that's probably worth $4 million. You think she's crying about her home values? Maybe she should have bought in Cleveland or Detroit back in the 70's, so her children and grandchildren would get nothing when she dies. Also, she's in a traditionally conservative area that's very NIMBY and still has tons of Republicans (southern Orange County). I bet you the remaining Republicans are every bit as NIMBY as the liberals. Still tons of Republicans in places like Newport Beach and Dana Point, even a decent share of hard-core Trumpies. |
CA homeownership rate is about 55%, which is low. If you go to urban areas, it's most certainly lower than half. So this argument doesn't really hold.
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Yes, if CA eventually became renter dominated, like NYC, the dynamics might change. But keep in mind that NYC is super-NIMBY too. The renters apparently hate tall buildings too. |
That sounds like your opinion rather than a fact.
If homeowners voted much more than renters, 99% of my peers shouldn't have had the ''Voted'' sticker on their chest on Tuesday. Anyway, I asked about the reason for this housing shortage and we're splitting hairs and getting nowhere. There clearly is a problem with a housing shortage, see the homeless camps everywhere in CA. Would like to understand the reason behind this rather than discuss the republican pockets of CA or why calling California liberal is wrong. |
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I don't know Los Angeles as well, but I know BART has done a pretty good job of incentivising private investment into exurban transit stations that bring a drastic uplift in value to the surrounding land. I've used a couple of examples there as case studies for similarly structured deals here in the GTA. Unless the State is going to implement some sort of mechanism to overrule local zoning disputes, I see developments like this one in West Dublin/Pleasanton being the primary method of adding large numbers of units. https://i.imgur.com/wQn5ETnl.png There are over 1,500 units in this photo and it's about a 45-minute train ride to Downtown (according to Google Maps, never done the route myself). There's no existing layer of low-density residential full of NIMBY homeowners. Also, upzoning from medium-density like this to high-density in the future should be far less of a battle than going from SFH to 4-5 storey blocks. |
It's mostly NIMBYism, but not just that. Proposition 13 has also played a role. It means that unless a house changes hands, property taxes cannot go up by more than 2% per year - which is of course generally speaking not only lower than property appreciation, but lower than inflation.
The proposition was originally put into place in 1978 in part to ensure seniors would not be priced out of their homes. But it applies to all property equally, and ensures that if you've owned a property for decades, you will be paying very low property tax rates, eliminating most of the incentive to sell. IIRC you can even pass down houses in families without your children getting reassessed. The result of this is it fucks up the California housing market. People who in other states might choose to downsize to smaller units - or move within the state - just stay put where they are for long periods of time. On average, homeowners in the major coastal cities stay put around three years longer than they would have otherwise, which doesn't sound like a lot, but it means a lot of units which could be taken up by the local workforce are just kept off the market entirely. |
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It may be libertarian, but it's the opposite in limiting density. It's truly bizarre that there aren't several thousand new units per year right in the valley.
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Maybe in private, a lot of silicon valley types are libertarian, but they sure do not vote that way outside of maybe gay rights and drug legalization, which are closely aligned libertarian issues with the Democrats. Progressives have completely opposite view, especially on economic issues, compared to libertarians. |
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The East Bay also isn't that insanely expensive. It's pricey, of course, but considering the local salaries, normal households should be able to afford a house and reasonable commute. The real issue is how do you fix SV sprawl where crap homes go for $2 million+ because they're close to giant corporate HQ, and where non-vested employees endure horrific commutes. |
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