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San Francisco's Housing Crisis Explained
An anonymous reader writes "We've heard a few brief accounts recently of the housing situation in San Francisco, and how it's leading to protests, gentrification, and bad blood between long-time residents and the newer tech crowd. It's a complicated issue, and none of the reports so far have really done it justice. Now, TechCrunch has posted a ludicrously long article explaining exactly what's going on, from regulations forbidding Google to move people into Mountain View instead, to the political battle to get more housing built, to the compromises that have already been made. It's a long read, but well-researched and interesting. It concludes: 'The crisis we're seeing is the result of decades of choices, and while the tech industry is a sexy, attention-grabbing target, it cannot shoulder blame for this alone. Unless a new direction emerges, this will keep getting worse until the next economic crash, and then it will re-surface again eight years later. Or it will keep spilling over into Oakland, which is a whole other Pandora's box of gentrification issues. The high housing costs aren't healthy for the city, nor are they healthy for the industry. Both thrive on a constant flow of ideas and people.'"
Back in the Ford administration. Or maybe Nixon.
Help stamp out iliturcy.
They Bay Area is one of the few economically active places in the USA, that's why housing is expensive there.
If you want cheap housing, go to an economically dying area, like Detroit; or a place with no regulations such that chemicals leak into your house or explode in your face, like Texas.
Table-ized A.I.
Why would they even bother with the Mission, when the Tenderloin has been a complete hole, even worse than Mission for years? It's a mystery how that area even exists. Clearly those tenants aren't paying any high rents.
I'm going to go with 1. Limited resources. There just isn't enough space and more importantly WATER in the area. The water problem isn't just in a drought year like now. It's an on-going concern. 2. Regulations are off the chart. I heard it's $500k just for the paperwork to build in some of these areas. 3. Huge demand, duh. Tech and finance have high salaries, everybody wants to live near work, everybody knows these guys have money so they charge accordingly. Compare and contrast with Oakland and the East Bay in general. You're taking a "million dollar ride" across the bridge or through the tube. Yep, you spend a lot of time commuting but you've got to do what you've got to do. 4. Prop 13. Since there are some limits on taxes, the market accounts for that and charges higher prices accordingly. That explains the whole state being expensive. Since most people must finance their purchase, what was once paid out in taxes is now paid out to bankers in the form of interest. The bankers don't use it to build schools. Some people blame illegal immigrants for poor schools; but the decline began with prop 13, and it's not like there were no illegals before it.
The only way to fix the Bay Area housing crisis is to build more fucking housing. Anything else is just shifting the pain around. This doesn't even need to mean high-rises; European cities manage population densities far higher than U.S. cities with buildings that are mostly 5 stories or less. But if people want to build skyscrapers, let them build skyscrapers unless there's a sound engineering reason not to.
Fixing the problem requires that the NIMBYs be crushed and that all non-essential regulations be eliminated. Obviously the buildings need to meet safety standards, but in a crisis situation like this, everything other than that should go. No "historical preservation" crap, no ability of "neighborhood activists" to block development, no convoluted environmental impact statements. Let's face it, the Endangered Species Act was passed because people cared about charismatic megafauna, not snail darters or burrowing owls. As things currently stand it's primarily a tool of NIMBYs.
This problem goes back decades. Up until the 1970s we could build like crazy. Empire State Building? Barely more than 1 year from groundbreaking to completion. Hoover Dam? 5 years. In contrast, the Big Dig took 15 fucking years to finish (1991-2006). And these examples are not atypical of the time periods in question. During the 1970s, we gave troublemakers of all stripes the ability to throw sand in the gears of development in a dozen different ways, and they all started to use it. Enough of this crap.
A couple decades back a blue collar worker could buy a house on 3 years salary. Can you do that today?
A couple decades back, house prices and lot sizes were a lot smaller.
Many tech workers with kids and who want a house live down there where it's cheaper. Set up office down there (too) and hire the 30+ set. It will take some of the pressure off of their Mountain View facilities. And it was dumb to expand into SF. It was ridiculously expensive already and very hostile to big business, even ones that are liberal and cool.
Well, except that it is very, very hard to start buying real estate in the Bay Area on a junior engineer's salary. In my area, I would not want to live in most of the neighborhoods where you can get something for $800K. Your well-founded admonitions don't align with most peoples' reality.
They really would be much happier in a Mountain View setting. They can take the old Netscape building. It's more of a suburban area where they will be free to accumulate and show off their employee badges to the other companies. There is even a light rail system right there, already built.
Do you mean oil just flows into people's home in Texas? Man, they must be rich!
Because, as TFA points out, the problems San Francisco has are entirely self-inflicted. It's amusing to see karma on such a large scale.
DATABASE WOW WOW
A couple decades back, people were living in the exact same houses we're living in today.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
Of course. It's those tech workers who are driving the housing prices up, and not the greedy house owners... Sure.
Here, drink this tea: http://murderpedia.org/male.J/... It will help you understand why we must show unconditional love to the wealthy, for only they can create jobs.
Aircraft Carriers, Drones, Tanks, Magnetic Rail Guns, Mile Long NSA Data Centers...
It's a great place to live if you're rich, and virtually impossible to live if you're middle class or poor.
Considering that California is the most populous state in the nation, I think you might be exaggerating things just a bit. Clearly, lots of people live here, and not all of them are rich. Me, for instance.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
They Bay Area is one of the few economically active places in the USA, that's why housing is expensive there.
If you want cheap housing, go to an economically dying area, like Detroit; or a place with no regulations such that chemicals leak into your house or explode in your face, like Texas.
Surely San Bruno would be more to one's liking...
If those San Francisco residents who are "entrenched" had to pay for their taxes like new residents do, they would be paying 1.25% per year property taxes on the current value rather than the basis of when they bought the property.
Since this is a socialist vs capitalist issue, those avowed socialists would have to pay several times as much tax per year for the same property they have had for many years. That would go directly to schools and Medical (medicare).
If we should "tax the rich" why should we exclude the property rich! Be consistent you socialists and communists and traditionalists all voting Democratic. With all its associated deomogogary.
This is a capitalist vs. socialist issue.
The problem is the socialists are being funded by the state and the capitalists to do their work.
It is the front lines of anarchy.
JJ
In Texas, yes.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
... or toxic waste from the oil industry?
I could buy the house I currently own in less than two years. What's your point again?
This isn't gentrification. This is super rich people pushing out very rich people, as compared to everybody else in the country.
If you're paying more than $1,500/month rent to live in a one bedroom apartment anywhere in the US, you're very rich. If you're paying $2,500/month to live in a one bedroom apartment anywhere in the US, you're super rich. The last time any poor people lived in San Francisco was the 1960's.
The rest of the US population not living in San Francisco doesn't have very much sympathy for you, except maybe the unfortunate souls living in Boston or New York.
I use the terms very rich and super rich, but feel free to substitute "less affluent upper middle class" and "more affluent upper middle class," if it makes you feel any better.
A couple decades back a blue collar worker could buy a house on 3 years salary. Can you do that today?
A couple of decades back people actually saved their money. I remember a time when almost no home had more than one TV (some not even that), Cable was considered a luxury (if available), not a necessity. You made a down payment on a car and kept it for years after it was paid off. Now it's more popular to lease a new car every three years or so. Even though most cars will last for well over 100K miles, if not 200K miles. If you wanted a house, you didn't buy new cloths every season with some designers name plastered on your ass and everything else you owned. You can actually survive without the latest iPhone. But most households have one for each person. That shit adds up fast. You also didn't buy things on credit. If you didn't have the cash, you saved for it. People who rent are probably two years salary in debt these days.
So yes, you can afford a home as a blue collar worker. But it has to be important to you. At least more important than much of the frivolous shit that most of us seem to think is a necessity today. I remember, years ago, refusing to get cable because I thought $5/ month was insane. I'm paying more than 20 times that for satellite now. And cable is even more expensive. I've been wanting to cut it off for years because there's very little worth watching, and I almost never turn on the TV. But my wife and daughter seem to think we must have it.
All with very healthy economy and housing prices are still affordable. Everywhere you look there are new construction popping up all over the place. And this boom in Texas should very least last a decade more with newly discovered oil in West Texas. I get the sense living in one of the top 3 cities in Texas is comparable to hustle and bustle of New York city during the early parts of last century.
Another cause of housing pressure is the increase in the US population. Here is a chart showing the growth of our population.
Wikipedia says, "Compared to other Western countries, in 2011, U.S. fertility rate was lower than that of France (2.02) and the United Kingdom (1.97).[9] However, U.S. population growth is among the highest in industrialized countries,[10] because the differences in fertility rates are less than the differences in immigration levels, which are higher in the U.S."
And a lot of immigrants (entire families, not just the workers) move to the Silicon Valley, because they get jobs there.
A couple decades back the impact of Prop 13 wasn't yet horribly visible.
Worse, thanks to Prop 13, corporations pay far far less, and thus are less likely to give up property for sale.
If you can't afford to live in the Bay Area, then don't. You can always find a good place much cheaper if you just expand your scope a bit. So you may have to add 45 minutes to your commute everyday. The idea is to build your wealth over time and not demand instant gratification.
Some days I get the sinking feeling Orwell was an optimist.
Irrelevant.
What was interest rates back then?
The relevant number is the % of income spent on paying interest on your mortgage.
---- Sig. gone.
blink... blink... wow. there really are people in the world who think like this?
Supply and Demand my friend. If you want rent prices to go down, you need to flood the market with more housing, not less. Only an idiot would think that limiting the increase of available houses while the population is growing would reduce the cost of said houses. But then I notice that you post as AC and I am probably poking a troll.
Some days I get the sinking feeling Orwell was an optimist.
My take is that tax law has fostered an environment where the investment classes are rewarded with tax benefits for tying up property with the intent of maximizing rents. Its a terribly unproductive use of financial resources, but it does allow for a "gentleman" class who is not expected to labor or produce anything for his income.
.
We even have the gall to assess "payroll tax" for any business creating jobs. Wasn't it enough that the business not only organized a way of not only paying a wage to someone else, then ratting out to the government that they hired Joe Blow, here's his SSN, and how much we paid him so the IRS can go extort their tithes?
The chickens are coming home to roost. We are amassing a tremendous population of "gentlemen" who do not work, others get welfare, we look everywhere outside our own country to get others to build our stuff under the aspect of "world trade" and "globalization", paying for these services with debt instruments.
This is one of those times I am not so dismayed at getting older and knowing my days are numbered. I have a lot of people who appoint themselves over me and are running up a helluva debt in my name, and there is nothing I can do about it. They will even pay armed security forces with money they do not have to enforce their agenda, while the populace ( me included ) do not know how to organize and defend ourselves in a like manner.
As far as I am concerned, the whole world is lusting after the whore of the Synagogue of Satan, worshipping the construct of supposed "wealth", where a small elite "owns" everything ( 'cuz they say so ) are playing and manipulating the rest of us like marionettes on a string for their amusement. They use dollars, not strings, but the effects are similar. The dollars can be created by them and them alone out of nothing, and they can change the rules of the game whenever they feel like it. I am compelled to follow, not make, the rules.
I am very pessimistic on this. I feel we as a nation have already sold ourselves into debt slavery, but we do not know it yet. The eviction notice has not arrived yet. I feel we are in the last days of the party that was America, and there is going to be one hell of a hangover.
Then move to the east bay. You can find decent family housing with good schools in Castro Valley for under 600k.
I know absolutely nothing about these things; so I'm actually asking here. Why does the city, I'm not saying every city, but I am saying any city, need to support infinite growth? There's water, there're hills, maybe that's as many people as can fit. Period. You're welcome to live anywhere you like where there's room. I'm sorry, there's no more room here at the inn. Find another.
I've zero interest in my city becoming a huge metropolitan core. I left the one that I was in to find fresh air, less traffic, country driving roads, and farm fresh food. I don't want another 5 million people to move into my city. Quite frankly, if they do, I'll leave, but that's a different issue.
California is only gaining population due to immigration from outside the US. You need to figure that those immigrants are lower educated, lower income people who are a net-drain on the system (for the first generation, not for the second+).
Almost all problems experienced by groups of humans are self-inflicted.
Prop 13 is a reaction to government interference in the local markets(see Serrano vs Priest and the fallout from it). All property owners pay based on their date of purchase, which is entirely fair. That said, Prop 13 isn't that big of a problem. Prices are just as bad in New York and they pay exorbitant property taxes.
Why do these people who live there and never upgraded their skills expect to be able to afford the city? If your brain poor and you can't afford it , you must move. That is free enterprise, you have no right to live on a million dollar street just because you exist. That is BS
You are an artist , well are people buying your stuff to afford to live there? No, tough move to a trailer park that over looks a junk yard, that is real life.
Stop crying and shut it.
Instead of building a giant floating barge as a sales tool, perhaps Google should have think about building a giant floating apartment buildings out in the Pacific for their employees.
The cost per square foot would probably be lower for their employees than a San Francisco apartment, and they wouldn't have to put up with San Francisco's ridiculous tax laws and building regulations. Besides, the commute to Mountain View by boat would beat taking a bus on the 101!
It's an interesting thought... Usually new people move-in, change the demographics, and out-vote the old Luddites. But if the Luddites start-off by demanding building restrictions before others can move-in, then those who would vote against them simply aren't ever allowed to move-in, so they don't ever get a vote.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
There is a huge amount of land in California the middle class can afford: the Central Valley. The air is so bad you are almost guaranteed to experience asthma or allergies, but you can swing it on as low as 30k per year in my opinion. Those kids living in LA, SF, SD who make 30k per year? They basically live in squalor(for America). They value the coolness of those cities so much they are willing to live 4 to a 2-bedroom, or get their own place and live paycheck to paycheck, or live with their folks.
Middle class can't afford San Francisco. A cheap house there is 800k. It isn't a question of sacrificing on a cell phone plan. The values are stratospherically out of reach for middle class earners.
Seriously, a couple decades ago you could go to a bank an open an account where the rates were at least competitive with inflation. These days, the typical interest rate is well under 1% with the Fed purposefully keeping inflation above 2% on the belief that inflation is good. Well, inflation isn't good, having inflationary expectations discourages people from saving money. Granted, you don't want long stretches of deflation either, but we're getting exactly what should have been predicted.
What's more, companies don't pay people based upon their value to the company these days, they pay the bare minimum they can get away with in most cases. Sure there are exceptions, but those exceptions have a harder time staying in business.
And no, blue collar workers around here would have a really hard time saving for a house when rent alone is typically aroudn $12k per year.
But so were San-Francisco _advantages_. Yes, I read TFA. And simply turning everything over to an invisible middle finger of market will only make it all worse.
That's not the only affordable area, by far. Half the state is desert, starting from just outside the L.A. Basin, and rent is extremely cheap there. The freeways make it possible to commute from bedroom communities there to large cities every day. And the air quality out there is great.
People predominantly choose where to live based on family roots, or jobs.
Go out where land is cheap, and there's probably no jobs there. It may suck to spend half your paycheck on rent, but it's infinitely better than getting no paycheck... And there's always the American Dream aspect of it. Everybody thinks if they move to a rich area, they're going to strike it rich, too... Sort of an investment in your future that way. Never mind how few make it, and how many people move away after a few years.
"Roots" are pretty simple... if you've got lots of family in an expensive area, you're not likely to move too far away, even if you're struggling. It's a big scary break to leave all your friends and family, and the only area and culture you've known, behind, all for cheap rent you might not be able to afford on your lower wages, anyhow.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
Buying a condo is now "directly participating in mass evictions"?
Making available free phone service, free office suites, free web hosting, free photo sharing and financing that with advertising now makes someone an "asshole"?
If this was true I could have a 100 year mortgage with really low % of income and end up dying and never owning the damned house in the first place.
But my wife and daughter seem to think we must have it.
So you're not really the man of the house. You are pussywhipped in the case of your wife and a people-pleaser in the case of your daughter. Gotcha.
No. I just know what's worth making an issue about and what's not. But at least I'm man enough to not post as an AC.
As someone who lives in Texas, this jives with the fact that unlike the previous California influxes in the '80s and '90s, the types of people moving are not the educated tech people, but indigent hipsters unable to land work in CA, so they flee conditions they made. Instead of well paying tech sector jobs, this wave is more interested in barista work, adding little to nothing to the community other than crime, rising rent and property taxes. The tech industry won't hire the new transplants, because a H-1B can be had with a CCIE for $16,000/year.
Problem is that this is a recipe for disaster. There are only so many short order cook and coffee slinger jobs. The transplants don't want roads (not "eco" enough), nor do they vote for bonds when it comes for basic police or fire protection. However, they will vote for $100,000,000.00 bike paths that are used by nobody. The Texas economy (especially central TX) is OK now, but it can easily collapse at any time, just because big businesses don't want to move here (water issues from all the new golf courses and power issues... both have power plant and water treatment plant expansion blocked by the Cali-"green" brigade.) Combine no new business (due to inattention due to basic infrastructure) with sharply rising real estate prices and a growing indigent population, and this is a perfect recipe for disaster. I'm seeing the gang tags which were gone in the 1990s reappear, and local areas have had general crime rates jump by 40% in a span of two years as per police blotter statistics.
TL;dr... don't move to Texas if you want work. NYC is having a renaissance and is the place to head to with crime at extremely low European city levels, and the businesses may not be "cool", but they do have jobs.
Heh, actually SF-like phenomenons are happening pretty much anywhere these tech companies locate. As someone who was born and raised in Pittsburgh and now is living in Tokyo after a stint in Europe, I was just curious to see how condos in Pittsburgh compare to what there is in Tokyo...and I was shocked. I was expecting them to be much, much cheaper but the reality was quite different. Tokyo was more expensive, but not by that much. I was talking with a friend(another ex-Pittsburgher) and he reminded me that both Apple and Google have recently opened relatively large campuses in Pittsburgh. This is what probably sent housing prices sky-high, the owners of these housing complexes knew that a lot of money was going to come streaming in. I cannot imagine this is sitting well with a lot of the poorer residents of the city...
Monstar L
It isn't even the cost of the land. It is the government regulation. If you could buy a whole block of 1 million dollar houses, tear them down and build a 5 story condo complex on the square block you would make a killing in SV. Only 1 town is letting that happen and that is San Jose and only near the light rail. Every stop has a massive apartment complex going up. All the other town regulate any new housing to make it almost impossible to make more units available.
You obviously don't understand how property tax valuations are done in this state. Interior modifications do not qualify for a reevaluation of home value, only additions may be reevaluated and those are calculated separate from the existing square footage(so your whole property value does not increase, only the new square footage is evaluated at current value).
Just set up an Omni Consumer Products division and take over Detroit.
But if the Luddites start-off by demanding building restrictions before others can move-in
That's apparently not how it's working out, though. Those moving in have money, and it costs $500,000 to build a single 800 square foot unit. Guess who gets the unit?
DATABASE WOW WOW
I, personally, have no need to move, having gotten in some time back and now have a house that has gone *up* in value over $800K over the past few years. The housing prices are a problem because it makes it difficult to hire people, because the commute from Castro Valley and other points East is... ummm... unpleasant. Your attitude seems rather parochial and insenstitive, and doesn't really move the ball forward in either clarifying the problem or suggesting a solution.
So you're saying, relative to pay, homes are about twice as expensive.
Did households have one wage earner or two 'back in the day' you speak of? The answer is one, or maybe one with a career and one with a part-time gig. Now pretty much every household has two full-time salaries coming in.
Back in the day, it was the single guy who had all sorts of disposable income compared to everyone else, because he had nobody else to pay for, whereas the married guy had to pay for himself, his wife, and his kids. Now, a single guy (or girl) needs to earn as much as the couple next door, who have two salaried positions, in order to participate in the housing market.
The housing market is high because there's twice as much money to spend on housing, and as years progressed people have collectively made the choice to spend that extra money on a house. If people had collectively decided to save/invest the wages of the second income, or spend the 'extra' money on other things while collectively deciding to NOT put that extra money into housing, things would look very different today. In most of the country, housing values are to the point where a couple with two full-time jobs are almost always necessary to buy a home. The areas where this is not true is where it is still more likely for the woman to stay home to 'raise the kids' (think of the Bible belt, which includes the cheap housing in Texas that people always point to).
Source: I'm a single guy and I earn about what my married neighbors bring in together. If I didn't, there's no way I could live here. My other options are to get married or bring in roommates. Neither of those appeal to me, so I run a business and hold down a full-time job to make ends meet.
or explode in your face, like Texas.
That was a small, old, family owned, nitrate plant, in a small town, that had been broke into several times. only 9 people worked at that plant. It is hard for small farmers to make a decent living. Taking risks on low cost nitrate fertilizer is one of the ways that can help out.
I also heard that if you sell a CA house, and buy a CA house, you pay taxes on the fist house, plus the difference between the two, so you buy a house for $50,000 (and are paying taxes on $50,000) and sell it for $1,000,000 and buy another one for $1,050,000 and pay taxes on $100,000. But then, I've never lived in CA, so I wouldn't really know or care how it works. It's just funny that so many claim it works one way, then someone else will correct them. For something that's so simple, it seems very complex.
Learn to love Alaska
THE reason California's personal income taxes are so high is that nothing can be collected through property taxes. Property taxes in California are in a perverse way the same as rent control. The property tax pricing has gotten so far out of whack due to Prop 13 formulas that the only way the state can get any revenue is on personal income tax. Of course where people always own home, personal income tax is cyclical so a lot of the boom - bust cycle plays out in California's budgets because the state is levered up on the economy. Economy does well, everything is great. Economy does poorly, whole thing fall down.
Right, all those San Francisco Republicans... Did you eat paint chips as a kid?
I could pack up and move to Hemet (fucking) CA if the only consideration was cost of living. But I also don't want to drive 3 hours to get to work and there's certainly no work in Hemet. With modern "corporate" america killing telecommutes (because it makes the managers nervous that you might be fucking off on the internet) but have no qualms about outsourcing that same work to some guy around the globe, who may or may not be fucking off on the internet or even qualified for the job, but he costs a third of what you make, so fuck it) it still means many of our jobs that could easily be done anywhere broadband is available are brought back in house. I could easily do my job pretty much anywhere in the country. I imagine most start-ups could do the same thing. "Oh, but I can't bug the guy next to me!" You obviously haven't discovered Hangouts, then. :) But seriously, if what you need is "face time" then I'll turn on the webcam and you can watch me watch hulu.. I mean code and do the cam "walk by interruption". And I don't even have to put on pants or spend any gas money to do this.
I guess the point is, people move to where the jobs are. That hasn't changed in a couple hundred years.
If you were me, you'd be good lookin'. - six string samurai
Not to mention, a lot of those "rich areas" were "cheap areas" when those roots were laid down. Which is kinda what the people in SFO are bitching about: "It was cheap and perfectly fine before the .coms showed up. Now everyone wants to live in the cool part of town, and I'm part of the reason it's the cool part of town, but because they make so much money, they can price me out of my own home. So I move, but where? My job is down the street and I can't afford to live in the neighborhood, so where to? Oakland? HA!" And there's plenty of people who would say "tough titties, life's a bitch" to that. It's even worse when you've got someone living on fixed income and suddenly finds themselves having to move at age 80. Can you imagine apartment hunting at that age? I certainly can't.
If you were me, you'd be good lookin'. - six string samurai
It's not quite so simple as supply and demand, however. The problem is that if you flood the market with more housing given the current price levels and demand, prices would take a LONG time to head back down once the demand is met (and that's assuming that the demand is ever met at all). Simply put, there's just so much existing scarcity that even massive amounts of new development would only serve to blunt the increasing trend in housing cost, rather than actually hoping to bring it down.
That's not to say development is not part of the solution--it absolutely, absolutely is--it's just that the current state of affairs is so entirely fucked up, and has been allowed to persist for so long, that what you'll see if you open the floodgates of new development is that in the short term, you get all the negative consequences (gentrification, displacement) while serving only the ultra rich who can afford those new housing units, but none of the long-term, aggregate benefits of lower housing costs that are decades down the line.
They Bay Area is one of the few economically active places in the USA, that's why housing is expensive there.
If you want cheap housing, go to an economically dying area, like Detroit; or a place with no regulations such that chemicals leak into your house or explode in your face, like Texas.
Surely San Bruno would be more to one's liking...
Stated like someone who has never lived under an airport noise footprint. There's a reason that you see all the boarded up houses right under the flight path in all the movies... no one actually wants to live there.
Prop13 means that neighbors cannot move to another house down the street since then they couldn't afford to pay for the property tax.
And without prop 13 owners were being forced out of their existing homes because they couldn't afford the ever increasing property taxes. Pre-prop 13 California tax policies were their own gentrification forcing out those of more modest or fixed incomes from regions of increasing property values.
It was very much like what is happening in SF, whether it is rent or taxes that cannot be paid hardly matters to the person being forced to move.
You buy a house and your yearly property tax is based off of a calculation typically in the 1-2% of purchase price value. It is limited to 2% increase per year if the market grows.
I was talking with a friend(another ex-Pittsburgher) and he reminded me that both Apple and Google have recently opened relatively large campuses in Pittsburgh.
150 employees in an old cookie factory for Google, and 100 employees for Apple retail is hardly "relatively large"...
Many blue collar workers earn more than white collar workers; jobs like plumbing, welding, etc. pay very well. And in lots of places around the country, housing and land are cheap.
As a software developer in the Bay Area, you probably live a lot worse than as a welder somewhere in a Midwestern farming town.
Wow, I am so sick of Californians stroking themselves. There are 49 other states in the country filled with people equivalently valuable to those in Cali. Try to keep that in mind.
They Bay Area is one of the few economically active places in the USA, that's why housing is expensive there.
If you want cheap housing, go to an economically dying area, like Detroit; or a place with no regulations such that chemicals leak into your house or explode in your face, like Texas.
The Bay area is boxed in by water, limiting available space and it has a high-population density. The land is also scenically desirable. So yeah, rent is going to be high.
Other cities in the US and across the world have the same issues, but don't resort to socialist approaches such as rent control or have the same sense of entitlement (for better or worse). They just let capitalism work things out.
Amazingly enough, they are also able to restrain themselves from insulting other states when expressing any displeasure online. Amazing!
I'm not sure where you live, but you shouldn't lump the illegals in with the legal immigrants. Most of the legal immigrants I've met, including the poorer ones in the poorer neighborhoods are putting more into the system than they're taking out. The poorer ones just work multiple jobs. The net-drain are from the older generation, long time citizens. I see many of the first gen immigrants with college degrees and decent paying jobs, and come from all over. It's a diverse melting pot here. Maybe you need to move to a better neighborhood.
Many of the wealthy to moderately wealthy want the illegals here. They must or they wouldn't keep paying them under the table to work all those menial jobs. They should be paying them more. Instead, they have the rest of us pay them taxes to support the system. The rich should pay more taxes to subsidize the impoverish immigrants that they underpay. The rest of us working class shouldn't be subsidizing their cheap labor pool.
THE reason California's personal income taxes are so high is that nothing can be collected through property taxes. Property taxes in California are in a perverse way the same as rent control. The property tax pricing has gotten so far out of whack due to Prop 13 formulas that the only way the state can get any revenue is on personal income tax. Of course where people always own home, personal income tax is cyclical so a lot of the boom - bust cycle plays out in California's budgets because the state is levered up on the economy. Economy does well, everything is great. Economy does poorly, whole thing fall down.
Dig a little deeper:
Prop 13 sets municipalities AGAINST housing. Since they can't get their money in property taxes, they take a chunk up front in planning and permit fee's. Last time I checked, many bay area cities are charging upwards of $140k in planning and permit fee's to build a single family home. That means that the barest wreck of a house with a valid occupancy permit is worth $140k. So that jacks up the prices of all houses, and gives them one way to get around prop 13.
The next way is to encourage you to move every few years. If you stay in your house, they never get to reset the property valuation. My parents are paying tax rates that last saw a major adjustment in 1978. I work in tech, making good money, and I can't afford to buy the house across the street from them in the east bay neighborhood I grew up in. So I commute in from a horrible distance, and hope I can make enough coin to move back in closer. When I do, the cities get to reassess the value of the house I sell and the new one I buy. The result of this is the transit problems never get entirely fixed. Most of the bay area freeways were built in the 20 years following WWII. Now days they have simple bypasses and rail extensions that have 20 year planning timeframes, and 10+ year construction times.
On the whole, California has rigged its economy to blow bubbles. That's how the cities and municipalities get by with the wreckage left behind by 40 years of NIMBY, tax and spend on free everything vs. proto-TEA Party types, all with the ability to amend the state constitution with 50% + 1 vote... The rich banker types have it down.... Let the system blow a bubble, cash out & crash, reshuffle, repeat. The people are just pawns.
After the first dot-com boom collapsed, about half the twentysomethings in SF left. After this one collapses, that will probably happen again. Face it, most of the useful things in "social" have been done.
I pay five times what my neighbor pays in property tax for the same model simply because my neighbor bought in 1977 and I bought in 2010. Prop 13 is good for older people who have been here a while but not so good for people trying to buy their first home.
I can understand the desire to prevent the government from raising property taxes too quickly, but there's really no good reason to set the annual assessment increase limit below the normal rate of inflation.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
Not quite, it is just that middle class in California makes $100k a year. Look at the average salaries of BART employees for example. More than 2/3 are north of $100k. Family income of $200k a year is solid upper middle class level. You don't start to even think about the term "rich", until you make near to $500k a year per household.
If programs would be read like poetry, most programmers would be Vogons.
So if you bought a house for $500,000 10 years ago, and it's now worth $5,000,000, the taxes will be no more than (0.02 * 500,000 * 1.20) = $12,000, but if you sell your $5,000,000 place to buy another $5,000,000 place, your tax will be no more than 0.02 * 5,000,000 = $100,000. The massive financial disincentive to selling also helps inflate prices, making the problem worse.
Learn to love Alaska
I pay five times what my neighbor pays in property tax for the same model simply because my neighbor bought in 1977 and I bought in 2010. Prop 13 is good for older people who have been here a while but not so good for people trying to buy their first home.
How is it not so good for buyers? It seems buyers would be paying taxes based on a current assessment with or without prop 13? In other words prop 13 seems irrelevant to that initial assessment and tax rate, that it only affects increases not the initial rate.
As a software developer in the Bay Area, you probably live a lot worse than as a welder somewhere in a Midwestern farming town.
My grandfather and father were welders. They lived quite comfortably about 40 miles outside of New York City. My brother inspects pipelines and lives quite comfortably about 40 miles outside of San Francisco. You don't have to go to the midwest to find affordable living. You can stay surprisingly close to the "cultural centers". My siblings and I did not lack visits to NYC's museums and other educational offerings, and occasionally attended various plays and performances.
Anecdotal. I went to CMU, worked in Pittsburgh for a few years after graduating (late 90s). Moved to the Bay area for ~11 year and then moved back to Pgh to take care of aging family. I can tell you first hand the *average* real estate prices in Pittsburgh/western PA are FAR FAR cheaper than anything in the Bay Area, including Oakland, CA. I'm know there are expensive condos/houses in Pittsburgh (1+ $million) but those are extremely rare. A very decent house (and property, which you won't ever get in the Bay Area) run closer to 100-200k. Anything more than that is extravagant, a historical landmark, or in a uniquely high demand location. The cost of my house in Pgh is equivalent or less than most down payments on houses in the Bay Area (again, anecdotal).
The company I work for in the Bay Area (kept me on as remote employee after I re-located back to pgh) is actively trying to limit new hires in San Francisco and instead build out an office in a city comparable to the expense of Pgh (ie, way cheaper than the Bay Area).
Point being, smart Bay Area (or similarly expensive cities) companies who continue to grow are looking at other, cheaper cities as branch offices (also great for Disaster Recovery). From a US employment perspective, imho, this is far better than outsourcing to India/China.
While tech companies that are doing well can drive up the real estate prices, there are numerous areas in the US that can easily and happily accommodate the influx of high earners while not driving out large segments of the population making less money. Whether or not they can find qualified employees who either already reside in those cheaper areas, or are willing to relocate to them remains to be seen.
YMMV
A lot of it also has to do with the fact that the major rental companies don't compete on pricing because they all use the same third party software and algorithms to determine how much rental units should cost. Conveniently, this lets them avoid charges of price fixing/collusion. This article has more information: http://www.nytimes.com/2011/11...
Well first off, your scenario is wildly outlandish. My grandparents home in Los Angeles County took 35 years to grow 10x in value. Anyways, why the need to sell your house? Why not target the federal government for supporting the home loan interest deduction, which promotes massive financing that props up pricing? Why force people out of their homes because of unreasonable property tax hikes? Home values were growing and property tax values were spiking, which helped promote Prop 13 in the first place. It's not right to force people out of their homes by making them unaffordable through increased taxation via inflation. People have no control over that. No amount of good or bad decision making can influence that.
Yes, it is quite large, in relative terms. The city of Pittsburgh is only about 30,000 people, meaning the % of the population in those 2 centers alone accounts for roughly 1% of the population. And since almost all those people are outsiders, the demand for real estate has had a sudden, pronounced spike since although the employees at those 2 corporations only represent about 1% of the population, they represent a much larger % of the population looking for housing, since at any given moment most people are staying put. Staying put that is until their landlord does everything in his/her power to boot them so they can rent out to someone who is more profitable.
Monstar L
Pre proposition-13, another hazard was "market-value adjustment" (MVA) of property taxes. Your neighbor decided to turn a sideyard into a ten storey condo. Initially, neighbors didn't complain, but then they were hit by a massive property tax increase because suddenly their acreage gained the market value of a ten-storey condo. So they protested, and height limits were put on buildings.
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
People have no control over that.
They vote for the laws and politicians that spend enough to require massive tax increases. Of course, the solution is to move. I did, and it was a great thing. Lower taxes and more services.
Learn to love Alaska
Yes, it is quite large, in relative terms. The city of Pittsburgh is only about 30,000 people, meaning the % of the population in those 2 centers alone accounts for roughly 1% of the population.
Off by a factor of over 10; as of 2012: population of 306,211. That's 0.08%, not 1%.
It sure looks like someone is trying to explain a housing crisis without even looking at how money is put into existence.
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
That "fracking" takes too long. Would you settle for a tropical cyclone? The more equal pigs are working on it as you speak.
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
But so were San-Francisco _advantages_. Yes, I read TFA. And simply turning everything over to an invisible middle finger of market will only make it all worse.
Actually, studies comparing areas with rent control to areas without, controlling for other factors, indicate that rent controls cause lower housing supplies and higher rents. The market actually does a pretty good job -- certainly far better than planning commissions achieve.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
Wrong. Everything goes down if the builders can continue asking millions for homes that were built using only a tenth of what they are asking. It will not do anything doubling or tripling the number of homes if no one can afford them.
Religion: The greatest weapon of mass destruction of all time
This is unadulterated horseshit.
Median gross rent in Pitt is $674, in SF is $1362. source.
The simple answer is for the tech companies to move. There are a lot of places that are nice that they could move to.
Texas: Austin, Dallas, and Houston are all thriving areas with a large tech presence.
Florida: Orlando, Melbourne, Tampa Bay area, and Palm Bay all have large tech companies not to mention NASA, UCF, and UF in Gainesville is not far away. In south Florida you have pretty much all of the south east Florida coast including Boca Raton the home of the PC. From Port St. Lucie south you have a lot of reasonable housing and a lot of biotech moving in as well.
North Carolina: The research triangle is pretty nice and home to Red Hat and SAS.
Or go crazy and head up to places like Kalispell MT which a great place to live and if you are into skiing you might like the winters. Not to mention the availability of near by wind power.
Or buy up large areas of Detroit and build or renovate lots of old housing.
Lots of great places to live in the US with low costs of living the fixation of the SF area isn't that healthy for industry. Frankly I fear the over abundance of wealth and venture capital in that one area is why you see lot of odd ball startups that fail while there maybe a group of really smart people in the University of Montana that have a really good idea that can not get funding.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
A respectable opinion at least, and better than I expected.
Like most such things, the author downplays esthetics and fashion-- why is New Urbanism winning? Demographics! Now me, I would say New Urbanism is winning because it's (1) it's right (2) it did a nerdy-to-sexy transistion.
This is the first I've seen of the Vida project, and that architech needs to be shot: "Everyone loves the wavy look of bay windows, I'll make the windows wavy in the *vertical* direction! I'm creative!"
No wonder no one wants to see any new construction.
One of the big reasons no one is excited about seeing big housing construction projects is that no one believes they're going to get it right: nearly everything in the US built since WWII is horrible.
Eh, living in Pittsburgh currently I promise you there's still a lot of very cheap housing here within a bus ride of Pitt/CMU/Google. Hell, I know PhD students who bought houses/apartments. Sure, if you want to live within a few blocks of those places it can get a bit pricey, but that's true anywhere.
weinersmith
It's kind of funny that you can be walking around here in a normal neighborhood, turn a corner, and suddenly see a house or row of houses that you're sure must cost a million $$ or more. And most of them are so breathtakingly beautiful....
weinersmith
Why not target the federal government for supporting the home loan interest deduction, which promotes massive financing that props up pricing?
This.
If both man and wife are working full time jobs you have to spend more money putting your kids into nannies, possibly have to spend more money on meals, probably have to hire housekeepers part time to clean the house and do minor chores because you do not have the time anymore. With a large family that second salary becomes essentially worthless.
I do agree however that one big reason for the average salary income to have go down in real terms is because there are more people working. With women in the job market it is hardly surprising with twice the workers you get half the wage values per worker.
Considering all that old housing, I'd say probably.
weinersmith
Tutorials iOS http://www.tutorials-ios.com/
Texas/Florida - You have rednecks and six inch long cockroaches that fly. Hot and humid and depressingly flat. No.
North Carolina - Hot/humid alternates with cold/humid, in an area overrun with rednecks and completely lacking in decent food (except barbeque). No.
Montana - Constant wind, two meters of snow, more rednecks, jello is considered a salad. No.
Detroit - All of the above disadvantages (except the roaches don't fly), plus you're in Detroit. No fucking way in hell No.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
Funny how bigotry is so popular when it is the right kind of bigotry.
Rednecks in South Florida? Really? I guess you never have been to Miami Beach or Palm Beach? I often drive by Rolls and other exotic cars. I work in the Palm Beach area and the company has a clean room we use to package our ASICs.
As to Texas? Ever hear of SXSW? Austin is a rather popular place with tech.
North Carolina? I guess you don't know about SAS and Red Hat.
I suggest you learn a bit more before you expose your bigotry and ignorance on such a grand scale.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Lived in the sweltering armpit that is Florida for a decade one year. Never again will I step out of the airport at Miami. Haven't been to Texas in two decades, but nothing that I hear from anyone living in the area makes me think that it has gotten any cooler, any less humid, or that mountains have suddenly appeared in the state. And I really don't care if there is some tiny corner of either of the Carolinas that has managed to acquire a population with an average IQ higher than the ambient room temperature, you're still in a state only slightly less backward than Louisiana or Pakistan.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
As opposed to a city where people use the public street as a toilet or attacks people if they work at a tech company?
Florida has a lot of smart people that work at the KSC, Raytheon, Boeing, Lockheed Martin, RIM and several bio tech firms are moving form California to Florida. Also are roaches do not fly. Please stay in California because it will soon be like Detroit and the Rust belt when it becomes the crack pot belt. Eventually companies and workers will get tired of the abuse and move. Even Oregon and Washington are good options for them to move.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
And that matters why?
The cost of living there is interest + maintenance.
If you had the money already, the cost of living there is the interest you could have gotten on an investment of similar risk + maintenance.
---- Sig. gone.
Actually I'm in Seattle rather than California, grew up in redneckland in northern Michigan. Those things you call 'Palmetto bugs'? Those are a species of tropical cockroach. I remember stomping on one, grinding my shoe to make sure it was dead, picking up my foot, and watching it run away. Vile things.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
Yes they are tough and yes Summer in Florida is not great unless you are the beach but it is no where near as bad you think. Lots of people seem to like being hot. North Carolina is also not as bad you you claim. The mountain areas are very nice. Dallas, Houston, and San Antonio are all nice places to live depending where you are. Seattle? I actually really like that area but being from South Florida I worry that the would sink into depression if I lived there for any length of time. I do like sunlight. I went to Victoria for my honeymoon and would rather live there than Seattle :)
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
In fort lee I rented my second floor apartment for 1400 and that was a simple 2 bedroom for 1400.00. I'm guessing but if I still owned it I would be mid 2300 to 2800's
if you see me, smile and say hello.
Plus you'd be living in Hemet...
Are the wife and daughter men? He's still the man of the house, he just got outvoted.
If you must moderate, please moderate as irrelevent, not something bad, because I'm sure someone will find this interest
But it eventually happens, and if you limit tax increases to 2% per year, homeowners get a tax cut in real terms most every year.
Are you saying that people should never move? I can think of a few reasons: To change jobs. The kids have moved out, so you don't need a big place (especially useful as it vacates a big place for new families with kids). You're too old to go up and down stairs. You need cash for retirement so you want to downsize from your suburban home and move into a small one story condo. This system breaks the normal lifecycle of home ownership.
Absolutely! Provided it was phased out over a number of years, I'd vote for this in a heartbeat.
You can get past the "forcing people out of their homes" problem in a couple of ways. The first would be to allow people with little to no income (seniors, for example), to have the tax assessed against their home and have it taken out of their estate when they die.
The second would be to move to an income tax and forget about property tax entirely. Property tax causes these sorts of problems by its very nature. Property isn't liquid, so you can't use property to pay taxes on property. Rich people have lots of property, so they pay more (in theory). Old people don't have the income to pay property tax, so we give them a break. Basically, we're fiddling with the property tax to try to make it act like an income tax, but with the nasty side effects of all sorts of terrible market distortions. I don't get why we do it.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
The article linked to by the OP is informative and well researched, but it is driving an agenda to complicate what is really very simple, something every commentator on the home purchase and rental market gets right away, that prices are simply being driven up by demand in a restricted market. The article tries to explain why the market is tight through a complex argument that is designed to exonerate the failings of judgement and greed that drives it. It misses the notion that the problem is nothing new, that it existed back in 1970 before Prop. 13 and rent control and when most of the factors were exactly what they are today: politicians are seduced by the tax revenue from business and so they encourage development with little or no regard to the side effects. To split hairs about demographic preferences that young techies who work in Social Media companies vs. those of electrical engineers who make hardware down in Santa Clara doesn't account for the inflated prices that began to rise in 1970 and which were kept up by the tax burdin placed on buyers of existing homes after Proposition 13 passed in 1978. The cities are locked into overassessing property values both by the tax burden and the demand, and have been long before there was incleased demand for housing in San Francisco.
The argument does not explain how sale prices down on the Peninsula have resumed their insane appreciation as 1 br 1 bath cottages go for more than $1 million in Menlo Pakr and Palo Alto and rent increases follow suit. Clearly economic expansion in Silicon Valley continues and the forces that drive it do not care about ridiculous side effects.
Also, look at a map. See how much flat ground there is to build on. This is not L.A. and although the article, obviously written from a pro-business point of view neglects to say that height limits have a practical benefit in a seismically active region where fire and getting to upper stories of multistory buildings is a serious risk. That is what the recent Mission Bay fire in apartments under construction in San Francisco taught, and it stretched the resources of SFFD to contain. In the event of a M = 7.5 quake on the San Andreas or Hayward fault the risk of fire is still very great. More buildings and people were lost in 1906 due to fire than the quake itself and San Francisco is about as vulnerable to that kind of destruction today. There are more than 1000 buildings in S.F. and that many in Oakland that will sustain major damage from the expected large quakes on nearby faults. If you think that the Loma Prieta Quake on 1989 is as bad as it gets, think again.
I'll bet the real estate agents who sell over-priced properties to people with cash, and most of these are investors, not people who intend to live in those properties, do not tell them of the risks from quakes, the fires they are capable of starting, wild land fires, and landslides in steep slopes. The venture capitalists don't care either, and the politicians who booster the business investment don't care either. I will smile at all them ironically when it all literally comes crashing down or when they have to leave because the congestion on the freeways has become so great that it is beginning to cut into productivity like it did in 1999. Then again, if we really do live in a fool's paradise and especially with regard to the world economic situation, a crash like 2008 is coming and that will rain on their parade. Maybe Rick Perry should have seduced all those companies away, and Texas would have been taught the downside of development.