8 ms·

California's housing crisis benefits existing homeowners, and this group has the greatest sway with legislators. It seems like a ponzi scheme, even if it's not

• i_am_nomad 7y ago
  What does "crashing down" mean, exactly? Do you mean economic development will stall? Then that would imply that home prices will decline and/or people will start leaving the state. If so, then that's the market at work, solving the problem without government intervention.
  • mullingitover 7y ago
    By 'crashing down' I mean a stiff housing price correction. There's already heavy government intervention in the housing markets, that's the problem: developers can't simply buy land and develop it to it's maximum potential. There are regulations that prevent the market from meeting demand, hence the skyrocketing prices that can't be addressed by increasing supply.
    • glitchc 7y ago
      Hasn’t happened in London yet, or Hong Kong or Bombay or any other world class city open to the elite. The wealth my change hands, but the number of elites is monotonically increasing. It doesn’t matter if none of the locals can afford it.
      • seanmcdirmid 7y ago
        Property crashes do happen from time to time. Even in HK, Mumbai, London, etc...
        • glitchc 7y ago
          Other than minor blips, long-term trend is positive. Check out the ten year trend at [1] [1] https://tradingeconomics.com/hong-kong/housing-index https://tradingeconomics.com/hong-kong/housing-index It may be an unpopular notion or maybe folks in SF are hoping to time the market, but the general trend across the globe is increasing price in desirable locales, barring natural disasters. So, yes, if a major earthquake hit SF, there would be a price correction :)
          • seanmcdirmid 7y ago
            SF area was pretty down for more than a few years in the 90s (almost a lost decade from a gain perspective). Yes, it is temporary but even a small blip is enough to take out most leveraged speculators. HK is an especially speculated and manipulated market, only experts should play there.
          • helen___keller 7y ago
            > Other than minor blips, long-term trend is positive. Check out the ten year trend The entire global equities market has been going crazy for the past decade, in no small part due to the historically low interest rates. Claiming that housing prices will keep going up is like claiming that the stock market will keep going up. Even if it is true in the long run, you can have recessions or depressions, some that may last decades (see Japan's stock market since the 90s). Bull runs don't last forever. Rental yields are abysmal in top cities, sometimes barely enough to cover the unit's tax burden & maintenance. If equities go down, so will the value of these units.
            • glitchc 7y ago
              Land ownership has a long-term positive growth trend going back a thousand years in western society. It’s as stable an investment as one can make. Average rate of return in North Am over 50 years is about 5% per year.
    • magduf 7y ago
      >By 'crashing down' I mean a stiff housing price correction. I don't see how that's a problem, in fact it sounds like a solution. I'm certainly not going to cry over a bunch of rich people losing their shirts on overpriced real estate.
      • KptMarchewa 7y ago
        The problem is that many people can't afford to live there in the period of bubble.
        • magduf 7y ago
          Right, nor should they. They should go where they can afford to live. If that means the Bay Area has no more restaurants, gas stations, garbage pickup, schools, etc., that's fine.
      • village-idiot 7y ago
        I wouldn’t, but given the political power of the home owning class I really fear what corrective measures the government would take to stop a correction.
      • jjeaff 7y ago
        It's not just rich people. It's people who have spent every bit of disposable income they have on keeping their mortgage paid up. That includes not investing into retirement funds. They are counting on their house being the retirement fund. When the housing market collapses, there are going to be a lot of people left holding the bag.
  • conanbatt 7y ago
    Its a market at work but it puts a cap on how much CA can grow. CA is already losing out enormously domestically. CA thrives demographically only on immigration, otherwise it would constantly lose people. Also the quality of life is not guaranteed by prices: SF is the only place i know where millionaires step on human shit on their way to work daily.
  • imtringued 7y ago
    Americans are fleeing SF in masses already.
• JumpCrisscross 7y ago
  > California's housing crisis benefits existing homeowners, and this group has the greatest sway with legislators Because they vote. New York renters are a powerful contingent. Because they vote. A large fraction of California has self-selected out of the political process. That is the root of a lot of its problems.
  • B-Con 7y ago
    Also because they exist. People who would move to CA but don't because of the housing problem can't vote to fix the issue.
    • tomatotomato37 7y ago
      To be fair democracy needs some type of locality limit to keep it in the specific sovereignty's influence; US citizens don't get to vote in Canadian politics just because some people in Maine are thinking of moving over to Montreal
  • mochomocha 7y ago
    In immigration-heavy places like the Bay Area, a lot of renters don't have the right to vote.
  • conanbatt 7y ago
    Large fraction of renters are foreigners. Around 27% CA population, twice the national average. If they could vote, they would change this. 2 things that would wreck california here are: 1) restricting immigration (they lose suckers) 2) liberalizing immigration (suckers get bargaining power)
    • dsfyu404ed 7y ago
      Add "restricting emigration" to the list. If the upper middle class couldn't plan on cashing out their house and leaving for a low CoL area they'd get serious about fixing things.
• notJim 7y ago
  The thing is, there's so much capital floating around with nowhere to go that it's not clear to me when it's going to come crashing down. It's not just real estate speculation, it's also venture capital feeding exploding tech valuations which results in all these new millionaires who buy up what little real estate there is.
• cgy1 7y ago
  And where are we going to find teachers, nurses, baristas, garbagemen, plumbers, etc. to service the wealthy homeowners when none of these professions pay anywhere enough for people to live on in places like the Bay Area? Soon places like this will be a mix of billionaires, FAANG workers, the retired, and nobody else.
  • gph 7y ago
    Probably find them living in tiny capsules and/or shipping containers down by the docks or maybe on top of that superfund site that rich people are starting to get weary about living on/near.
    • kazinator 7y ago
      Not much room for "servant's quarters", when your multi-million-dollar condo is like 1200 sq. ft.
  • nomnomnom01 7y ago
    First of all, plumbers make good money. Second, expensive new developments that are unaffordable won't work. Ever seen the prices on them? Here in Los Angeles which isnt nearly as expensive, its about $3000+ but usually even more for new developments because they are high end. Please do some basic research beforehand.
  • magduf 7y ago
    I honestly don't see the problem here. It's simple: teachers, nurses, baristas, garbagement, plumbers, etc. won't be able to live there. Nor do they need to. These people can live somewhere else, far away, and commute in. To entice them to make this ridiculous commute, their pay will have to be extremely high, and they'll probably want shorter hours too (so they can spend half their work-time commuting), so they'll have to hire twice as many people. So if some wealthy homeowner needs a plumber, it's no problem. Remember, plumbers are usually contractors. They can call up the plumbing company, who will send a plumber who will drive 2-4 hours to get there, and the same amount to go home. This will result in an enormous charge just for fixing a leaking pipe. But that's OK, because the homeowner is wealthy, remember? They can afford $3k for a service call. If they can't, well maybe they need to rethink where they're living, and sell and move someplace cheaper. Some jobs just don't even need to be done. Baristas, for instance, aren't really needed. They can be paid a fortune to drive 3 hours each way every day, and this can be reflected in the coffee prices, but will wealthy people pay $30 for a latte? If they do, fine: baristas can commute. If they don't, oh well, the coffee shop can go out of business (or maybe have self-serve lattes), and the wealthy homeowners can go without. The same goes for teachers. If the wealthy people aren't willing to pay enough taxes for teachers to have $250k salaries to live there, then they don't really need to have teachers, and their kids can go without an education. Maybe they can send their kids to boarding school somewhere cheaper. Seriously, I think that if people stop fretting about these lower-paid people, and just let the chips fall where they will, the problem will resolve itself one way or another. Either the wealthy people will cave in and get local government to approve more affordable housing construction, or the local real estate market will collapse because people don't really want to live in a place where there's no garbage collection.
• xvedejas 7y ago
  Upzoning helps the homeowners who are upzoned, though I don't know how many of them realize it. Land can be sold at much higher values to developers if it's upzoned, and so its market rate is generally higher. It's those homeowners whose property isn't upzoned which are left out of the economic benefits.
  • yholio 7y ago
    Upzoning increases the value of the land, but decreases the value of pre-existing built square footage, since it's no longer an exclusivist area. If you have a brand new mansion built to the highest standards on the premise that it will be located in a tranquil neighborhood you might be on the net losing side if an apartment building is approved next door. In any case, you need to tear down your existing home in order to realize any gains, which few people are willing to do.
    • clairity 7y ago
      yes, the value of upzoning accrues to land value, not the real property that sits on it, but the rest of your conclusion doesn't follow. when demand outstrips supply adding a different type of supply (like an apartment building) won't depress prices materially (for detached single family residences). they're different market segments. also, you don't need to tear down the home to realize gains, since, as you yourself said, the value accrues to the land, not the building. the price would immediately incorporate that value, without the need to replace the structure atop. if you also want to gain rental income, then yes, you'd need to replace the structure, but that's an investment to unlock a different income stream.
      • gph 7y ago
        >when demand outstrips supply adding a different type of supply (like an apartment building) won't depress prices materially (for detached single family residences). they're different market segments. That's not how the real world works. In the real world, people who want to live in a single family home also want to live in a low density area. No one wants a single family home if there's a bunch of apartment buildings across the street.
• nomnomnom01 7y ago
  You do realize its not a smart move, right? Costs have gone up insanely because we have too many people. Don't pretend it will make things affordable because new developments aren't. And if you forget we have a power shortage, water shortage, and our streets are already overburdened? Common sense and critical thinking are something most people in California lack. Cause and effect are a wonderful thing to learn, too bad most people don't understand it
• 01100011 7y ago
  I'm curious what voter turnout is like for renters vs owners. With only my friends as data points, owners are more likely to vote.
  • conanbatt 7y ago
    I can tell you what the turnout of CA foreigners that vote: 0%. And CA is 27% foreign born population.
  • dannyr 7y ago
    Homeowners vote often and also are more engaged. They show up to hearings more than renters. This is the problem with renters. When they don't like how things are going, maybe they feel helpless, they just move to a different city.
    • dsfyu404ed 7y ago
      I see nothing wrong with this though. Homeowners can't just leave like the renters can. Of course they're more involved in trying to prevent the place from turning into a dump (never-mind that their actions have the exact opposite effect)
• hedora 7y ago
  I know of no one that is against putting up more housing near transit. People that live near the new construction will see their property values and quality of life rise due to more walkable businesses nearby. People selling existing houses on up zoned lots should also be able to charge a premium, knowing the developers are putting in >>$10M of housing units on the lot. I wish I knew which legislators blocked this so I could donate to their opponents.
  • rcpt 7y ago
    Anthony J. Portantino