Hacker News Reader

Comment by dfxm12 | Hacker News Reader

Why is CA so expensive? Is it something intrinsic to the land (weather, natural features, etc.) or is it something more variable, like job & entertainment opportunity? If it's the latter (and I suspect it is), it is a solvable problem, at least for most G8 countries, since there is a lot of un(der)-developed areas out there.

I would not have a home without significant assistance from my parents.

I don't know your specific case, but on average, you could have bought a home without assistance if you wanted, just maybe not when & where you bought.

View on HN

Because of Prop 13. http://projects.scpr.org/prop-13/stories/housing-shortage/ has a good write up.

Because land isn't taxed based on it's current value landowners have little incentive to develop their land in order to get the most out of it. They simply bank land as much as possible as it's the most surefire way to turn a profit. It's why we have golf courses* in city centers and dilapidated shacks* next to Google's global HQ.

Additionally, prop 13 gives landowners every incentive to lobby for policies that restrict development in order to drive up prices instead of fighting for the right to build 4 story apartments on their property.

Slashing property taxes always floods the market with speculators and destroys housing affordability. Look at Vancouver, or Malta, their housing shortages rival SF despite low wages and comparatively small economies.

* https://www.planetizen.com/node/93284/la-country-clubs-takin...

* https://www.theguardian.com/technology/2016/dec/15/google-ca...

It also forces individual home owners into a corner. Anecdotally, I have a friend who bought in the 90s for peanuts and now his house is easily worth more than a million dollars. He has specifically said something along the lines of "we would like to move to something that fits our family a little better, but it wouldn't be worth the tax bill."

That's nonsense, prices were ballooning in California before Prop 13, and was in response the great inflation in the 70s.

Property taxes do go up in California, just not at the speculative price increases due to tiny interest rates and investors.

If you want to find fault, blame interest rates and people paying the maximum monthly payment based on tiny interest rates, and ignoring the ridiculous house prices.

The nature of employment in the US has changed very rapidly in the past few decades. Agriculture and manufacturing jobs have evaporated, replaced by service jobs. Globalization means that any job that doesn't need to be performed inside the US will likely leave the US.

What this means is that in the past, there used to be forces that encouraged jobs to be somewhat evenly spread across the country. Most medium-sized cities had a number of factories, small towns were surrounded by farms, etc.

Now the only jobs are jobs that involve working with or for other people, so you see a rapid concentration in a smaller number of large metro areas.

Unfortunately, cities cannot physically adapt as quickly as the economy has changed. The rapid change in housing prices — upwards in metro areas and downwards elsewhere — is basically a measure of how much the physical infrastructure is out of sync with today's needs.

Personally, I hope we figure out a way reinvigorate and distribute jobs across medium-sized cities. It's very difficult for the poor any elderly to uproot, and the US has tons of space, so I think it's better for everyone if the jobs come to them instead of forcing them to come to the jobs.

> Globalization means that any job that doesn't need to be performed inside the US will likely leave the US.

Sounds like over-rationalization to me. Tech jobs don’t need to be done in the US for obscene amounts of money, yet they are.

> Tech jobs don’t need to be done in the US

In theory, yep. In practice, lots of software work is basically an exercise in interpersonal collaboration logistics for which physical colocation is still the most common approach. I've long been hopeful that we'd break out of that model and achieve the geographic redistribution that the parent commenter is hopeful for, but that it hasn't happened yet makes me think there is something more to it than it seems.

Many many aren't. One of the reasons I left EA was because half of my team was given the task of training a team of outsourced people to replace them.

Yes, there are still plenty of programming jobs in the US, in large part because a key part of the job is translating human requirements into code. That means that knowing the language and culture are valuable assets. Also, English is the lingua franca of software, which helps.

But a lot of them aren't anymore. I'd say 70% of my team is offshore. Before it became popular to offshore, they would have all been local. There's been many offices around me in the financial industry that have consolidated IT departments into much smaller local shops, closing offices here.

It's the jobs. You want to work at Google, you work in CA. You want to work in movies, you work in CA. There are various environmental factors (like the weather) and economic factors (like locking in property taxes when you buy) that keep people in their homes, stunting inventory.

Yeah, I _could_ buy a house somewhere else, just like I _could_ give up on a fulfilling career. But I don't think people are willing to spend the majority of their waking hours in a job they don't like so they can have a house, given the alternative of having a job they do and renting. Everything is a life choice, and home ownership is not be all and end all, but I think it seems very wrong that the dichotomy of career vs home-ownership is as harsh as it is.

It's not the jobs.

In New York you can get an apartment in Jackson Heights for $200k and take the F train to work.

https://www.redfin.com/NY/Corona/112-50-Northern-Blvd-11368/...

In the Bay Area it's expensive near job centers but it's still expensive 40 miles away. The sprawling mess is too low density to sensibly cover with trains so people end up with insane highway commutes.

California's problem is property taxes. Tax people fairly - not based on the time they joined the class of property owners - and our problems go away.

It's the jobs. You want to work at Google, you work in CA. You want to work in movies, you work in CA.

This isn't true. I've known Googlers who worked in Ann Arbor, Pittsburgh and NYC. I've enjoyed many films made in Georgia. Places like NM, Georgia, Austin, etc. are enticing filming there because they know the industry can support more than just one hub in LA. Now filmmakers know they can work and play in Atlanta, Albuquerque or Austin, places cheaper than Hollywood. Places where you don't need family assistance for a down payment on a house. A Googler could do the same in Pittsburgh.

I think it seems very wrong that the dichotomy of career vs home-ownership is as harsh as it is

Is it? OK, I'll grant that it is if you have a singular mindset of "I must own a home right now and I can only have a fulfilling career bay area", but you aren't entitled to live and work in a specific place. And who cares? There's so much more to this world than that.

The examples you cite are exceptions, not the rule.

Most Google engineers still work in CA, and it's easier to get hired for a role at HQ because there are always openings for all kinds of positions. For the smaller offices, they might only be hiring infra or only hiring L6+, etc.

For movies, think about what you'd do as a young actor trying to get a major role. Would you live in Atlanta where a handful of films are shot every year, or would you live in LA where hundreds of opportunities come up every month?

Times change though for cost economics as an industry matures. I live in Atlanta and there are now more movies and TV shows filmed in the state of Georgia than in Los Angeles now. I keep seeing reports of people constantly moving to Georgia to work in the entertainment industry and several people I know have ties to the entertainment industry here as well. Almost all the Marvel movies are filmed downtown and in various locations throughout metro Atlanta. Every other Netflix series has been filmed in the area. There are tons of yellow signs pointing to movie and TV shooting locations throughout the city.

Entertainment is a lot more cost-sensitive to labor than most tech companies and while a lot of regulations on filming can be an issue on occasion I'm pretty sure that all of it is dwarfed by the sheer number of bodies necessary to film some scenes on a non-studio location.

During the Great Recession, movie stars kept their 8+ figure checks but almost everyone else took massive cuts. Similar economics happen in labor markets for tech where we are seeing a very clear bimodal distribution of pay for those in FAANGS companies (or very close to them) and those that aren't.

In my experience, a lot of people who live and reside in Los Angeles will take gigs in Georgia. Most people wouldn't actually live there minus their short stints to do the film they are involved in.

> But I don't think people are willing to spend the majority of their waking hours in a job they don't like so they can have a house, given the alternative of having a job they do and renting.

This is... not accurate.

IANAL or a real estate person, but my understanding is that it's a combination of the following:

1) Laws passed in the 1970s that lock in a home's tax value unless/until it's sold, meaning anyone who owned a home in the 70s will never, ever want to sell because their taxes will skyrocket from their fixed 70's values;

2) NIMBYs forbidding the construction of new housing, especially any high-density housing, meaning an area that's massively grown in population has not significantly grown in housing availability;

3) Tech companies insisting on building huge campuses here, attracting more and more people, who use their tech salaries to snap up the extremely limited housing, leading to tech companies needing to pay higher salaries to attract new employees, leading to those higher salaries being used to outbid others on houses, leading to tech companies needing to pay higher salaries...

When we rented our last house, the real estate agent handling the rental asked why we, a Bay Area-salaried DINK couple, weren't buying. We laughed, because the down payment alone on the house we were renting - a dinky, dingy two-bedroom from the 60s which hadn't been significantly upgraded or maintained since - would have been close to our combined yearly income, never mind the taxes and mortgage payments. And that was for one of the crappiest houses in the neighborhood, not one we'd actually consider buying.

It's a combination of the major metro areas (SF, LA, and SD) being boxed in by mountains, and of these areas supporting major globalized industries (tech, entertainment, and biotech/military, respectively) where per-employee revenue is high, productivity is high, and wages are correspondingly high. Fixed & limited housing supply + high incomes = very high house prices. Prop 13, as mentioned by other commenters, doesn't help.

Everybody outside of one of these industry hubs always says "Well, why don't major companies just move to areas with lower cost of living, where they can pay their employees less for the same work and be more competitive?" It's never that simple. Flip that comment around and ask an employee in a low-paying industry in a low-paying hub "Well, why don't you just learn data science, get a job at Google or Facebook, and move to the Bay Area so you can partake in these $300-400K/year salaries too?" You'll probably get a response that mentions some combination of family & community roots; it being hard to develop tech skills without mentors and teachers; not fitting in with the political & cultural views of people in Silicon Valley; and difficulty convincing employers that you do in fact possess those skills in the face of stereotypes to the contrary. Now multiply those difficulties by 50,000 employees and you see why corporations don't do this. Companies in knowledge industries are webs of highly-specialized human capital, each of which often has their own family & community roots in the local area and is reluctant to uproot their life just because their employer wants to save a few bucks by moving their headquarters elsewhere.

Because the Boomers forbid housing construction and put in prop 13 to shelter themselves from any tax increase as housing cost skyrocketed. They created this mess.

If zoning and construction were sane I think something like prop13 would be a good thing. Nobody should be forced out of a home they could otherwise afford just because the taxes went up.

There are more specific ways to deal with that issue besides prop 13 though, like homestead exemptions.

Definitely not the Boomers that did Prop 13. Prop 13 was passed in 1978, when the oldest boomers were 32 and the youngest 14. Not many owned houses then.

This was passed by voters of earlier generations. Look at the two leaders of the movement, Howard Jarvis (born 1903) and Paul Gann (born 1912).

Most Boomers were opposed to it b/c they could easily foresee the cuts to social services and education that were coming.

I was told to assume $350/square foot for new construction here in the East Bay by a design/build firm I contacted recently. So a typical 2000 sq. ft. home is $700K just for design, construction, and permits, plus $300K for land if you can find it. So it seems more like localized inflation to me. Architects and tradespeople need to pay to live here too. Plus requirements due to seismic and fire hazards, insulation requirements, etc. add to costs. Now solar panels will be required as well.

IMO prop 13 worked out really badly but it isn't the main cause of the problem, just one more giant expense for the new homeowner on top of everything else.

CA has expensive areas because Prop 13 means young people pay much higher property taxes than people who have owned forever and corporations pay practically nothing as long as they never rennovate. And you can't fix it without convincing people to vote to raise their own taxes, so we're basically screwed forever. Plus local control means communities can create jobs without building housing to support them, increasing emissions, clogging roads and forcing out everyone who wasn't already rich in the 90s.

Move literally anywhere else if you can.

It has desireable weather, beaches, mountains, deserts, forests, national parks, fresh produce, industries, higher education system, decent laws for worker protection, so it’s a pretty good piece of land.

It's not too complicated - most big cities in CA have simply not built enough housing to keep up with population growth.

Mass transit in/out of urban centers like SF/LA are very underdeveloped, so it makes it really difficult to live in a cheaper area outside of the city and bear the commute everyday.

cash purchases/wealth management have rushed in from around the globe to secure homes as an investment, meanwhile few want to leave, and huge, huge industry as started bringing highly paid young people. Similar story in the Seattle area..

Stupid laws don't help.

Not re-evaluating property values until sale.

NIMBY zoning laws everywhere.

To answer your first question: widespread opposition to housing/development across the political spectrum.

Reply on news.ycombinator.com