How California Became America's Housing Market Nightmare

[ansible]

California, the land of golden dreams, has become America’s worst housing nightmare.

Recent wildfires have only heightened the stakes for a state that can’t seem to build enough new homes.

The median price for a house now tops $600,000, more than twice the national level. The state has four of the country’s five most expensive residential markets—Silicon Valley, San Francisco, Orange County and San Diego. (Los Angeles is seventh.) The poverty rate, when adjusted for the cost of living, is the worst in the nation. California accounts for 12% of the U.S. population, but a quarter of its homeless population.

How did we get here? Simply put, bad government—from outdated zoning laws to a 40-year-old tax provision that benefits long-time homeowners at the expense of everyone else—has created a severe shortage of houses. While decades in the making, California’s slow-moving disaster has reached a critical point for state officials, businesses and the millions who are straining to live there.

This fall, as President Donald Trump blamed Democrats for the situation on his swing through the state to raise money for his reelection, lawmakers in Sacramento passed some of the most sweeping legislation in years to address housing affordability. Google, Facebook Inc. and Apple Inc. are throwing billions of dollars at the issue. But nobody’s kidding themselves that it’s enough.

“Broadly speaking, there is no solution to the California housing crisis without the construction of millions of new houses,” said David Garcia, policy director for the Terner Center for Housing Innovation at the University of California, Berkeley.

McKinsey & Co. estimated in 2016 that California needed some 3.5 million more homes by the middle of next decade—a figure that Governor Gavin Newsom made a central part of his administration’s goals. A more recent analysis suggests it may take the state until 2050 to meet the target.

https://www.bloomberg.com/graphics/2019-california-housing-crisis/?utm_source=pocket-newtab

[DBoon]

1. ... and homeowner groups throughout the state are actively opposing new housing

making it politically impossible to remediate the problem.

Of course if you already own a home a soaring median price is an advantage, not a problem.

[Celerity]

6. the 'I got mine, FUCK YOU' crowd

Last edited Wed Nov 13, 2019, 10:10 PM - Edit history (1)

If my father did not have a house in the LA area, I would never live there (I do not even live there atm, so there is that) if I had to pay. I might consider buying if there was a massive market crash, but that is pretty unlikely in our area (near the ocean, very near) barring a crazy huge earthquake, in which case (especially if it was the 'big one') it might all be in the Pacific anyway.

[tblue37]

19. Climate change, wildfires, & water scarcity might make CA uninhabitable soon. nt

[D_Master81]

2. I always wonder how people afford living in Cali

Me and my wife like to watch “Flip or Flop” on HGTV and they will buy tiny trash houses for $400,000+. Here in Indiana that’d get you a 4000 sq home.

[Garrett78]

4. Not everywhere in CA is the same. My wife and I live on the northern coast. 3/1 1552 sq ft for 205k.

[Polly Hennessey]

7. Same here. Two story home

on five acres. Paid less than 600k for our property.

[rownesheck]

14. Those tv shows always surprise me.

The prices for those houses are insane. One good thing about living in TX is the affordable housing. We have a 2400 sq ft in a really nice neighborhood right outside Houston. Paid just under 200k.

[ansible]

24. What about property taxes in Texas?

I've heard they're even more expensive there compared to CA

[Demovictory9]

25. people afford CA housing prices by rolling equity from prior house into new or two incomes paying

large mortgage or parents helping kids with down payment

[LisaM]

3. Where are they going to put them?

The cities are filling up and they clearly can't push them up into the path of the wildfire footprint. We need to address overpopulation, and frankly, everyone can't pile up in the same few cities. I live in Seattle - there is no room for all the housing they want, they are knocking down beautiful houses apace in the name of density and putting up cheap, ugly boxes (someone called them filing cabinets), pushing out anyone who had affordable rental housing, and creating a homeless problem in the meantime.

One part of the answer is that we need to re-populate parts of the country that are losing population. There are lots of beautiful states - all of them, IMO - and some of them are small enough that a few thousand new residents could tilt voting districts blue, too.

I moved to Seattle in the late 80s, not because of a job, but because of a relationship - so I do ask myself, should others have to make different choices now, than I did then? It's a fair question, but back then, when I was younger, I wasn't particularly drawn to Seattle and would have also gone to, say, Milwaukee, St. Louis, Detroit (I'm from Michigan), Kansas City, lots of places to start the next phase of my life.

I wish to hell these companies would stop trying to do things like add 50,000 jobs in places that have housing crises, and go and 1) pay taxes in a smaller city; and 2) try to re-populate the interior of the country.

How can California need 3.5 millions new homes in the next ten years? Where are they going to put 10 million new people?

[Nay]

5. Not only that, but where are they going to get the water for them? I agree with

you that we need to repopulate the middle of the country, but large companies won't move there for several good and bad reasons.

[LisaM]

8. Well, mostly bad. They are demanding infrastucture be in place for one thing.

I could list all the things Amazon has done to make Seattle a far worse place to live in, but it takes more fingers and toes than I have handy.

The main thing is that they - and other big companies - avoid taxes. If they could go to someplace and increase their tax base, and maybe pay workers a lower salary, you'd think at some point it would even out. But they all shirk their tax responsibility. (Seattle, and Washington in general, also have an extremely regressive tax system).

The water issue is another good point, and that's a looming crisis.

We really need to slow - and reverse - population growth. I did my part - no kids!

[Blue_true]

11. Most young professionals won't move to inland cities.

You are not going to get a 22 year old U-Dub or Berkley grad to move to Arkansas for many reasons. The culture in inner America basically sucks and the politicians are backward and religion is jammed in people's faces. The best solution for interior states that are hollowing out is to build out from their universities, but the dominant politicians in most of those places hate higher education and do all they can to cause grads to head to more populated places. I keep thinking about the Jordan Steffy video, the gay kid who beatdown a bully. The schools would not protect him, so he had to take matters into his own hands. You can bet that when the kid goes off to college, he likely goes to a big city and never return home. The politicians where he lives are likely Neanderthals when it comes to LGBTQ rights. Why would a young person that came from a more tolerant place want to go to backward areas of the country to live?

[LisaM]

12. I get that, but there are liberal enclaves

mostly college towns, like Austin, of course. North Carolina definitely has some progressive areas, and it's beautiful. Milwaukee is hardly inland.

I get the issues, but something has to happen. And, everyone doesn't go to U-Dub or Berkeley.

[Blue_true]

15. I agree with you that not everyone go to two universities.

And the college towns in most states are blue. The unfortunate thing is the governor and Legistlature in most of those places are red (North Carolina, Louisiana and Montana current exceptions) idiots that wage war on colleges and college towns. The smart act would be to use colleges and college towns as growth anchors and then spread that growth out by investing in highways and other infrastructure - unfortunately most state level leaders in those places don't have that vision, so the young people finish school and head to bigger cities to work and live.

[LisaM]

17. You could change some states to purple - at least - with 10,000 new residents.

It's crazy, some states are smaller than probably the top 100 cities.

It's quite true that water is going to be an issue; I agree with whomever said that up-thread.

[roamer65]

20. Very true.

The more liberal enclaves of Grand Rapids, Ann Arbor and the Detroit area burbs are growing. The rest of Michigan is dying.

[Blue_true]

21. Apply that to any state. The same trend happens.

Urban areas and college towns become more racially diverse, prosper and grow. Rural parts of the state become less diverse and continuously shrink, unfortunately those rural places have political power that is grossly disproportionate to their populations.

[roamer65]

22. Correct.

[Blue_true]

9. Problem.

The coasts are where jobs keep growing. The interior is hollowing out and politicians in those places seem to be perfectly fine with that. If there are no good jobs, people are not going to move. States like California, Oregon, Washington do have a solution. California can move more people up the northern coast and northern interior and use hitech communication to connect those people with their Bay Area or LA/San Diego job headquarters. Washington and Oregon can build more south and west, there is plenty of land in both directions. Virginia, North Carolina, Georgia have similar opportunities, there are parts of the states that can be built into to spread population and technology can be used to remotely connect people to jobs.

[LisaM]

10. Well, they can't just spread out in Washington.

The coast will have a rising sea level and tsunami problem, there are forest fires here, too, and now we are dealing with mudslides.

They can build on the other side of the mountains, but water will be an issue there, too. They've had droughts.

[VarryOn]

13. Good thing they passed some rent control laws...

At least those help with housinf supply.

[SKKY]

16. Those HGTV shows kill me...

“She works part-time at a daycare. He raises boutique salamanders. Their budget is 1.4 million”

[miyazaki]

23. Rolf. Where do they find these fuckers.

[mokawanis]

18. My friend in Culver City, right on the edge of LA

Bought an 1,100 sq. ft. house for $200,000 down on a price tag of $800,000. As much I like California and LA there is no way I could ever afford to live there.

Btw, 7 years after he bought that $800,000 house it was appraised for 1.1 million.

[mr_lebowski]

26. Allow me to point out that one 'bad government' example ... to whit, Proposition 13 ...

E.G. The "40-year-old tax provision that benefits long-time homeowners at the expense of everyone else" mentioned ... was really not an example of 'bad government' ... it was a done via citizens ballot initiative, passed by the voters, and added to the Constitution ... it was not some bit of 'bad' legislation passed by bureaucrats.

Allow me to also point out ... it won by almost 70-30, with 65% turnout ... and has been reviewed and upheld by SCOTUS.

It was put in place because older residents were being forced out of their homes due to how fast property taxes were rising.

Even now I'm not sure how much it's contributing to the housing crisis ... for every elderly family that stays put thanks to the (relatively) low property taxes on their 50 y.o. home, there's probably 10 other that are taking their 500-1000% (or even greater) profits by selling the house and moving to FL or AZ or wherever else ...

Two sides to every story.

Full disclosure: The law is pretty much what's going to allow me to retire TO California ... on accounta I'll be inheriting a paid-for house in the town I grew up in (well, went to high school in, and my folks have lived in since), and would very much like to return to ... and Prop 13 offers same protections on inherited property ... so I'm kinda partial to it