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California Housing

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https://www.rollingstone.com/politics/politics-features/california-housing-crisis-causes-874803/

 

There is much sort of general mention of how the booming economy in the San Fran area in particular has driven property values through the atmosphere, pushing people out onto the streets, with people able to own or rent only at the top of the pay scale.  This is the land of Alphabet and Apple.  But it's not really a booming economy.  People who do full time jobs in that area are living in a van in a parking lot.  How is that booming? 

 

 

If the gigantic multinational corporations (like Alphabet and Apple) that generate such huge profits were not driving such intense wealth concentration, if more of that wealth were paying salaries for full time employees in the area so they could actually afford the housing, then the market would dictate that some of those companies would be forced out of the area, just like individuals and families are being forced out of their homes right now.  As companies continue to grow and drive demand for additional jobs, the costs of housing rise, the costs of wages rise to match those costs, obviously pretty soon it would be prohibitively expensive for a company to stay there.  When the wages do not rise to accurately reflect the increased demand on housing, the companies are not paying what it costs to employ the people who work for them.

 

Seems like the market should be sucking workers out of that area into more affordable areas, where these huge wealth machines are not skewing things so that full time workers are homeless.  When you look at San Fran and that hi tech market, as well as the billionaire farmers and the people who work for them who don't even have clean water to drink, California looks to me like just another place where corporations and billionaires have a stranglehold on the resources that are needed to make the economy move.  The race to the bottom is already over, and they won.  They pay literally not even enough for an employee to have a place to live or clean drinking water.  And the worker has to take it, because everything is locked up.

 

This kind of wealth concentration and domination of resources is not the desired end goal of a free market.  This is the opposite of what is supposed to happen:  competition is supposed to efficiently allocate resources.  People who work hard are supposed to be able to succeed.  Not wind up living in a van in a parking lot.

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It seems the underlying problem in California is local zoning laws which require one family homes on large plots of land;  And prohibit multi dwelling buildings.  The excuse often given by municipalities is that they want to maintain the character of their area.  But the underlying reason is that existing, well-heeled homeowners vote to keep property values up for themselves.  It's another case of "NIMBY, I've got mine".  

 

These restrictive local zoning laws drive up the price of existing, mostly luxury housing while preventing developers from coming in and building multi-dwelling units.  Homeowners who support these laws, see the problem on the street and in the news, every day but, Ayn Rand-like, would rather watch their homes skyrocket in value, than do anything to alleviate the suffering they are causing.

 

As you said:

7 hours ago, splunch said:

California looks to me like just another place where corporations and billionaires have a stranglehold on the resources that are needed to make the economy move.

 

So far homeowners have been able to defeat governor Newsom's SB50 bill which would prohibit local zoning laws which exclude multi-unit dwellings.  Up to now, Democratic governor Gavin Newsome, even with Democratic supermajorities in both houses has been unsuccessful in overturning local zoning laws.  One thing is for sure:  "Safe" parking lots for the homeless, adjacent to bathroom facilities is not any kind of satisfactory answer.

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Out here my next door neighbor is paying $2,450 a month rent for a small 3 bedroom home 1,300sf,  my mortgage is less for a larger home. I live roughly 45 miles from SF. I do think a correction is on it's way but nothing like 2008, prices will probably drop to 2015 levels but return to current levels in about 5 years or less and get even higher. The only option that may work is to build state sponsored affordable housing that is still near mass transit so people can get to the city. The fact there are supermajorities in the statehouse at least gives people hope that maybe something's possible.

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It's hard to believe people live in their cars in parking lots...rather than just leave and go someplace else, though, where wages and cost of living are reasonably aligned. The only way this situation keeps on like this, with people staying in the area and living out of their cars while they deliver full time work, is if they have no choices.  If they could leave the immediate SF area and be able to afford housing, I think most people certainly would.  I know I wouldn't want to watch my kids go through that.

 

That's why I put some of the finger on the concentration of wealth and power, too.  Why aren't other areas within California moving to steal that workforce? Is it really just a grassroots thing, or are there other interests at work here?  Surely some town an hour or two from SF could call up Google and say, why don't you set up a big corporate office here?  We'll zone for development of some condos and apartments, and work to create an environment where your workforce can afford to live, etc.?  Nobody wants that?  It's 100% NIMBY in all directions??  Or is it just that Google really doesn't give a damn, because they aren't having any trouble as it is, just because some of the people who clean their facilities and prepare their food live out of their cars???  What's the problem?

 

If people had choices, they wouldn't just stay in that area earning less than it costs to live, is what makes me wonder how the market has gotten so skewed.

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Does the healthcare system exacerbate this problem?  Is some of this workforce more mobile if they aren't sweating the health insurance they may hold through their jobs, even though they don't pay them enough to afford rent?  If there were universal healthcare in place, maybe people are more willing to pick up and just leave the area entirely?

 

If there were a way to create actual competition for that workforce, the situation would be corrected over time, because Google does actually need people to clean their offices and landscape their campuses.  If those people had viable alternatives, Google would simply have to pay them enough to survive in that region in order to entice them to stay.  So yeah, maybe somebody who empties the trash for Google at night earns $80,000 per year, but so what?  That's literally the cost of doing that job in that town, isn't it?  Hell, I've heard of software engineers and programmers who go out there and get jobs paying a good bit more than that and they have to share an apartment, too.

 

And let's be real, it's not like Google can't afford it. They can.  That's why the property values are so high in the first place:  because so much goddamn money is flowing into that town through those businesses.  

 

Also, if competition did succeed in pulling some people out of town, competition housing would not be as intense, so prices might drop a bit.

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1 hour ago, splunch said:

If there were universal healthcare in place, maybe people are more willing to pick up and just leave the area entirely?

 

Universal healthcare would definitely make workers more independent.  Andrew Yang makes the same point about his "Freedom Dividend".  If workers were given a way to be more self-sufficient, employers would be forced to become more solicitous of their needs.

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40 minutes ago, bludog said:

 

Universal healthcare would definitely make workers more independent.  Andrew Yang makes the same point about his "Freedom Dividend".  If workers were given a way to be more self-sufficient, employers would be forced to become more solicitous of their needs.

Exactly.  There is no telling what sort of dynamics might be unleashed if people were not terrified into immobility by healthcare fears.

 

So it's possible that the behemoth healthcare industry is one part of this problem in California.  Maybe even a significant part of the problem.

 

If Alphabet were busted up in a huge anti-trust decision, component businesses spun off, that might help, too, because some of them would probably leave the area.  If the few behemoths that dominate that economy were fractured into numerous smaller entities, their whispered agreements not to poach each other's employees (i.e., collusion to block competition for labor) would be reduced even though they are difficult to prove, because such agreements are more fragile and harder to reach where you have more players.

 

The whole situation smacks of a sort of traffic jam, a tightly locked down jam-up where the pieces just aren't able to move freely anymore.  

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On 9/9/2019 at 7:45 PM, bludog said:

It seems the underlying problem in California is local zoning laws which require one family homes on large plots of land;  And prohibit multi dwelling buildings.  The excuse often given by municipalities is that they want to maintain the character of their area.  But the underlying reason is that existing, well-heeled homeowners vote to keep property values up for themselves.  It's another case of "NIMBY, I've got mine".  

 

Exactly right. 

 

On 9/10/2019 at 8:59 AM, splunch said:

It's hard to believe people live in their cars in parking lots...rather than just leave and go someplace else, though, where wages and cost of living are reasonably aligned. The only way this situation keeps on like this, with people staying in the area and living out of their cars while they deliver full time work, is if they have no choices. 

 

They have choices.  But, Silicon Valley is where billionaires are made.  People used to go (maybe they still do) to New York or Hollywood to 'make it big'.  Now, San Francisco is where you go to get rich if you're an aspiring techie.  They pay exorbitant rent prices for the privilege of being at the center of the tech universe. 

 

I'm not sure that the pay and cost of living are misaligned.  These tech companies pay good money.  The average salary of all employees in San Francisco is almost $90k per year, compared to $47k nationally.   That seems to be in line with the cost of living.  This site estimates that $50k in Dallas provides the same standard of living as $92k in San Francisco.  

 

Saying you make $92k sounds better than $50k, even if it provides the same standard of living.  

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4 minutes ago, Renegade said:

 

Exactly right. 

 

 

They have choices.  But, Silicon Valley is where billionaires are made.  People used to go (maybe they still do) to New York or Hollywood to 'make it big'.  Now, San Francisco is where you go to get rich if you're an aspiring techie.  They pay exorbitant rent prices for the privilege of being at the center of the tech universe. 

 

I'm not sure that the pay and cost of living are misaligned.  These tech companies pay good money.  The average salary of all employees in San Francisco is almost $90k per year, compared to $47k nationally.   That seems to be in line with the cost of living.  This site estimates that $50k in Dallas provides the same standard of living as $92k in San Francisco.  

 

Saying you make $92k sounds better than $50k, even if it provides the same standard of living.  

But there are people who do not work for the tech companies, or who do not work directly for them, who support the infrastructure around those companies.  They show up and clean their offices and take out their trash and cook their food, etc.  Those people aren't making $92,000, I assume.  And those people can't pay rent, despite working full time.  The boom is definitely on, but the top layer has launched into the stratosphere, driving costs through the roof and leaving the bottom layers floundering.

 

So if you work full time and can't afford rent, and you and your family is living in a car, you're not part of the tech boom.  You didn't move there to get rich; you grew up there and have now been priced out of the housing market.  Personally, in that scenario, I'd start looking for someplace else to go where I could make ends meet.  Instead, this problem seems to keep growing.  So it is those people who appear to have no options, not the techie that moves there to try to get rich.

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2 hours ago, splunch said:

So it is those people who appear to have no options, not the techie that moves there to try to get rich.

 

Good point.  They have statistics on everything these days.   Here's a website that lists the cities with the highest and lowest income inequality.  Yep, San Francisco is one of the most unequal cities in the nation.  

 

Minimum wage in SF is $15.59.   Minimum wage in Dallas is $7.25.  Even allowing for the cost of living difference, $15.59 should go further than $7.25.  Wouldn't the lowest earners in SF be better off than the lowest earners in Dallas?  

 

Maybe not when you look at the details.  This site has downloadable data on rental prices by city.  It says a studio apartment (the cheapest category) in San Francisco costs about $2,029 per month.  Wow!  In Dallas, the comparable number is $766.   So, the overall 'cost of living' numbers are obscuring much bigger differences in the cost of housing.  $2,029 represents 130 hours of work at minimum wage in San Fran.  $766 represents 106 hours of work at minimum wage in Dallas.  If I was king, I'd relax the building restrictions in San Fran.

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1 minute ago, Renegade said:

 

Good point.  They have statistics on everything these days.   Here's a website that lists the cities with the highest and lowest income inequality.  Yep, San Francisco is one of the most unequal cities in the nation.  

 

Minimum wage in SF is $15.59.   Minimum wage in Dallas is $7.25.  Even allowing for the cost of living difference, $15.59 should go further than $7.25.  Wouldn't the lowest earners in SF be better off than the lowest earners in Dallas?  

 

Maybe not when you look at the details.  This site has downloadable data on rental prices by city.  It says a studio apartment (the cheapest category) in San Francisco costs about $2,029 per month.  Wow!  In Dallas, the comparable number is $766.   So, the overall 'cost of living' numbers are obscuring much bigger differences in the cost of housing.  $2,029 represents 130 hours of work at minimum wage in San Fran.  $766 represents 106 hours of work at minimum wage in Dallas.  If I was king, I'd relax the building restrictions in San Fran.

It's probably much worse than that, actually, the relative costs between San Fran and Dallas.  Because San Fran is surrounded on all sides by suburbs, some of which are even more high-rent, that go on forever.  If you want to access something affordable, but work in San Francisco???  You'll have like a 4-hour commute!  In Dallas, you can climb into your pickup and be out in the middle of NOWHERE in like 30 minutes.  I'll bet the rent out there is pretty reasonable, too.  But even if the data accounts for that, the data already shows an astonishing cost of living in San Francisco.  I literally pay no more than that studio rent (average...so not the highest one) for my mortgage on a nice big place with plenty of land, and not out in the sticks, either.

 

If I was king, I think I'd link the minimum wage for a company to its earnings, contractors and temps and anyone else included.  If you're Google, yes, you can pay $95,000 per year for somebody to take out your trash.  Here's a tissue.  Get over it.  Your outrageous monopoly control over so many industries is fueling this mind-boggling inequality, which is skewing the markets in ways that are really hurting people.  So you can make that "trickle-down" dream a reality, now.  You're making the money, you're the big winner, you barely pay taxes...time for some trickle down.

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That wouldn't work, either, though.  That would ultimately actually just strengthen the grip that these behemoths have on the economy and the region.  

 

In the end, you break up the behemoths, and set the component parts to compete.  That will spread profits around, and perhaps give the market a chance to do what it is supposed to do.

 

Tough problem at this point, obviously.  

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Yesterday, with the prodding of Gov Gavin Newsom, California passed a bill limiting rent hikes, statewide, to no more than 5%, after inflation.  The bill also makes it much harder to evict tenants.

After the senate vote, Newsom commented

Quote

“California is at the doorstep of enacting strong, statewide renter protections — safeguards that are critical to combating our state’s housing and cost-of-living crisis,”

https://www.nytimes.com/2019/09/10/business/economy/california-rent-control.html?module=inline

 

Increased eviction protection makes it harder for landlords to clear out their multi-dwelling buildings and sell to developers for conversion to exclusive occupancy, luxury housing. 

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2 hours ago, bludog said:

Yesterday, with the prodding of Gov Gavin Newsom, California passed a bill limiting rent hikes, statewide, to no more than 5%, after inflation.  The bill also makes it much harder to evict tenants.

 

Rent controls are OK for people who can actually get an apartment, but they do nothing to address the root of the problem which is a lack of supply.  The expected outcome is for new construction to become even more scarce.  Existing properties will probably see less maintenance, updates, and upgrades.  I would also expect landlords  to charge higher initial rent for what new construction does happen.  

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Of course that is correct.   The underlying problem in California is local zoning laws which require one family homes on large plots of land;  And prohibit multi dwelling buildings. 

 

Rent control has been a historically lost cause in Sacramento so the passing of this legislation could be a sign of more to come.

Quote

“Passing tenant legislation in Sacramento is incredibly difficult,” said Assemblyman David Chiu, a San Francisco Democrat who is the bill’s author. “But we’re in the midst of the worst housing crisis in our state’s history, and I think my colleagues and policymakers understand we have to do something differently.”

https://www.nytimes.com/2019/09/10/business/economy/california-rent-control.html?module=inline

 

I would love to see California succeed, in every way.   I never lived in beautiful California but I have had very pleasant travel experiences, there.  And I tend to identify with California's preponderance of Liberal voting people.    

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8 hours ago, bludog said:

Of course that is correct.   The underlying problem in California is local zoning laws which require one family homes on large plots of land;  And prohibit multi dwelling buildings. 

 

Rent control has been a historically lost cause in Sacramento so the passing of this legislation could be a sign of more to come.

https://www.nytimes.com/2019/09/10/business/economy/california-rent-control.html?module=inline

 

I would love to see California succeed, in every way.   I never lived in beautiful California but I have had very pleasant travel experiences, there.  And I tend to identify with California's preponderance of Liberal voting people.    

Large lots? My home built 1989 is on 3600sq ft. I'm probably a bit of an outlier but I'm 51 miles from SF. Out here in east co.co. the large houses that are 3000+ square ft are actually on some fairly small lots 5000-6000 sq ft. I have heard apartments going roughly $1,000 it's just people may need to accept mass transit from out here that was done in 2016.

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If you're 51 miles from SF, how long does it take you to get there on mass transit?  It seems to me that 51 miles is too far to commute.

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1 hour ago, Renegade said:

If you're 51 miles from SF, how long does it take you to get there on mass transit?  It seems to me that 51 miles is too far to commute.

I don't use it but I would guess roughly an hour using it during commuter hours makes the most sense. The bridge toll is $6 and parking downtown is very expensive. People commute from as far away as Sacramento to San Francisco I have seen I know that's crazy but housing out in the valley is extremely cheaper and I guess they do get used to it somehow.

 

 

 

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On 9/9/2019 at 11:08 AM, splunch said:

https://www.rollingstone.com/politics/politics-features/california-housing-crisis-causes-874803/

 

There is much sort of general mention of how the booming economy in the San Fran area in particular has driven property values through the atmosphere, pushing people out onto the streets, with people able to own or rent only at the top of the pay scale.  This is the land of Alphabet and Apple.  But it's not really a booming economy.  People who do full time jobs in that area are living in a van in a parking lot.  How is that booming? 

 

 

If the gigantic multinational corporations (like Alphabet and Apple) that generate such huge profits were not driving such intense wealth concentration, if more of that wealth were paying salaries for full time employees in the area so they could actually afford the housing, then the market would dictate that some of those companies would be forced out of the area, just like individuals and families are being forced out of their homes right now.  As companies continue to grow and drive demand for additional jobs, the costs of housing rise, the costs of wages rise to match those costs, obviously pretty soon it would be prohibitively expensive for a company to stay there.  When the wages do not rise to accurately reflect the increased demand on housing, the companies are not paying what it costs to employ the people who work for them.

 

Seems like the market should be sucking workers out of that area into more affordable areas, where these huge wealth machines are not skewing things so that full time workers are homeless.  When you look at San Fran and that hi tech market, as well as the billionaire farmers and the people who work for them who don't even have clean water to drink, California looks to me like just another place where corporations and billionaires have a stranglehold on the resources that are needed to make the economy move.  The race to the bottom is already over, and they won.  They pay literally not even enough for an employee to have a place to live or clean drinking water.  And the worker has to take it, because everything is locked up.

 

This kind of wealth concentration and domination of resources is not the desired end goal of a free market.  This is the opposite of what is supposed to happen:  competition is supposed to efficiently allocate resources.  People who work hard are supposed to be able to succeed.  Not wind up living in a van in a parking lot.

You are correct on many points here. Why do we allow folks like Bill Gates to get so darn rich? One thing Trump is right about is loss of jobs to China and other countries. These trade policies were put into place by rich stakeholders who aren't dumb. They really are not US worker trade policies, they are trade policies designed to protect giant corps and their patent rights. 

The surrounding Bay area near San Francisco and the city itself is a perfect example of inequality where the median home price is in excess of a million plus. It has become an oligarchy where policy direction is left in the hands of the few. This is a horrible truth for our democracy currently as it stands.

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On 9/12/2019 at 3:14 PM, Renegade said:

 

Rent controls are OK for people who can actually get an apartment, but they do nothing to address the root of the problem which is a lack of supply.  The expected outcome is for new construction to become even more scarce.  Existing properties will probably see less maintenance, updates, and upgrades.  I would also expect landlords  to charge higher initial rent for what new construction does happen.  

this is true regarding rent control. But how did it get this way is important to know. Once you have objectionable renter prices that affect average middle class workers who are needed in the City you already have a big problem. Mass transit, and other avenues to solve the problem are something to look at. But again, the average rent price all over the Bay Area is already quite high. And when they build houses like they do everywhere - the builders are incentivized to make a profit with the smallest amount of land. Typically that means they build big houses close together, or teeny tiny renting spaces in order to get the biggest bang out of their buck. Ouch!

 

What about city planners working together to build a better overall infrastructure? You know there's a lot of commerce that can be generated if the planning is done right. Long term thinking is required. City planning that is long-term and done right is way overdue. And oh yeah, we do need to tackle inequality in structural ways. 

Taxation, breaking up monopolies, restructuring our patent system, etc...

 

Peace!

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On 9/14/2019 at 7:34 PM, TheOldBarn said:

this is true regarding rent control. But how did it get this way is important to know. Once you have objectionable renter prices that affect average middle class workers who are needed in the City you already have a big problem. Mass transit, and other avenues to solve the problem are something to look at. But again, the average rent price all over the Bay Area is already quite high. And when they build houses like they do everywhere - the builders are incentivized to make a profit with the smallest amount of land. Typically that means they build big houses close together, or teeny tiny renting spaces in order to get the biggest bang out of their buck. Ouch!

 

Builders in SF would love to go high-rise.  That way they could provide more living space on a smaller amount of land, and make more profit too.  But, they can't get zoned for that due to NIMBYism.   On a personal level, that's completely understandable.  No one wants a new high-rise next door.  But, the result for the city is low availability and higher prices.  It's interesting that even in one of the most community-minded places in America, it's sometimes almost impossible for people to put community first.

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34 minutes ago, Renegade said:

 

Builders in SF would love to go high-rise.  That way they could provide more living space on a smaller amount of land, and make more profit too.  But, they can't get zoned for that due to NIMBYism.   On a personal level, that's completely understandable.  No one wants a new high-rise next door.  But, the result for the city is low availability and higher prices.  It's interesting that even in one of the most community-minded places in America, it's sometimes almost impossible for people to put community first.

In that case, an efficient and properly competitive market would drive the necessary changes.  There is only so much room in SF, and if companies like Google demand that space, then they shall have it, because they have the kind of cash to pay for it, through salaries for their employees, so that their employees can afford to pay rents that other companies' employees cannot match.  Those other companies will simply have to set up shop somewhere else.  The problem is that Google is only paying those salaries for some people, even though it costs a lot to live there even if all you do is wash the windows.  You still have to have those people, but they don't pay them enough to drive out other companies' high tech employees, obviously.  So those workers are left in the lurch.  Tough problem, for sure.  Ideally, companies who were willing to NOT be in that area could offer a much higher quality of life (like a home) to its employees, even if they paid less, so they could lure people out of that area, reducing demand for housing while simultaneously reducing the supply of people on-hand to clean those windows, driving their salaries up.

 

The practice of agreeing not to "poach" each other's employees among the giants in that area is one example of the sort of anti-competitive behavior that exacerbates and perpetuates this kind of problem.  The use of zoning laws and lobbying to bolster NIMBY campaigns and block the kind of development that would naturally alleviate this problem is also part of the problem.

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Hey, buddy. Frankly speaking, such situation can be meet in great number of towns in USA. It goes without saying, that life in California is expensive, but here you can have well-payed job, that will cover all the expenditure. If somebody can't find a good job, then it isn't problem in location, where he is lives, the main problem is he and his laziness. If you don't believe me, then you can check the Average Salary in different towns in the USA at https://costoflivingreports.com/ and make sure, that my words are true ones.

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