Why one of America’s richest states is also its poorest
economist.com
economist.com
This is the problem: "High rents reflect the success of California’s businesses—but also decades of low investment and over-regulation. The California Environmental Quality Act, passed in 1970, aimed to ensure that environmental concerns got a proper hearing in planning and development. In practice, the act has become a NIMBYs’ charter. Four-fifths of all suits filed under it have sought to stop infill development in cities (ie, on land already zoned for building) even though this usually has a smaller environmental impact than building on green fields. California’s development and impact fees are about three times higher than the national average. Zoning laws and parking requirements are onerous, too."
SF isn't even the worst offender compared to cities like Belmont and Palo Alto. While there are real safety concerns that limit development since 1. we're in earthquake country, and also because of 2. some Superfund sites in parts of the Bay Area; most of the problems just stem from current homeowners of single family homes (NIMBYs), who do not want high-density housing near their house. Until this changes, no reasonable amount of income assistance will solve this problem for the poor or the middle class. There's just too little usable land here to be exclusively used for traditional single-family homes.
This has more detail about the problem in SF: https://www.sfchronicle.com/politics/article/How-powerful-is...
PS: The first US colonies actually took a crazy amount of capital to set up. The west was largely settled by people in covered wagons which for the time period also represented a lot of capital ~50,000+$ in 2018 USD.
But the west was first colonized by the Spanish.
One of the first Anglos to reach Alta California was the Bartleson-Bitwell party https://en.m.wikipedia.org/wiki/Josiah_Belden
For example, basically all of New England that isn't on the coast was settled by people who got so fed up with the puritanical authoritarians in Boston that upending their lives and moving a few days ride west (and risking starvation/financial run in the first few years) was the better option.
The underground railroad gets a lot of coverage, but it's peak never reached 1,000 slaves per year where 23,191,876 slaves where part of the 1850 sensuous. So, people are talking about a migration of ~0.004% per year.
Cheaper land makes being a farmer vastly easier. The same capital allows for more either more farm land or better farm land. Remember, farms are just like any business you can extract more money when the output stays the same but your costs drop.
Also, saying significant wealth is required to setup a colony is very different from individuals having that wealth. Consider the wealth required to build a 80 story high rise generally vastly outstrips the wealth of people living in it.
PS: That said, looking at modern immigration even illigal immigrants to the US tend to be better educated than the average peopulaion of their origin countries. Likely becase immigration is a lot of effort, weeding out the less motivated and capable.
Twenty-two dollars.
That adds up quickly.
"Back-breaking" isn't just a figure-of-speech; modern medicine isn't (yet?) advanced enough that a rational actor should ever choose construction work over something else; and there are just enough desperate people around that I doubt anyone is willing to pay the true cost of construction-work to a not-as-desperate would-be construction-worker.
The limited resource here, then, is actually: desperate people who are still smart enough to do construction work.
I can't wait until construction becomes a non-human-powered activity - even if it still requires a human to control the machinery.
That trend is so powerful precisely because lots of trade-working parents don't want their kids to suffer the kinds of medical bills, chronic pains (with potential resulting opioid addictions) and stunted healthspans, that they do.
Granted, construction is rather especially bad among the trades in this manner: things like welding are not quite as physically-demanding.
Their homes would do quite nicely as office-parks or some other commercial property, but those people both are rich enough and value their places irrationally enough, to [pay out their butts, and/or lose out on a big payout, to] stay there instead of taking their share of what developers think they can earn from that land.
I'm assuming there's political pressure from wealthy land lords who don't want their cash cow slain?
Thats how revolutions start. Be sure to do a door-to-door inspection for firearms before tearing down someone's house without their consent.
OR, people in the Bay Area can MOVE. Why can't you move?
Why can't you move?
The only case where property values would drop is if you were in an area that exists unnaturally due to how low density the city core is. The trick is though if California ever fixed this problem the immense influx of capital investment, job creation, and migration pressure since the economy would be kicked into overdrive would drive those property values back up and way higher than the currently crippled density environment can allow. It might take longer than some owners are comfortable with (ie, decades) but considering how much growth Cali sees while stabbing itself in its own foot I'd imagine almost any currently developed and commutable single family home in any major metro area of the state would be worth twice what it is now in 30 years (adjusted for inflation) if they allowed unlimited building because the manic development you would see would drive density up in all directions of city cores for miles around each year.
Before I moved into my current place, I was in low income HUD subsidized housing. It was a brand new building with rent control. Rent control worked great, but the owners didn't keep their side of the promise. Maintenance took months, all amenities we paid for were broken, access to the garage to store our vehicles was broken for 4+ months, elevators were broken for months at a time.
There is no way to get people to freely build affordable housing in or around larger cities under this current system.
This is largely true but needs more qualifiers. There are non-profits that have done this successfully in cooperation with federal and local governments for the long term, for example Arlington Housing Corporation
https://www.ahcinc.org/
Like many business models it is often a challenge to pull off successfully and attempts to make it work without the right combination of people with the right skills, motivation, long term vision, persistence... will fail.
Yeah but the problem is you can’t. Additional capacity always comes in onesie-twosie, not fast enough to outstrip the seemingly limitless demand to live in the area. Put up a couple thousand unit high rises? Big deal, won’t affect prices one bit, they’ll get snapped up before breaking ground. You really would have to build a million units all at once to do anything, and logistically you can’t.
Comapre to Massachusetts. We have a law against snob zoning. So while there is a homeless problem, we're making steady progress because of developers buying people out and building apartments. (Mind you're, they're mostly buying parking lots, gas stations, and mini strip malls and putting housing there. And nobody's eminent domaining anybody.)
If you could just do something there are a number of solutions to housing affordability. Building, zoning, public transport, taxes or mortgage regulation. None of these by themselves solve the actual problem.
Boo-hoo. Poor rich people.
Then sell it and stop being that person. There's no obstacle. The interests of the landlords financial situation requires no extra care, let alone at the expense of tax payers or citizens at large.
Everyone person that buys a house is responsible for that decision, and punishing renters to protect them is straight up poor payers for the rich.
And these one million new apartments...where shall they get their water to drink or send their waste water? Where will these people park? What highway will they use?
Because the mechanism by which NIMBYism works is democratic control of the relevant governments, not a few hold outs refusing to sell out to a government-approved development (because if there was a such a development, it would use eminent domain from the outset, so such resistance would fail.)
Eminent domain isn't so much fun when its your stuff is it?
I wonder though if there is one for the job part as well. Even if you fix the housing problem to some degree by having much more capacity and cheaper housing. I doubt this would stay stable, if the Bay Area continues to grow - I don't see any serious sign that this is not the case - the problem will emerge eventually again. I wonder how the job market would have to look like to make this stable.
NIMBYism is not the origin of the problem, but the consequence. Nimbyism pays off because for the owner, increased rents is a stronger incentive than increased value. The more people go into, for example, San Francisco, and less units are build, rents go up, and city revenues go up as well. Thus NYMBIsm has a strong incentive to be used.
The situation would be exactly opposite if San Francisco did not charge, for example, Sales taxes to everyone, and used prop taxes to levvy its revenues. Ideally, they would use land value tax. This would change the basic incentive to be nymby: the more the city spends and builds, the more people in low density housing will have to pay. And then they will be asking themselves for developers to build and give them units, which is what happens in cities that have alligned incentives.
This is an important idea: this means that the solution is NOT to prevent NIMBY, because you cant fight against powerful incentives.
The single most powerful thing the city could do is move sales taxes into land value taxes: every worker's income will increase, including landlords, but will shift the burden from poor to rich, from landlod to renter, and from non-labor to labor.
The more your house increases in value, the more tax you pay.
I love Seattle for its shitty weather and somewhat affordable housing for how much companies are willing to pay.
Drives me nuts that my left-wing brethren often oppose upzoning, development, increasing density.
Rent control is not a long term fix and ultimately makes the problem worse.
Our democracy is possible BECAUSE of capitalism AND socialism, not despite one or the other.
There's more housing than people in the USA. At this point, the most likely durable remedy is UBI, thereby enabling people to repopulate (or stay in) the interior, mitigating the urbanization trend.
Did you know that it is illegal to build apartments in over 73% of San Francisco neighborhoods?[0]
That's why I don't support this ideal of tax proposition to cater for homeless as it is being introduced. The proponents are just chasing shadow while leaving the substance. Instead I suggest proposition to dismantle zoning as the first step in the right direction.
And instead of stepping back and analyzing what's causing this disaster they double down on their existing agendas.
Some additional stats on homelessness and California:
https://streetlifesolutions.blogspot.com/2018/05/california-...
https://www.theguardian.com/us-news/ng-interactive/2017/dec/...
Surveys typically suggest that only about 10 percent of the homeless in California come from elsewhere. This leaves 90 percent of them as Californians who had a home there at one time.
Thanks in part to the lovely weather, California has the most unsheltered homeless. IIRC, it also has the most chronic homeless.
I spent nearly six years homeless, most of it in California. I left the state to get back into housing someplace cheaper.
I strongly suspect that the insane California housing prices are a major factor here, much more so than mental health issues or addiction. For every 100 poor families on the West Coast, there are only 30 affordable homes. [2]
California has about 8.5% of the US population. There is something very wrong that it has 25% of the homeless population.
[1] https://en.m.wikipedia.org/wiki/List_of_states_and_territori...
[2] https://www.geekwire.com/2018/every-100-families-living-pove...
Also referring to the geek wire article, low income doesn’t necessarily mean homeless, especially chronically homeless. CA just tends to help them move to low income housing in cheaper parts of the state
I think a much more likely explanation than "California just churns out crazy people at a phenomenal rate" is "There's probably a connection between the insane housing prices and the crazy high levels of homelessness there."
For example, San Francisco: http://hsh.sfgov.org/research-reports/san-francisco-homeless...
Los Angeles: https://www.lahsa.org/documents?id=2059-2018-greater-los-ang...
According to the 2017 SF survey, 10% of homeless were out of state when they most recently became homeless. According to the 2018 LA survey, 14% were out of state.
I am not sure if you should entirely trust these numbers, or if they are asking exactly the right question---everyone involved knows that there's a right answer and a wrong answer to the question---but it's the best we have.
And according to a UCLA study, "65% of unsheltered homeless individuals have lived in the county for more than 20 years." That means 35% have been here less than 20 years.
http://www.latimes.com/business/la-fi-ucla-anderson-forecast...
And how many of the homeless were born in the county? I suspect it's a very low considering so many residents in the county of L.A. aren't native born.
There's a funny advertisement for the Grinch movie here in L.A. which rings true. The line says, something like, "My favorite time of year is Christmas, when everyone goes back to where they came from."
Sounds made up. Source?
Only if California is reduced to the touristy hollywood-esque definition of LA + SF.
Inland there are tons of affordable towns and even dying towns. A while back there was even a town selling itself on eBay (and was unsuccessful at that).
I think you misread the line for California in your footnoted reference #1, which shows it at 12.14%.
I have zero reason to believe that this fully accounts for one of the 50 states being home to one out of every four homeless Americans.
"One of 50 states" is a misleading statistic, given that states are nowhere near equal in population and California is the largest.
California is home to one out of every eight Americans, has good weather, and has some cities with an infamously high cost of housing. What fraction of the homeless population would you expect it to have?
Please produce citations showing that California churns out crazy people at such high rates that we should apparently consider shutting the entire state down as a human health hazard.
2. If anyone hears me, yes, it would be great if all homeless had access to good Psychiatric help. And what's help good these days?
3. The chronic homeless I know just want a legal place to poop, and pitch a tent.
4. Most aren't seriously mentally ill; just the end result of a careless, brutal economic system. A system that fails many of us, especially the ones without a stable support system. What's that support system? Usually a caring family member. That caring family member that is always left out of the "I'm a winner" speech.
5. Rich boys can find themselves in college, and the job market.
6. Poor boys have one, or two chances.
7. A mental/physical hiccup can bring a poor boy down quick.
8. I don't want to debate, but we need areas of land that people who don't fit in can camp. We need it immediately.
9. Counties are using that "break on the glass theory" to harass poor souls to suicide, and worse. Worse is deficating on your streets? You don't like it, nor do I, but where are they suspose to relieve themselfs?
10. We need free plots of land, and bathrooms for the homeless. I've never heard a homeless person ask for much. My buddies just want to legal place to sleep, and a legal place to relive themselfs.
11. We are currently living in a society where everything is basically illegial. 100 years ago most people were basically homeless, but they had hope, and weren't harassed, vilified for not fitting in. Those days are gone, and we wonder why they do drugs?
The deeper we look, the more we realize everything is connected.
Homelessness is societal cancer. There isn't one cause, one cure. It's a complex adaptive system that must be treated as a whole.
Mental health, addiction, and homelessness is a vicious cycle.
I've studied this problem space a fair amount. I agree that the weather is a factor. But I also think the housing issues are another major factor.
At this point, I'm tired of arguing it. I run into this same argument over and over on Hacker News -- that the insane housing prices and shortages of affordable housing in California have no bearing whatsoever on the high rates of homelessness there. I continue to be flabbergasted by what looks to me like a ridiculous claim on the face of it.
So, I think I'm done here for now and it's time for me to go do other things.
Homeless is easier in California. I imagine a lot of New York homeless people die in the winter. Not true in a place like LA.
There's definitely a selection effect completely separate from any political/economic factors (though of course those have an effect too).
Living Wage Foundation calculates yearly the living wage for London and there are around 4k companies that pay it voluntarily.
Maybe a similar solution would be useful.
I'm struggling to understand why the these people living below the poverty line don't just move to a place where rent doesn't eat all their salary. They must be trapped in one way or another.
What a surprise: in a state where working full-time for minimum wage doesn't even cover rent for a 1b apartment in the suburbs of one of its largest metro areas, there are a lot of people who struggle.
California exports poor people and imports rich ones.
https://www.sacbee.com/news/state/california/article13647809...
American economic woes are solely a consequence of enormous debts and unwillingness to let prices go down.
We are precariously similar to Japan in 1989
Sure, a lot of those people might be dead by then, but who keeps score when you're in the 10% that has no problem whatsoever?