The California Dream: A second bedroom

[Ad Orientem]

IRVINE, Calif. — This was the state that embodied the middle-class American dream: Move west, acquire a small slice of property, perhaps with a palm tree or two.

For decades, comfortable suburbs like this one just south of Los Angeles boomed with new housing tracts designed to attract the latest arrivals. When space started to come at a premium, developers moved inland, building more homes for people who could not afford the more expensive coastal areas.

But now, cities across the state are grappling with a dwindling stock of housing that can be considered affordable for anyone but the wealthiest. In much of the state, a two-bedroom apartment or home is virtually impossible to acquire with anything less than a six-figure salary.

“It’s hard to imagine how all of California doesn’t become like New York City and San Francisco, where you have very rich people and poor people but nothing in between,”? said Richard K. Green, an economist and director of the Lusk Center for Real Estate at the University of Southern California. “That’s socially unhealthy and unsustainable, but it’s where we are going right now — affordability is its worst ever, and we’re seeing a hollowing-out of the middle class here.”?

Read the rest here...
http://www.nytimes.com/2014/09/24/us/a- ... .html?_r=0

[WildAboutHarry]

I did not see any mention of Bakersfield, Fresno, Merced, Modesto, Stockton, Lodi, Saramento, Live Oak, Gridley, Marysville, Yuba City, Red Bluff, Redding et. al in the article.  Lots of bedrooms there.  The Central Valley is full of reasonably priced bedrooms.

If you want to live in comfort in LA or Orange County (or the coast, or San Francisco, or Marin County, etc.) then you need a robust six-figure income.  If you do not have the skills, education, etc. to make that kind of income then you cannot afford to live there, unless you are willing to make lifestyle compromises.  Which is fine, but it is a lifestyle decision, not something inherently unfair about high-cost areas of California.

Voting with one's feet does still work.

[TripleB]

Is anyone with any common sense going to point out that the reason for this great divide between the wealthy and the poor and the high cost of living is precisely because of government forces designed to "help" the poor, which causes a chain of events that screws the poor over in the end?

Why is housing so expensive in the SF area? Rent control. Designed to help the poor so fat cat landlords can't jack up rents and force people out of their homes. What happens in a rent controlled area? New development stops. What capitalist investor will risk assets into building new homes/apartments in an area where the risk is unlimited (could drop to zero value) but the gain is capped by rent control? The answer is apparent by what actually does happen in rent controlled areas, like SF, right now.

Why is housing so expensive in LA (and also contributes to the high cost of living in SF)? High taxes to support social programs to help the poor. Who pays those taxes? The poor do. And in the process of paying those taxes, there is waste/loss into the government system. So the poor might pay $1,000 into taxes to receive $800 in benefit from the government. The poor can't afford that loss.

How do the poor pay the taxes? Higher apartment costs because of high property taxes to support the social programs. Higher utility costs because the utilities are required to pay their employees more money to live in the high cost of living area. Higher food costs because of higher property taxes for the supermarkets, higher gas taxes to transport the food to the supermarket. Higher cost of everything because every business is required to pay their employees more money to live in that higher cost of living area.

10% state income tax on people in the 25% tax bracket. That means 1/3 of your tax goes to the state. Think about how expensive it is to run the whole US as a country. Does California cost 1/3 as much? Consider how many billions we spend on the military as a country. California doesn't have a military. Where does the 1/3 of the money that goes to the military go?

10% sales tax. Where does that go?

People in the middle income brackets leaving. Tax dollars leaving.

The state is a mess. Liberalism doesn't work.

[dragoncar]

Is anyone with any common sense going to point out that the reason for this great divide between the wealthy and the poor and the high cost of living is precisely because of government forces designed to "help" the poor, which causes a chain of events that screws the poor over in the end?

Why is housing so expensive in the SF area? Rent control. Designed to help the poor so fat cat landlords can't jack up rents and force people out of their homes. What happens in a rent controlled area? New development stops. What capitalist investor will risk assets into building new homes/apartments in an area where the risk is unlimited (could drop to zero value) but the gain is capped by rent control? The answer is apparent by what actually does happen in rent controlled areas, like SF, right now.

Why is housing so expensive in LA (and also contributes to the high cost of living in SF)? High taxes to support social programs to help the poor. Who pays those taxes? The poor do. And in the process of paying those taxes, there is waste/loss into the government system. So the poor might pay $1,000 into taxes to receive $800 in benefit from the government. The poor can't afford that loss.

How do the poor pay the taxes? Higher apartment costs because of high property taxes to support the social programs. Higher utility costs because the utilities are required to pay their employees more money to live in the high cost of living area. Higher food costs because of higher property taxes for the supermarkets, higher gas taxes to transport the food to the supermarket. Higher cost of everything because every business is required to pay their employees more money to live in that higher cost of living area.

10% state income tax on people in the 25% tax bracket. That means 1/3 of your tax goes to the state. Think about how expensive it is to run the whole US as a country. Does California cost 1/3 as much? Consider how many billions we spend on the military as a country. California doesn't have a military. Where does the 1/3 of the money that goes to the military go?

10% sales tax. Where does that go?

People in the middle income brackets leaving. Tax dollars leaving.

The state is a mess. Liberalism doesn't work.

Any new developments are exempt from rent control in SF.  I think it's a flawed policy, but there's plenty of incentive to build new units.  Unfortunately, other policies (BMR, NIMBY) still restrict growth.  Nevertheless, construction rate is currently phenomenal.

[TripleB]

Any new developments are exempt from rent control in SF.  I think it's a flawed policy, but there's plenty of incentive to build new units.  Unfortunately, other policies (BMR, NIMBY) still restrict growth.  Nevertheless, construction rate is currently phenomenal.

Interesting. When did that shift in policy start?

[Pointedstick]

SF's problem isn't really rent control anymore. It's the tech bubble boom causing a zillion young six-figure-salary engineers to move to SF, pushing up rents with their vastly higher purchasing power compared to most of the prior locals.

The real problem is democratic* political resistance to high-density housing. The city exercises total control over who can build what where, and the fees and permitting processes are extraordinary compared to anywhere else in the USA. People currently living in low-density housing (which SF has a huge amount of compared to most cities) vote to reject proposals to build apartment buildings and condos, not wanting their views or the character of their quaint neighborhoods spoiled. And besides, the extreme housing squeeze benefits them since their home values are skyrocketing.

By "democratic," here I mean "pursuant to the institutions of democracy" not "in the Democratic party."

[dragoncar]

Any new developments are exempt from rent control in SF.  I think it's a flawed policy, but there's plenty of incentive to build new units.  Unfortunately, other policies (BMR, NIMBY) still restrict growth.  Nevertheless, construction rate is currently phenomenal.

Interesting. When did that shift in policy start?

Always?  When rent control was instituted in 1979? Only existing buildings were covered.  So any post 79? Building is not rent controlled.  That's not to say there aren't other regulatory hurdles.  See what pointed stick said

Edit: also exempted are all single family units, including condos and coops, built in any year.

[Mountaineer]

I wonder if the SF building controls will stay in place after the next 9.0 or will the "lightening never strikes in the same place twice" dummies rebuild?

... Mountaineer

[moda0306]

SF's problem isn't really rent control anymore. It's the tech bubble boom causing a zillion young six-figure-salary engineers to move to SF, pushing up rents with their vastly higher purchasing power compared to most of the prior locals.

The real problem is democratic* political resistance to high-density housing. The city exercises total control over who can build what where, and the fees and permitting processes are extraordinary compared to anywhere else in the USA. People currently living in low-density housing (which SF has a huge amount of compared to most cities) vote to reject proposals to build apartment buildings and condos, not wanting their views or the character of their quaint neighborhoods spoiled. And besides, the extreme housing squeeze benefits them since their home values are skyrocketing.

By "democratic," here I mean "pursuant to the institutions of democracy" not "in the Democratic party."

I'm sure you'll use this to fire another libertarian bullet at me, but I find it interesting when different levels of environmental concern oppose each other.  On a macro-economic level, more HDH is good, but for a city to adopt it, they are cramming more people in a smaller area, which leads to some negative "environmental" consequences associated with congestion.

[Pointedstick]

I'm sure you'll use this to fire another libertarian bullet at me, but I find it interesting when different levels of environmental concern oppose each other.  On a macro-economic level, more HDH is good, but for a city to adopt it, they are cramming more people in a smaller area, which leads to some negative "environmental" consequences associated with congestion.

I actually think HDH is a really good thing for a city, at the same time that I hate it personally. It seems to increase that "magic of the city" that so many (again, not me) seem to be entranced with. It keeps city living affordable for more economic classes of people, it reduces car-dependence, it encourages walking, biking, and the growth of mass transit, and it robs you of a yard where you can permanently park your boat or pair of RVs!

[TripleB]

SF's problem isn't really rent control anymore. It's the tech bubble boom causing a zillion young six-figure-salary engineers to move to SF, pushing up rents with their vastly higher purchasing power compared to most of the prior locals.

What a terrible "problem"!

Here's some similar "problems":

My neighbor moves away and the entire Swedish Bikini Team moves in next door. I'll miss my old neighbor so much!

My coworkers are fired and replaced by more competent versions who do more work in less time. I'll miss my old coworkers!

The cotton gin has made it so we don't have to spend so much time sorting picked cotton. How am I going to get a job??


The fact that a butt-load of people making $200k+/year are moving into a city should be a GREAT thing for the city. It might not be good for the previous locals, but it's great for the city.

[Pointedstick]

The fact that a butt-load of people making $200k+/year are moving into a city should be a GREAT thing for the city. It might not be good for the previous locals, but it's great for the city.

More like $100k, not $200k. And yes, you would think it would be good for the city, right?

Here's why it's not:

- None of these people have families or want to start them any time soon. They are almost all male, single, and between the ages of 22 and 35.

- These tech workers leave for work early and return late, resulting in their parts of the city being largely abandoned for most of the daylight hours.

- Existing residents--who the tech workers are never going to entirely replace--politically oppose building more housing, causing more of themselves to be pushed out as prices rise beyond their purchasing power.

- Housing prices are skyrocketing as a result of the constrained stock of housing.

- Existing families are moving out as they become unable to afford to live in the city.

- Both the locals and the new rich tech workers are leftists, and politically support the whole gamut of leftist nonsense, leaving the city council free to implement much of their agenda. If it's the middle-class that's largely conservative, it's the rich and the poor who are liberal, and that's all San Francisco has anymore...


The net result is a city that is increasingly populated only by rich tech workers and homeless bums, is largely abandoned during the day, is dominated by corrupt leftist politics, has few children, few women, and no affordable housing--even to the tech workers!

I lived in the area for years, and to me it was a nightmare, not a utopia. I only just a year ago escaped to New Mexico--which is largely bereft of high-tech yuppies, and I greatly prefer it.