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> Rather than asking "Who can we blame?" maybe we could start asking "How do we fix it?" Nobody talks about the hard truth: The homeownership rate in Californi

> Rather than asking "Who can we blame?" maybe we could start asking "How do we fix it?" Nobody talks about the hard truth: The homeownership rate in California is ~55% and therefore over half of Californians are heavily incentivized to keep the housing crisis going. For existing homeowners this isn't a crisis, it's a free paper money bonanza. Just by living in their houses home "owners" (most are heavily leveraged) "earn" 100k in paper money year in year out - magic! Truly solving the housing crisis would mean for housing costs to go down a lot, which means house values would go down and the 55% will keep fighting that. If you want to stay long term in California and disconnect yourself from the madness that is California housing costs, you have to buy at some point and accept it as the price of entry.

LurkingPenguin 5y ago
Nobody talks about the harder truth: even with its exclusionary housing policies, California is increasingly not capable of supporting the population it has. The 2021 fires and worsening drought conditions are just a taste of things to come.
- epistasis 5y ago
  California is extremely capable of supporting its current population, and easily 50% more. The only thing stopping this is proper distribution of land and water. We let wealthy people hoard land and water (Prop 13 and our land rights system), rather than allocating them based on market systems or even more fair systems. We have feudalism baked too deeply into our laws.
  - mc32 5y ago
    California was a semi desert before we built the canals and aqueducts -which is why it was a backwater with few people till that was done and its fertile soil was able to sustain life. People (city dwellers) came _after_ the farmers. So, it might be in need of an update, but I think you're mischaracterizing how this happened.
    - epistasis 5y ago
      Giving people rights to water simply because they took it from the Spanish first is the definition of feudal. We don't allocate resources logically or helpfully, we give people rights because their ancestors got their first, and it is preposterous economically and morally.
      - mc32 5y ago
        Extensive canals and water rights and riparian water rights were not developed till the demand by the Gold Rush, and then after its admission into the Union additional laws and provisions were passed and levees and canals built, and then in the early 1900s water from the Colorado was diverted into Calif. then much later aqueducts to channel water into semi-desert cities. The Spanish may have had a few little channels here and there (for their missions along the el camino), but it wasn't till the Gold Rush people built large elaborate systems for water distribution (for their claims). Then appropriative and riparian rights attracted many farmers into fertile lands. Does it deserve a revisit, sure. It will be fraught and messy, but sure.
    - CameronNemo 5y ago
      This really depends on where in California you are looking. SoCal? Sure, desert. But the San Joaquin valley was full of freshwater lakes and marshes before the invaders started using it for farming. https://eccentricculinary.com/californias-vanishing-lakes-and-the-hunger-of-the-mines/ https://eccentricculinary.com/californias-vanishing-lakes-an...
  - LurkingPenguin 5y ago
    Even if, for argument's sake, one accepts your claim, it's quite clear that the policies are not going to change. I'm a native Californian who left and now lives overseas, and every visit back has not only provided a stark demonstration of California's decline, but also taught me that many Californians refuse to believe their lying eyes. I have friends and family who in the past 5 years have lost homes to fire, seen their wells run dry, had to flee from toxic wildfire air, etc. and yet all but one of them has stayed. It's insanity in my humble opinion and I think if more Californians had an opportunity to spend some time away from the state, more of them would realize that the state is in great peril. It literally and figuratively is a case of the frog in boiling water.
    - epistasis 5y ago
      Things are changing, as the entrenched interests die from old age. Last year, Prop 15 nearly eliminated the Prop 13 for commercial properties. That this was even within 10% points of passing is such a huge change as to be unthinkable. 15 years ago I would rant about Prop 13 and get nothing but hate from others for my position. These days I'm as likely to find somebody ranting about the evils of Prop 13 as I am to initiate the rants. And the only people I see really arguing for Prop 13 are in the dying our demographics of newspaper comment sections and NextDoor, and nearly no one I meet in person. We have a huge problem with Boomers and their heirs, but immigration is rapidly changing eh demographics to allow for more sound governance.
      - LurkingPenguin 5y ago
        Hope springs eternal in California, but unfortunately water does not.
        epistasis 5y ago
        Lol, I love the slogan, and it may be true. But I will go down fighting this fight, and in my estimation it is getting easier to fight, even if it's not yet clear who will win. I would not blame anyone for leaving, given the current insanity of state and local politics, but I also welcome the growing crowd of politically active young people that have far more skin in the game than the aged "got mine, forget you crowd. So if you ever do return, get in touch with local political orgs and you will be making a positive difference.
  - seanmcdirmid 5y ago
    Land and water is mostly hoarded by farmers. The wealthy only hoard a bit of land in urban areas.
  - Supermancho 5y ago
    > California is extremely capable of supporting its current population, and easily 50% more. So is the Moon, with enough effort and cost, but that's not the point.
    - MarkSweep 5y ago
      In way you have a point: from an airplane it is easy to see that the Bay Area and LA are as flat and uniform as the moon. Real cities have variations in building density that reflect the demand for different areas.
ransom1538 5y ago
You have described why the housing "crisis" will never be solved in CA. The homeowners will vote down every new apartment complex, every new developer plan, every rezone. It will never end, ever. Current home owners will never vote for less money, ever. The only way CA can fix this is by a state wide vote - demanding housing to be allowed. Home owners in CA love new Panera Breads and new Chipotles - tie any new commercial properties to new housing. New 1brdm condos will never be built ever. This cannot be fought at a county NIMBY level: this must be statewide. %46 of CA do not own homes - the vote count is almost there. I await my downvotes.
- sombremesa 5y ago
  I lazily Googled and disproved you in five seconds: > San Francisco and the East Bay should see 7,872 new apartments open in 2021, an increase of 36% from the previous year. It's the highest number of apartments — 13,497 units — added to the region in the last five years. Surprised?
  - austinheap 5y ago
    We can’t solve mental illness with more quarter million dollar condos. I don’t know why this is still being peddled.
    - jdavis703 5y ago
      A lot of folks enter into mental health crisis from the stress, sleep deprivation and other issues caused by being homeless. Certainly not all. But having gone through a time period dealing with stress and sleep deprivation from the comfort of my home, I can empathize.
      - austinheap 5y ago
        “Unhoused” — esp families — are rapidly rehoused in SF. Those experiencing “chronic homelessness” (the ‘visible’ humans, who deserve the same amount of love and respect) are more often tied to mental health…just different things are helpful for the different groups.
ceh123 5y ago
Worth noting that according to [0], this is one of the lowest rates in the country, which would suggest to me this has less of an effect than you are selling here. [0] https://blog.stewart.com/stewart/2019/11/05/u-s-homeownership-rate-by-state/ https://blog.stewart.com/stewart/2019/11/05/u-s-homeownershi... * I didn’t vet this source much but it apparently pulls from UC Census data.
- CheezeIt 5y ago
  Unlike other states, California property tax rates don’t increase with market value.
  - zebnyc 5y ago
    Can you clarify this? Property taxes are what are holding me back from making a bid for a more expensive home. If I buy a home for $1 million, won't I have to pay property taxes based on that price even if it was previously tax assessed at $100k.
    - c0g 5y ago
      There’s a cap on increases on the previously assessed value, value is re-assessed when ownership changes (except in certain cases like parents to kids). Look up Prop 13.
    - ByteJockey 5y ago
      Back in the 70s California passed a proposition that limits how much property taxes can increase. [0] As a result of this, if you buy a home and the price goes up afterwards, you won't be paying property taxes on the market price of the house. [0] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13
      - gorgoiler 5y ago
        How is house value estimated? If it’s based on square feet and some sort of local average square foot price from the last 12 months then fine. If it’s based on individual assessors deciding your blossoming cherry grove and a charming mid-century atmosphere likely to appeal to young professional couples then… I’d rather the tax be based of the actual price for which the house last changed hands.
MontyCarloHall 5y ago
> For existing homeowners this isn't a crisis, it's a free paper money bonanza. Just by living in their houses home "owners" (most are heavily leveraged) "earn" 100k in paper money year in year out - magic! Is this appreciation consistent with the rest of the country, or areas with comparable quality of life? If you only have one home, real estate appreciation only makes you money if it’s higher for your house relative to other houses you’d actually want to live in, since if you sell your house and buy another house of comparable quality that’s also appreciated to a similar degree, you wouldn’t come out ahead. So yeah, that starter house you bought for $300k 25 years ago that’s worth over a million now? Unless you’re willing to move to a much lower cost of living part of the country, you could sell that house and buy…another million dollar starter house.
- dragonwriter 5y ago
  > you only have one home, real estate appreciation only makes you money if it’s higher for your house relative to others, since if you sell your house and buy another house of comparable quality that’s also appreciated to a similar degree, you wouldn’t come out ahead. Equity can be leveraged meaningfully without selling, so that's not true.
  - MontyCarloHall 5y ago
    Besides HELOCs, what are you referring to? A HELOC is just a tool for getting lower interest rates on another loan, which only would make you wealthier if you happened to invest it in some other appreciating asset with an extremely high ROI.
    - issa 5y ago
      A HELOC is, literally, a line of credit. You can do anything you want with that money: start a business, go to college, buy bitcoin, buy another property, etc.
      - blacksmith_tb 5y ago
lbarrow 5y ago
55% is one of the lowest home ownership rates in the country. If high levels of home ownership drive policies that prohibit new construction and drive up prices, how is it that places like Minnesota, with a home ownership rate in the mid-70s, are so cheap to live in?
- xboxnolifes 5y ago
  The problem isn't that 55% is "high" (or not). The problem is that, currently, there is a housing problem that is significantly profitable for 55% of a population. This means that 55% of people have conflicting interests with fixing this problem.
  - MontyCarloHall 5y ago
    Yes, and those 55% wield extremely disproportionate political power. This is why I’m pessimistic that NIMBYs will always rule.
    - jjav 5y ago
      > Yes, and those 55% wield extremely disproportionate political power. House owners don't have any additional political power than renters. Still one vote per person and politicians don't consult homeowners any more often than anyone else.
      - nsonha 5y ago
        No one say they do, point is they benefit from not solving housing and has SOME power simply by being a large group. I you believe solving housing is public interest then that's a problem. Of course you can say when 55% of people are against affordable housing then affordable housing is not public interest.
      - jjeaff 5y ago
        Those homeowners get richer and richer every year. Their borrowing power increases and even as renters are getting gouged by rising rents, homeowners don't even have to worry about their property tax going up. This leads to disproportionate political power.
api 5y ago
At this point the only economically rational thing for the other 45% to do is leave. Yes California is awesome in lots of ways, but it's someone else's house (literally) and you don't really live there. If enough people do this, the NIMBYs will get what they deserve as home values crash.
- seanmcdirmid 5y ago
  If enough people leave because housing is too expensive, then eventually housing stops being too expensive and people stop leaving. Eventually an equilibrium is reached, but that we might be at that equilibrium already if California’s population isn’t crashing.
  - api 5y ago
    California has a huge economy with a lot of network effects that draw and hold people there. Going remote and geographic diversification of industries will help people escape the California rent trap. SpaceX is leaving. VCs increasingly fund startups anywhere or fully remote. Software companies are going remote. It’s happening. COVID has accelerated some of these trends a lot, especially remote.
jazzyjackson 5y ago
what good is your house doubling in value if all the other houses have also doubled in value?
- bb88 5y ago
  If your house you purchased for $200,000 20 years ago is now worth $1.4M, say, that's $1.2M in profit. You could live in a smaller house worth $1M and still get $400k of profit you didn't have before.
  - jazzyjackson 5y ago
    ah, I see the light now
    - imtringued 5y ago
      The young people working for that profit don't see it.
  - addicted 5y ago
    Or what happens in reality. You sell your $1.4mm house and move to a bigger house that costs about $400k in one of the sunbelt states. That’s why the sunbelt states are seeing population growth. Cheap housing. Never mind that it’s states like California, New York and Connecticut that are paying for those states’s ability to attract people with cheap housing.
autokad 5y ago
I don't think housing prices are an issue. one part of the homeless are mentally ill. This is a very hard problem and I don't think anyone has the answers for yet, but its not home prices. Another major group of the homeless is drug addicts. Again, home prices isn't going to change that. I think its very rare someone goes homeless because their rent went up. if they can't afford it, they usually move. I'll get down-voted before this but that's how I feel, and I think this 'more affordable homes will solve homelessness' is a waste of time.
- toomuchtodo 5y ago
  The answer to mental illness is quality mental healthcare available to those in need, along with housing first policies to create stability for those seeking care. This has costs of course. California is the fifth largest economy in the world (Between Germany and the United Kingdom) and yet can’t prioritize this spending (and the spending that is taking place is not very effective or efficient).
- issa 5y ago
  The people who become homeless because their rent went up certainly exist. These people tend to be homeless for a short amount of time because they are able to eventually find new housing. Maybe they live in their car for awhile. Maybe they couch surf. But it's a good point that there are people with mental health / drug problems that have issues beyond housing cost. Both can be true at the same time.
  - DoreenMichele 5y ago
    Research by Zillow Group Inc. last year found that a 5 percent increase in rents in L.A. translates into about 2,000 more homeless people, among the highest correlations in the U.S. The median rent for a one-bedroom in the city was $2,371 in September, up 43 percent from 2010. Similarly, consultant McKinsey & Co. recently concluded that the runup in housing costs was 96 percent correlated with Seattle’s soaring homeless population. Even skeptics have come around to accepting the relationship. “I argued for a long time that the homelessness issue wasn’t due to rents,” says Joel Singer, chief executive officer of the California Association of Realtors. “I can’t argue that anymore.” https://www.bloomberg.com/news/features/2018-11-20/the-homeless-crisis-is-getting-worse-in-america-s-richest-cities https://www.bloomberg.com/news/features/2018-11-20/the-homel...
issa 5y ago
You are assuming that having low income housing somehow impacts the price of higher end housing, and I am not sure that this is true. Would a person with a million dollar house be hurt if we built 100,000 more million dollar houses? Yes. Would that same homeowner be hurt if we built 100,000 cheap rental apartments? It certainly doesn't seem like it. However much property values fall due to less people looking for low-end housing, you would think they would go up due to not being surrounded by homeless camps. I would say the people who are incentivized to oppose cheap housing are the lower-end landlords.
- MontyCarloHall 5y ago
  > Would that same homeowner be hurt if we built 100,000 cheap rental apartments? Of course they would. Million dollar houses in many parts of the country are so insanely expensive not because they’re luxury goods; they’re expensive because supply is so constrained that even mediocre houses are extremely scarce relative to demand. People buying million dollar houses in e.g. the Bay Area know that their house is not particularly fancy, relative to other houses (that often sell for much less in other parts of the country). As an analogy, consider cars in communist countries. Russian Ladas and East German Trabants were objectively horrible cars, but they cost several years’ average salary because supply was so scarce. Introduce millions of even cheaper cars into the aforementioned communist countries and the prices of Ladas/Trabants would plummet. Likewise, introduce thousands of low income units into the Bay Area and the price of what used to be starter homes that now go for a million dollars would plummet.
  - issa 5y ago
    I still think you are underappreciating the difference between people who buy homes and people who rent. To buy a house, you need a certain income, a down payment etc. The people who live in low income housing have none of those things and were never potential buyers anyway.
    - noahtallen 5y ago
      I don’t think that’s fair. Plenty of people rent because it’s the only option they can afford right now, even at high salaries. If you don’t yet own a home, making a meaningful down payment will take years and years of savings. To afford a mortgage on a $500k house in a west coast city, you’re looking at $100k of savings. The point is that loads of people would love to own a house or upgrade their living situation, but are priced out of it. These people are all competing for rentals, driving rent up. As a result, it’s not hard to simply not be able to afford rent, and end up on the street. This would be fixed by drastically increasing supply, so that housing at the low end of the market is more affordable, both rentals and ownership. The general point of this thread, though, is that everyone who already bought a house cannot afford to loose that value, as it’s likely the biggest financial risk and investment they have. This means there is essentially no pressure for the market to decrease prices. (I imagine developers wouldn’t want to ever make less rent either.) So long as housing is treated as an investment for the property owners, there is only pressure for prices to go up.
trophycase 5y ago
What is your suggestion? That only 5% become homeowners/property owners and we're basically back to feudalism?
- imtringued 5y ago
  Land value taxes reduce the value of land and increase the value of work.
jjav 5y ago
> therefore over half of Californians are heavily incentivized to keep the housing crisis going This is a too-frequent HN meme but it doesn't really work that way. There is no special club of homeowners that have more say in what politicians do. Just one vote per person, same as non-homeowners. And turns out homeowners don't spend time thinking about this, let alone scheming to somehow "keep the housing crisis going". A house is a place to live, that's all.
- MomoXenosaga 5y ago
  Technically true but, and this is what makes democracy such a joke, poor people don't vote.
  - imtringued 5y ago
    They vote for parties that bribe them with cheap crap and screw them behind the scenes.
- imtringued 5y ago
  That doesn't change that they are the source of the problem and that they get paid to cause the problem and be against its solutions. They also throw money into the throats of large corporations that own a huge amount of land.

LurkingPenguin 5y ago

Nobody talks about the harder truth: even with its exclusionary housing policies, California is increasingly not capable of supporting the population it has. The 2021 fires and worsening drought conditions are just a taste of things to come.

epistasis 5y ago
California is extremely capable of supporting its current population, and easily 50% more. The only thing stopping this is proper distribution of land and water. We let wealthy people hoard land and water (Prop 13 and our land rights system), rather than allocating them based on market systems or even more fair systems. We have feudalism baked too deeply into our laws.
- mc32 5y ago
  California was a semi desert before we built the canals and aqueducts -which is why it was a backwater with few people till that was done and its fertile soil was able to sustain life. People (city dwellers) came _after_ the farmers. So, it might be in need of an update, but I think you're mischaracterizing how this happened.
  - epistasis 5y ago
    Giving people rights to water simply because they took it from the Spanish first is the definition of feudal. We don't allocate resources logically or helpfully, we give people rights because their ancestors got their first, and it is preposterous economically and morally.
    - mc32 5y ago
      Extensive canals and water rights and riparian water rights were not developed till the demand by the Gold Rush, and then after its admission into the Union additional laws and provisions were passed and levees and canals built, and then in the early 1900s water from the Colorado was diverted into Calif. then much later aqueducts to channel water into semi-desert cities. The Spanish may have had a few little channels here and there (for their missions along the el camino), but it wasn't till the Gold Rush people built large elaborate systems for water distribution (for their claims). Then appropriative and riparian rights attracted many farmers into fertile lands. Does it deserve a revisit, sure. It will be fraught and messy, but sure.
  - CameronNemo 5y ago
    This really depends on where in California you are looking. SoCal? Sure, desert. But the San Joaquin valley was full of freshwater lakes and marshes before the invaders started using it for farming. https://eccentricculinary.com/californias-vanishing-lakes-and-the-hunger-of-the-mines/ https://eccentricculinary.com/californias-vanishing-lakes-an...
- LurkingPenguin 5y ago
  Even if, for argument's sake, one accepts your claim, it's quite clear that the policies are not going to change. I'm a native Californian who left and now lives overseas, and every visit back has not only provided a stark demonstration of California's decline, but also taught me that many Californians refuse to believe their lying eyes. I have friends and family who in the past 5 years have lost homes to fire, seen their wells run dry, had to flee from toxic wildfire air, etc. and yet all but one of them has stayed. It's insanity in my humble opinion and I think if more Californians had an opportunity to spend some time away from the state, more of them would realize that the state is in great peril. It literally and figuratively is a case of the frog in boiling water.
  - epistasis 5y ago
    Things are changing, as the entrenched interests die from old age. Last year, Prop 15 nearly eliminated the Prop 13 for commercial properties. That this was even within 10% points of passing is such a huge change as to be unthinkable. 15 years ago I would rant about Prop 13 and get nothing but hate from others for my position. These days I'm as likely to find somebody ranting about the evils of Prop 13 as I am to initiate the rants. And the only people I see really arguing for Prop 13 are in the dying our demographics of newspaper comment sections and NextDoor, and nearly no one I meet in person. We have a huge problem with Boomers and their heirs, but immigration is rapidly changing eh demographics to allow for more sound governance.
    - LurkingPenguin 5y ago
      Hope springs eternal in California, but unfortunately water does not.
      - epistasis 5y ago
        Lol, I love the slogan, and it may be true. But I will go down fighting this fight, and in my estimation it is getting easier to fight, even if it's not yet clear who will win. I would not blame anyone for leaving, given the current insanity of state and local politics, but I also welcome the growing crowd of politically active young people that have far more skin in the game than the aged "got mine, forget you crowd. So if you ever do return, get in touch with local political orgs and you will be making a positive difference.
- seanmcdirmid 5y ago
  Land and water is mostly hoarded by farmers. The wealthy only hoard a bit of land in urban areas.
- Supermancho 5y ago
  > California is extremely capable of supporting its current population, and easily 50% more. So is the Moon, with enough effort and cost, but that's not the point.
  - MarkSweep 5y ago
    In way you have a point: from an airplane it is easy to see that the Bay Area and LA are as flat and uniform as the moon. Real cities have variations in building density that reflect the demand for different areas.

ransom1538 5y ago

You have described why the housing "crisis" will never be solved in CA. The homeowners will vote down every new apartment complex, every new developer plan, every rezone. It will never end, ever. Current home owners will never vote for less money, ever. The only way CA can fix this is by a state wide vote - demanding housing to be allowed. Home owners in CA love new Panera Breads and new Chipotles - tie any new commercial properties to new housing. New 1brdm condos will never be built ever. This cannot be fought at a county NIMBY level: this must be statewide. %46 of CA do not own homes - the vote count is almost there. I await my downvotes.

sombremesa 5y ago
I lazily Googled and disproved you in five seconds: > San Francisco and the East Bay should see 7,872 new apartments open in 2021, an increase of 36% from the previous year. It's the highest number of apartments — 13,497 units — added to the region in the last five years. Surprised?
- austinheap 5y ago
  We can’t solve mental illness with more quarter million dollar condos. I don’t know why this is still being peddled.
  - jdavis703 5y ago
    A lot of folks enter into mental health crisis from the stress, sleep deprivation and other issues caused by being homeless. Certainly not all. But having gone through a time period dealing with stress and sleep deprivation from the comfort of my home, I can empathize.
    - austinheap 5y ago
      “Unhoused” — esp families — are rapidly rehoused in SF. Those experiencing “chronic homelessness” (the ‘visible’ humans, who deserve the same amount of love and respect) are more often tied to mental health…just different things are helpful for the different groups.

ceh123 5y ago

Worth noting that according to [0], this is one of the lowest rates in the country, which would suggest to me this has less of an effect than you are selling here. [0] https://blog.stewart.com/stewart/2019/11/05/u-s-homeownership-rate-by-state/ https://blog.stewart.com/stewart/2019/11/05/u-s-homeownershi... * I didn’t vet this source much but it apparently pulls from UC Census data.

CheezeIt 5y ago
Unlike other states, California property tax rates don’t increase with market value.
- zebnyc 5y ago
  Can you clarify this? Property taxes are what are holding me back from making a bid for a more expensive home. If I buy a home for $1 million, won't I have to pay property taxes based on that price even if it was previously tax assessed at $100k.
  - c0g 5y ago
    There’s a cap on increases on the previously assessed value, value is re-assessed when ownership changes (except in certain cases like parents to kids). Look up Prop 13.
  - ByteJockey 5y ago
    Back in the 70s California passed a proposition that limits how much property taxes can increase. [0] As a result of this, if you buy a home and the price goes up afterwards, you won't be paying property taxes on the market price of the house. [0] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13
    - gorgoiler 5y ago
      How is house value estimated? If it’s based on square feet and some sort of local average square foot price from the last 12 months then fine. If it’s based on individual assessors deciding your blossoming cherry grove and a charming mid-century atmosphere likely to appeal to young professional couples then… I’d rather the tax be based of the actual price for which the house last changed hands.

MontyCarloHall 5y ago

> For existing homeowners this isn't a crisis, it's a free paper money bonanza. Just by living in their houses home "owners" (most are heavily leveraged) "earn" 100k in paper money year in year out - magic! Is this appreciation consistent with the rest of the country, or areas with comparable quality of life? If you only have one home, real estate appreciation only makes you money if it’s higher for your house relative to other houses you’d actually want to live in, since if you sell your house and buy another house of comparable quality that’s also appreciated to a similar degree, you wouldn’t come out ahead. So yeah, that starter house you bought for $300k 25 years ago that’s worth over a million now? Unless you’re willing to move to a much lower cost of living part of the country, you could sell that house and buy…another million dollar starter house.

dragonwriter 5y ago
> you only have one home, real estate appreciation only makes you money if it’s higher for your house relative to others, since if you sell your house and buy another house of comparable quality that’s also appreciated to a similar degree, you wouldn’t come out ahead. Equity can be leveraged meaningfully without selling, so that's not true.
- MontyCarloHall 5y ago
  Besides HELOCs, what are you referring to? A HELOC is just a tool for getting lower interest rates on another loan, which only would make you wealthier if you happened to invest it in some other appreciating asset with an extremely high ROI.
  - issa 5y ago
    A HELOC is, literally, a line of credit. You can do anything you want with that money: start a business, go to college, buy bitcoin, buy another property, etc.
    - blacksmith_tb 5y ago

lbarrow 5y ago

55% is one of the lowest home ownership rates in the country. If high levels of home ownership drive policies that prohibit new construction and drive up prices, how is it that places like Minnesota, with a home ownership rate in the mid-70s, are so cheap to live in?

xboxnolifes 5y ago
The problem isn't that 55% is "high" (or not). The problem is that, currently, there is a housing problem that is significantly profitable for 55% of a population. This means that 55% of people have conflicting interests with fixing this problem.
- MontyCarloHall 5y ago
  Yes, and those 55% wield extremely disproportionate political power. This is why I’m pessimistic that NIMBYs will always rule.
  - jjav 5y ago
    > Yes, and those 55% wield extremely disproportionate political power. House owners don't have any additional political power than renters. Still one vote per person and politicians don't consult homeowners any more often than anyone else.
    - nsonha 5y ago
      No one say they do, point is they benefit from not solving housing and has SOME power simply by being a large group. I you believe solving housing is public interest then that's a problem. Of course you can say when 55% of people are against affordable housing then affordable housing is not public interest.
    - jjeaff 5y ago
      Those homeowners get richer and richer every year. Their borrowing power increases and even as renters are getting gouged by rising rents, homeowners don't even have to worry about their property tax going up. This leads to disproportionate political power.

api 5y ago

At this point the only economically rational thing for the other 45% to do is leave. Yes California is awesome in lots of ways, but it's someone else's house (literally) and you don't really live there. If enough people do this, the NIMBYs will get what they deserve as home values crash.

seanmcdirmid 5y ago
If enough people leave because housing is too expensive, then eventually housing stops being too expensive and people stop leaving. Eventually an equilibrium is reached, but that we might be at that equilibrium already if California’s population isn’t crashing.
- api 5y ago
  California has a huge economy with a lot of network effects that draw and hold people there. Going remote and geographic diversification of industries will help people escape the California rent trap. SpaceX is leaving. VCs increasingly fund startups anywhere or fully remote. Software companies are going remote. It’s happening. COVID has accelerated some of these trends a lot, especially remote.

jazzyjackson 5y ago

what good is your house doubling in value if all the other houses have also doubled in value?

bb88 5y ago
If your house you purchased for $200,000 20 years ago is now worth $1.4M, say, that's $1.2M in profit. You could live in a smaller house worth $1M and still get $400k of profit you didn't have before.
- jazzyjackson 5y ago
  ah, I see the light now
  - imtringued 5y ago
    The young people working for that profit don't see it.
- addicted 5y ago
  Or what happens in reality. You sell your $1.4mm house and move to a bigger house that costs about $400k in one of the sunbelt states. That’s why the sunbelt states are seeing population growth. Cheap housing. Never mind that it’s states like California, New York and Connecticut that are paying for those states’s ability to attract people with cheap housing.

autokad 5y ago

I don't think housing prices are an issue. one part of the homeless are mentally ill. This is a very hard problem and I don't think anyone has the answers for yet, but its not home prices. Another major group of the homeless is drug addicts. Again, home prices isn't going to change that. I think its very rare someone goes homeless because their rent went up. if they can't afford it, they usually move. I'll get down-voted before this but that's how I feel, and I think this 'more affordable homes will solve homelessness' is a waste of time.

toomuchtodo 5y ago
The answer to mental illness is quality mental healthcare available to those in need, along with housing first policies to create stability for those seeking care. This has costs of course. California is the fifth largest economy in the world (Between Germany and the United Kingdom) and yet can’t prioritize this spending (and the spending that is taking place is not very effective or efficient).
issa 5y ago
The people who become homeless because their rent went up certainly exist. These people tend to be homeless for a short amount of time because they are able to eventually find new housing. Maybe they live in their car for awhile. Maybe they couch surf. But it's a good point that there are people with mental health / drug problems that have issues beyond housing cost. Both can be true at the same time.
- DoreenMichele 5y ago
  Research by Zillow Group Inc. last year found that a 5 percent increase in rents in L.A. translates into about 2,000 more homeless people, among the highest correlations in the U.S. The median rent for a one-bedroom in the city was $2,371 in September, up 43 percent from 2010. Similarly, consultant McKinsey & Co. recently concluded that the runup in housing costs was 96 percent correlated with Seattle’s soaring homeless population. Even skeptics have come around to accepting the relationship. “I argued for a long time that the homelessness issue wasn’t due to rents,” says Joel Singer, chief executive officer of the California Association of Realtors. “I can’t argue that anymore.” https://www.bloomberg.com/news/features/2018-11-20/the-homeless-crisis-is-getting-worse-in-america-s-richest-cities https://www.bloomberg.com/news/features/2018-11-20/the-homel...

issa 5y ago

You are assuming that having low income housing somehow impacts the price of higher end housing, and I am not sure that this is true. Would a person with a million dollar house be hurt if we built 100,000 more million dollar houses? Yes. Would that same homeowner be hurt if we built 100,000 cheap rental apartments? It certainly doesn't seem like it. However much property values fall due to less people looking for low-end housing, you would think they would go up due to not being surrounded by homeless camps. I would say the people who are incentivized to oppose cheap housing are the lower-end landlords.

MontyCarloHall 5y ago
> Would that same homeowner be hurt if we built 100,000 cheap rental apartments? Of course they would. Million dollar houses in many parts of the country are so insanely expensive not because they’re luxury goods; they’re expensive because supply is so constrained that even mediocre houses are extremely scarce relative to demand. People buying million dollar houses in e.g. the Bay Area know that their house is not particularly fancy, relative to other houses (that often sell for much less in other parts of the country). As an analogy, consider cars in communist countries. Russian Ladas and East German Trabants were objectively horrible cars, but they cost several years’ average salary because supply was so scarce. Introduce millions of even cheaper cars into the aforementioned communist countries and the prices of Ladas/Trabants would plummet. Likewise, introduce thousands of low income units into the Bay Area and the price of what used to be starter homes that now go for a million dollars would plummet.
- issa 5y ago
  I still think you are underappreciating the difference between people who buy homes and people who rent. To buy a house, you need a certain income, a down payment etc. The people who live in low income housing have none of those things and were never potential buyers anyway.
  - noahtallen 5y ago
    I don’t think that’s fair. Plenty of people rent because it’s the only option they can afford right now, even at high salaries. If you don’t yet own a home, making a meaningful down payment will take years and years of savings. To afford a mortgage on a $500k house in a west coast city, you’re looking at $100k of savings. The point is that loads of people would love to own a house or upgrade their living situation, but are priced out of it. These people are all competing for rentals, driving rent up. As a result, it’s not hard to simply not be able to afford rent, and end up on the street. This would be fixed by drastically increasing supply, so that housing at the low end of the market is more affordable, both rentals and ownership. The general point of this thread, though, is that everyone who already bought a house cannot afford to loose that value, as it’s likely the biggest financial risk and investment they have. This means there is essentially no pressure for the market to decrease prices. (I imagine developers wouldn’t want to ever make less rent either.) So long as housing is treated as an investment for the property owners, there is only pressure for prices to go up.

trophycase 5y ago

What is your suggestion? That only 5% become homeowners/property owners and we're basically back to feudalism?

imtringued 5y ago
Land value taxes reduce the value of land and increase the value of work.

jjav 5y ago

> therefore over half of Californians are heavily incentivized to keep the housing crisis going This is a too-frequent HN meme but it doesn't really work that way. There is no special club of homeowners that have more say in what politicians do. Just one vote per person, same as non-homeowners. And turns out homeowners don't spend time thinking about this, let alone scheming to somehow "keep the housing crisis going". A house is a place to live, that's all.

MomoXenosaga 5y ago
Technically true but, and this is what makes democracy such a joke, poor people don't vote.
- imtringued 5y ago
  They vote for parties that bribe them with cheap crap and screw them behind the scenes.
imtringued 5y ago
That doesn't change that they are the source of the problem and that they get paid to cause the problem and be against its solutions. They also throw money into the throats of large corporations that own a huge amount of land.