7 ms·

As a lifelong Californian I’ve seen homelessness expand from “expected” places like skid row into suburbs in (north) Orange County. I’ve long felt that Califor

As a lifelong Californian I’ve seen homelessness expand from “expected” places like skid row into suburbs in (north) Orange County. I’ve long felt that California was a harbinger for the rest of the nation and if they wanted they could choose to avoid the policy mistakes (e.g. SFH zoning, nimby-ism, prop 13, etc). I’m not convinced that they have because the truth is the current status quo materially benefits a coalition of interest groups including current homeowners and property developers. If we want to tackle this we need a national coordinated strategy. A piece meal approach at the city level is just playing whack a mole.

anon84873628 3y ago
It's almost like our entire political system is premised on the idea that house prices should never go down...
- birdyrooster 3y ago
  it makes sense though as this is how the middle class sees a lot of their wealth passed through death and marriage, its houses for the middle class. its just that the middle class is shrinking and so now the same houses are owned by fewer families. for everyone else there is renting and homelessness.
  - caddemon 3y ago
    In SF/Bay Area there is definitely a separate issue besides just the shrinking middle class. SWEs that by all other metrics would be solidly middle class if not upper middle are having a hard time finding affordable homes there. The only people I know who've entertained ownership in the area are DINK, and I know many people in their late 20s and early 30s who have been consistently earning over 6 figures since the day they left college. That said, I can understand arguments for protecting existing middle class homeowners. I think a huge chunk of the problem could be resolved by having policies that treat property like any other speculative investment while having some sort of exceptions for primary family homes that are actively being lived in by the owners. I'm guessing if that were the only class protected by the SF property tax laws only a small minority of the current places would remain with locked-in rates.
    - seiferteric 3y ago
      I think you could ban investment properties entirely and we would still have the same problems, it would barely be a blip I bet. There just isn't enough housing and there isn't likely to be anytime soon.
  - birdyrooster 3y ago
    https://www.cnbc.com/2023/01/18/amid-inflation-more-middle-class-americans-struggle-to-make-ends-meet.html https://www.cnbc.com/2023/01/18/amid-inflation-more-middle-c...
- exclusiv 3y ago
  There's some of that for sure, but real estate is a good inflation hedge. So if you print like we have been and new supply doesn't jack up, then here we are. That's just a natural economic thing; not a political system at play, other than a byproduct of massive printing which has been out of control for some time. I mean, we had interest rates jack up (for the US in modern times at least lol) and prices didn't drop as much as they should (and many that lost in bidding wars in the frothy market went to the sidelines) When the Fed goes the other way because they have no real choice, prices are going even higher.
  - briantakita 3y ago
    Real estate prices is propped up with credit. Credit can be created at ever increasing numbers until there is a collapse in the credit markets or the monetary system. When loans become unpayable, defaults occur. If credit markets collapse, then housing prices go down. Real estate has value & a premium associated with the credit markets & revenue generated by the property (e.g. rentals).
    - exclusiv 3y ago
      > Real estate has value & a premium associated with the credit markets & revenue generated by the property (e.g. rentals). Yes for commercial - usually cap rate based which is related to return and risk, replacement cost valuation, or revenue multiplier. With regard to residential - prices are going to go up when fed goes the other way. They have NOT been propped up with credit or favorable interest rates. Those factors have gotten worse but prices have held strong. They have been propped up because supply is still low and new construction is expensive. Those things aren't likely to change anytime soon. Not to mention US RE is still a good place to park foreign cash in relative terms and is a good inflation hedge. Rents will go up. Home prices will go up. Commercial hasn't fallen out yet though. Office space should be converted to multi family residential or mixed use. Commercial collapse is likely though which I think you are referring to. But to the article at hand - could be a way to monetize a sharp drop in revenue due to WFH and the hike in interest rates - convert to affordable housing and offset any investment to cities (ie taxpayers) to address the homeless and affordability crisis.
- seiferteric 3y ago
  Even without the politics/nimbyism I am trying to imaging a realistic scenario where housing prices go down and stay down in California, but I just can't.
  - skulk 3y ago
    Can you imagine one where wages go up instead to compensate?
    - missedthecue 3y ago
      It seems that the price of housing is directly related to how much people can afford to pay, meaning that increases in wages won't remediate housing cost increases, but contribute to them directly and indirectly.
    - seiferteric 3y ago
      Nah, this is why you can make $180k in CA and still feel poor cause you are competing with everyone around you in a zero sum game (real estate).
- willcipriano 3y ago
  The real problem is wages aren't allowed to go up.
  - jacobsenscott 3y ago
    Wages have gone up significantly recently: when wages go up - house prices (and the price of everything else) go up. Raising wages doesn't magic up more houses.
    - willcipriano 3y ago
      > Wages have gone up significantly recently "Since President Biden took office in January 2021, the increase in prices due to inflation is over 14%, resulting in a loss in real wages of nearly 4%" https://budget.house.gov/press-release/fiscal-state-of-the-union-bidens-real-wage-decline https://budget.house.gov/press-release/fiscal-state-of-the-u... "Americans With a College Degree Saw Wages Decline the Most in Two Decades" https://www.bloomberg.com/news/articles/2023-02-10/americans-with-a-college-degree-saw-wages-decline-most-in-two-decades#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-02-10/americans... "Between 1973 and 2015, real hourly earnings for the typical 25–54 year-old man with only a high school degree declined by 18.2 percent" https://www.aeaweb.org/articles?id=10.1257/jep.33.2.163 https://www.aeaweb.org/articles?id=10.1257/jep.33.2.163
      - jacobsenscott 3y ago
        https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N You can zoom in to any point on the chart to tell whatever story you wish.
        willcipriano 3y ago
        Labor is taking less and less of what it creates home with it, you can't hide that with gamed CPI: https://fred.stlouisfed.org/series/LABSHPUSA156NRUG https://fred.stlouisfed.org/series/LABSHPUSA156NRUG Every recession labor gives up a little more ground and never gains it back. More reading: https://fredblog.stlouisfed.org/2019/08/capitals-gain-is-lately-labours-loss/ https://fredblog.stlouisfed.org/2019/08/capitals-gain-is-lat...
- missedthecue 3y ago
  Is it possible to have a healthy flourishing community where housing prices decrease every year? Has this ever happened anywhere?
  - Server6 3y ago
    Japan. For an island with limited space they treat their real estate market very differently. The land itself has value, but structures depreciate to zero. https://housekey.jp/why-japanese-real-estate-is-different/ https://housekey.jp/why-japanese-real-estate-is-different/
    - missedthecue 3y ago
      Housing prices in Japan have been going up for years. They had the implosion after the superbubble in the 1990s (prices got so ridiculous, that the land beneath the emperor's palace was worth more than all the land in California) But other than this extreme, the trend has very definitely been up and to the right, year after year after year. Even as the population declines.
treesrule 3y ago
Some states (montana Minnisota although the later is less likely to succeed imo) have started doing this at a state wide level, I think Cali has a particularly uphill battle since the housing situation is already bad and the headwind that we really will never be able to change: prop-13. (I think all the other things that are preventing new housing CEQA, SFZ poor public infrastructure can all be changed if we do it right but I don't see prop-13 ever changing even if we get these taken care of)
- jjfoooo4 3y ago
  Why is Minnesota less likely to succeed?
  - treesrule 3y ago
    They invested a lot of money which is good and all of the programs they put it into seem like they will help, but I think their zoning reforms wern't strong enough to truely increase supply enough
- Gibbon1 3y ago
  The malign thing about prop 13 is is basically means that for muni's property tax doesn't cover required services. It also distorts prices driving them higher.
BellLabradors 3y ago
>I’ve long felt that California was a harbinger for the rest of the nation This graph would counter that somewhat: https://twitter.com/Noahpinion/status/1678452715201130497 https://twitter.com/Noahpinion/status/1678452715201130497 https://pbs.twimg.com/media/F0sPvd2aEAANBCC?format=png&name=900x900 https://pbs.twimg.com/media/F0sPvd2aEAANBCC?format=png&name=...
- fortuna86 3y ago
  Trump voting states don't offer services for homeless, so they leave for places that do. Is that so surprising? Not to mention the morality of cutting soup kitchens and shelters just so your state's homeless become someone else's problem.
  - caddemon 3y ago
    I think there are 2 separate issues here: 1. The silent majority of homeless people that are suffering and with the proper services could get back on their feet, but they are not actually having a day to day impact on the general population. Cutting helpful services for these people is terrible, and the longer someone goes homeless the more issue they may have getting out later. Housing prices also have more impact in creating this type of homelessness. 2. The loud minority of homeless people, often in need of serious mental help that they very well may refuse, who have a negative impact on the community - disruption in the libraries, needles on the street, etc. There are places where the prevailing sentiment is refusing to remove these people when they are disturbing important community spaces or to arrest them for crimes like openly using hard drugs and peeing in the public fountain. This sort of tolerance shouldn't be conflated with robust access to resources, but unfortunately it does seem to be by policy makers. So yeah, many homeless people go to cities where they will have access to services, and that is more relevant to statistics. Some homeless people go to cities where they know they will more easily be able to obtain and use drugs, steal, etc. Those people are a tiny fraction of the total population, but it doesn't take many of them to start to have a noticeable impact on a local area. This is where we see the more visceral negative reaction to homelessness in west coast cities coming from. Though I'm sure there are people from other areas of the country amplifying this problem for their own political agenda rather than care for the community or the homeless, it's definitely a real feeling amongst residents in certain areas of SF too, and it doesn't come out of nowhere.
outside1234 3y ago
Tackling the issue nationally is key because a significant portion of homeless in the cities is from poverty / drug addiction in rural areas that results in folks showing up in cities desperate for help (it is estimated that 75% of SF’s homeless are from outside of the city). It is not just a city problem. That is just where the problems end up because it is the only place with any infrastructure to handle it.
- nebula8804 3y ago
  If thats the case then its really a form of additional wealth transfer from the blue states to the red states. They save money on taxes by not tackling this problem/creating it in the first place and then dump the externalities onto blue state taxpayers.
- rnburn 3y ago
  > "it is estimated that 75% of SF’s homeless are from outside of the city" -- Where are you getting that 75% number from? The latest survey I'm familiar with showed nearly exactly the opposite (71% of homeless in SF had a prior place of residence in SF). See https://sfstandard.com/2023/05/22/san-francisco-homeless-people-from-the-city https://sfstandard.com/2023/05/22/san-francisco-homeless-peo...
vkou 3y ago
Prop 13 is a uniquely Californian problem, and yet homelessness is exploding all over the country. The problem isn't Prop 13. The problem isn't entirely nimby-ism, either. The problem is that for a variety of structural reasons, housing costs too much, mental healthcare is not available, and there's no pathway for treating drug problems. This causes sick, addicted, or simply poor people who are living on the margins to slide into homelessness, with no way to climb back up the slide.
- ketzo 3y ago
  Well, California's housing crisis is uniquely intense by almost any measure (affordability, relative/absolute homeless population, median family wealth). Prop 13 is a unique and meaningful contributor to a glacial housing market -- if moving homes (to an equally-expensive home!) would quadruple your property tax, you're probably not gonna sell. And slow/frozen markets result in increased prices.
- stilldeadinside 3y ago
  Housing costs are high because it's hard to build a house. It's a dangerous task requiring a lot of logistics and coordination. There are toxic chemicals, dangerous heights, sharp objects, and requires being in unhealthy poses and breathing in fumes during the construction. Then there's the financial risks, with people not paying as promised, or withholding some pay due to work quality. At the end of the day, people are not willing to sacrifice their health as cheaply, and there isn't a new influx of cheap migrant labor, so the costs will remain high in the future.
Karrot_Kream 3y ago
California has lots and lots of small local governments which makes it structurally harder in California than states where there aren't as many governments. The state government is trying to use RHNA allocations right now to force local governments to get in line but there's no substitute for a single governing body.

anon84873628 3y ago

It's almost like our entire political system is premised on the idea that house prices should never go down...

birdyrooster 3y ago
it makes sense though as this is how the middle class sees a lot of their wealth passed through death and marriage, its houses for the middle class. its just that the middle class is shrinking and so now the same houses are owned by fewer families. for everyone else there is renting and homelessness.
- caddemon 3y ago
  In SF/Bay Area there is definitely a separate issue besides just the shrinking middle class. SWEs that by all other metrics would be solidly middle class if not upper middle are having a hard time finding affordable homes there. The only people I know who've entertained ownership in the area are DINK, and I know many people in their late 20s and early 30s who have been consistently earning over 6 figures since the day they left college. That said, I can understand arguments for protecting existing middle class homeowners. I think a huge chunk of the problem could be resolved by having policies that treat property like any other speculative investment while having some sort of exceptions for primary family homes that are actively being lived in by the owners. I'm guessing if that were the only class protected by the SF property tax laws only a small minority of the current places would remain with locked-in rates.
  - seiferteric 3y ago
    I think you could ban investment properties entirely and we would still have the same problems, it would barely be a blip I bet. There just isn't enough housing and there isn't likely to be anytime soon.
- birdyrooster 3y ago
  https://www.cnbc.com/2023/01/18/amid-inflation-more-middle-class-americans-struggle-to-make-ends-meet.html https://www.cnbc.com/2023/01/18/amid-inflation-more-middle-c...
exclusiv 3y ago
There's some of that for sure, but real estate is a good inflation hedge. So if you print like we have been and new supply doesn't jack up, then here we are. That's just a natural economic thing; not a political system at play, other than a byproduct of massive printing which has been out of control for some time. I mean, we had interest rates jack up (for the US in modern times at least lol) and prices didn't drop as much as they should (and many that lost in bidding wars in the frothy market went to the sidelines) When the Fed goes the other way because they have no real choice, prices are going even higher.
- briantakita 3y ago
  Real estate prices is propped up with credit. Credit can be created at ever increasing numbers until there is a collapse in the credit markets or the monetary system. When loans become unpayable, defaults occur. If credit markets collapse, then housing prices go down. Real estate has value & a premium associated with the credit markets & revenue generated by the property (e.g. rentals).
  - exclusiv 3y ago
    > Real estate has value & a premium associated with the credit markets & revenue generated by the property (e.g. rentals). Yes for commercial - usually cap rate based which is related to return and risk, replacement cost valuation, or revenue multiplier. With regard to residential - prices are going to go up when fed goes the other way. They have NOT been propped up with credit or favorable interest rates. Those factors have gotten worse but prices have held strong. They have been propped up because supply is still low and new construction is expensive. Those things aren't likely to change anytime soon. Not to mention US RE is still a good place to park foreign cash in relative terms and is a good inflation hedge. Rents will go up. Home prices will go up. Commercial hasn't fallen out yet though. Office space should be converted to multi family residential or mixed use. Commercial collapse is likely though which I think you are referring to. But to the article at hand - could be a way to monetize a sharp drop in revenue due to WFH and the hike in interest rates - convert to affordable housing and offset any investment to cities (ie taxpayers) to address the homeless and affordability crisis.
seiferteric 3y ago
Even without the politics/nimbyism I am trying to imaging a realistic scenario where housing prices go down and stay down in California, but I just can't.
- skulk 3y ago
  Can you imagine one where wages go up instead to compensate?
  - missedthecue 3y ago
    It seems that the price of housing is directly related to how much people can afford to pay, meaning that increases in wages won't remediate housing cost increases, but contribute to them directly and indirectly.
  - seiferteric 3y ago
    Nah, this is why you can make $180k in CA and still feel poor cause you are competing with everyone around you in a zero sum game (real estate).
willcipriano 3y ago
The real problem is wages aren't allowed to go up.
- jacobsenscott 3y ago
  Wages have gone up significantly recently: when wages go up - house prices (and the price of everything else) go up. Raising wages doesn't magic up more houses.
  - willcipriano 3y ago
    > Wages have gone up significantly recently "Since President Biden took office in January 2021, the increase in prices due to inflation is over 14%, resulting in a loss in real wages of nearly 4%" https://budget.house.gov/press-release/fiscal-state-of-the-union-bidens-real-wage-decline https://budget.house.gov/press-release/fiscal-state-of-the-u... "Americans With a College Degree Saw Wages Decline the Most in Two Decades" https://www.bloomberg.com/news/articles/2023-02-10/americans-with-a-college-degree-saw-wages-decline-most-in-two-decades#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-02-10/americans... "Between 1973 and 2015, real hourly earnings for the typical 25–54 year-old man with only a high school degree declined by 18.2 percent" https://www.aeaweb.org/articles?id=10.1257/jep.33.2.163 https://www.aeaweb.org/articles?id=10.1257/jep.33.2.163
    - jacobsenscott 3y ago
      https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N You can zoom in to any point on the chart to tell whatever story you wish.
      - willcipriano 3y ago
        Labor is taking less and less of what it creates home with it, you can't hide that with gamed CPI: https://fred.stlouisfed.org/series/LABSHPUSA156NRUG https://fred.stlouisfed.org/series/LABSHPUSA156NRUG Every recession labor gives up a little more ground and never gains it back. More reading: https://fredblog.stlouisfed.org/2019/08/capitals-gain-is-lately-labours-loss/ https://fredblog.stlouisfed.org/2019/08/capitals-gain-is-lat...
missedthecue 3y ago
Is it possible to have a healthy flourishing community where housing prices decrease every year? Has this ever happened anywhere?
- Server6 3y ago
  Japan. For an island with limited space they treat their real estate market very differently. The land itself has value, but structures depreciate to zero. https://housekey.jp/why-japanese-real-estate-is-different/ https://housekey.jp/why-japanese-real-estate-is-different/
  - missedthecue 3y ago
    Housing prices in Japan have been going up for years. They had the implosion after the superbubble in the 1990s (prices got so ridiculous, that the land beneath the emperor's palace was worth more than all the land in California) But other than this extreme, the trend has very definitely been up and to the right, year after year after year. Even as the population declines.

treesrule 3y ago

Some states (montana Minnisota although the later is less likely to succeed imo) have started doing this at a state wide level, I think Cali has a particularly uphill battle since the housing situation is already bad and the headwind that we really will never be able to change: prop-13. (I think all the other things that are preventing new housing CEQA, SFZ poor public infrastructure can all be changed if we do it right but I don't see prop-13 ever changing even if we get these taken care of)

jjfoooo4 3y ago
Why is Minnesota less likely to succeed?
- treesrule 3y ago
  They invested a lot of money which is good and all of the programs they put it into seem like they will help, but I think their zoning reforms wern't strong enough to truely increase supply enough
Gibbon1 3y ago
The malign thing about prop 13 is is basically means that for muni's property tax doesn't cover required services. It also distorts prices driving them higher.

BellLabradors 3y ago

>I’ve long felt that California was a harbinger for the rest of the nation This graph would counter that somewhat: https://twitter.com/Noahpinion/status/1678452715201130497 https://twitter.com/Noahpinion/status/1678452715201130497 https://pbs.twimg.com/media/F0sPvd2aEAANBCC?format=png&name=900x900 https://pbs.twimg.com/media/F0sPvd2aEAANBCC?format=png&name=...

fortuna86 3y ago
Trump voting states don't offer services for homeless, so they leave for places that do. Is that so surprising? Not to mention the morality of cutting soup kitchens and shelters just so your state's homeless become someone else's problem.
- caddemon 3y ago
  I think there are 2 separate issues here: 1. The silent majority of homeless people that are suffering and with the proper services could get back on their feet, but they are not actually having a day to day impact on the general population. Cutting helpful services for these people is terrible, and the longer someone goes homeless the more issue they may have getting out later. Housing prices also have more impact in creating this type of homelessness. 2. The loud minority of homeless people, often in need of serious mental help that they very well may refuse, who have a negative impact on the community - disruption in the libraries, needles on the street, etc. There are places where the prevailing sentiment is refusing to remove these people when they are disturbing important community spaces or to arrest them for crimes like openly using hard drugs and peeing in the public fountain. This sort of tolerance shouldn't be conflated with robust access to resources, but unfortunately it does seem to be by policy makers. So yeah, many homeless people go to cities where they will have access to services, and that is more relevant to statistics. Some homeless people go to cities where they know they will more easily be able to obtain and use drugs, steal, etc. Those people are a tiny fraction of the total population, but it doesn't take many of them to start to have a noticeable impact on a local area. This is where we see the more visceral negative reaction to homelessness in west coast cities coming from. Though I'm sure there are people from other areas of the country amplifying this problem for their own political agenda rather than care for the community or the homeless, it's definitely a real feeling amongst residents in certain areas of SF too, and it doesn't come out of nowhere.

outside1234 3y ago

Tackling the issue nationally is key because a significant portion of homeless in the cities is from poverty / drug addiction in rural areas that results in folks showing up in cities desperate for help (it is estimated that 75% of SF’s homeless are from outside of the city). It is not just a city problem. That is just where the problems end up because it is the only place with any infrastructure to handle it.

nebula8804 3y ago
If thats the case then its really a form of additional wealth transfer from the blue states to the red states. They save money on taxes by not tackling this problem/creating it in the first place and then dump the externalities onto blue state taxpayers.
rnburn 3y ago
> "it is estimated that 75% of SF’s homeless are from outside of the city" -- Where are you getting that 75% number from? The latest survey I'm familiar with showed nearly exactly the opposite (71% of homeless in SF had a prior place of residence in SF). See https://sfstandard.com/2023/05/22/san-francisco-homeless-people-from-the-city https://sfstandard.com/2023/05/22/san-francisco-homeless-peo...

vkou 3y ago

Prop 13 is a uniquely Californian problem, and yet homelessness is exploding all over the country. The problem isn't Prop 13. The problem isn't entirely nimby-ism, either. The problem is that for a variety of structural reasons, housing costs too much, mental healthcare is not available, and there's no pathway for treating drug problems. This causes sick, addicted, or simply poor people who are living on the margins to slide into homelessness, with no way to climb back up the slide.

ketzo 3y ago
Well, California's housing crisis is uniquely intense by almost any measure (affordability, relative/absolute homeless population, median family wealth). Prop 13 is a unique and meaningful contributor to a glacial housing market -- if moving homes (to an equally-expensive home!) would quadruple your property tax, you're probably not gonna sell. And slow/frozen markets result in increased prices.
stilldeadinside 3y ago
Housing costs are high because it's hard to build a house. It's a dangerous task requiring a lot of logistics and coordination. There are toxic chemicals, dangerous heights, sharp objects, and requires being in unhealthy poses and breathing in fumes during the construction. Then there's the financial risks, with people not paying as promised, or withholding some pay due to work quality. At the end of the day, people are not willing to sacrifice their health as cheaply, and there isn't a new influx of cheap migrant labor, so the costs will remain high in the future.

Karrot_Kream 3y ago

California has lots and lots of small local governments which makes it structurally harder in California than states where there aren't as many governments. The state government is trying to use RHNA allocations right now to force local governments to get in line but there's no substitute for a single governing body.