Why California's High Cost of Living Might Be a Good Thing ... (Irvine: middle-class, apartments)

[sheri257]

Because the cheaper a place gets and more overcrowded it gets. People want their cake and eat it too ... they want cheap but they don't want all of the traffic and crowds that go with it.

But that's the Catch 22. As people move to cheaper places they'll inevitably be dealing with the same problems that California has ... as other people flock to those cheaper places also.

Cheap inevitably leads to overcrowding ... it's just a question of when.

Who knows ... maybe the 100,000 or so people who move out each year is a good thing. It might even help solve the illegal problem.

Here's an article that talks about how even migrant farm workers are moving back to Mexico or cheaper states like Arizona because of the high cost of living here.

Home for the Holidays by Zachary Stahl | Page 1 | December 18, 2008 | Monterey County Weekly | Farmworkers’ migration

[Jonotastic]

lol California is one of the most overcrowded states in the nation. Even in small towns like Mendocino, lot sizes are tiny. I respectfully disagree with your statement.

[JustJulia]

Houses in my old neighborhood are on the market for $500K and up. That is not cheap. Affordable housing in my neck of the manufactured woods is either tiny or in an undesirable neighborhood, and we didn't feel like waiting a couple more years to see where the market would finally bottom out. We don't mind working hard for the nicest house we can reasonably afford. My husband and I are bright white-collar workers, exactly the kind being lamented for leaving. We're just not going to kill ourselves for a $5000 mortgage or to live next to a SF house with 15 people living in it, not when we can buy a beautiful house in a very comfortably middle-class neighborhood outside Chicago for under $400K. And that was on the high side ... we could have spent a lot less if we wanted to make some compromises.

Cheap does lead to overcrowding, yes, but someone has to live in the houses that are already there. California can't just shed several million people and then everything will be fine. You want the revenue generated from taxpaying residents who own their homes and work good jobs in the state, but there are obviously not enough people who could afford the inflated market. Unfortunately, California, you're in for a very bumpy rise as the market corrects itself.

[EscapeCalifornia]

Originally Posted by JustJulia

Houses in my old neighborhood are on the market for $500K and up. That is not cheap. Affordable housing in my neck of the manufactured woods is either tiny or in an undesirable neighborhood, and we didn't feel like waiting a couple more years to see where the market would finally bottom out. We don't mind working hard for the nicest house we can reasonably afford. My husband and I are bright white-collar workers, exactly the kind being lamented for leaving. We're just not going to kill ourselves for a $5000 mortgage or to live next to a SF house with 15 people living in it, not when we can buy a beautiful house in a very comfortably middle-class neighborhood outside Chicago for under $400K. And that was on the high side ... we could have spent a lot less if we wanted to make some compromises.

Cheap does lead to overcrowding, yes, but someone has to live in the houses that are already there. California can't just shed several million people and then everything will be fine. You want the revenue generated from taxpaying residents who own their homes and work good jobs in the state, but there are obviously not enough people who could afford the inflated market. Unfortunately, California, you're in for a very bumpy rise as the market corrects itself.

Just wait till the threadstarter says you're an uneducated, unskilled loser for not paying $5000/mo for a house and others say the state is better off without people like you. That's the treatment anyone gets who doesn't drink the California Kool-aid.

[sav858]

Originally Posted by EscapeCalifornia

Just wait till the threadstarter says you're an uneducated, unskilled loser for not paying $5000/mo for a house and others say the state is better off without people like you. That's the treatment anyone gets who doesn't drink the California Kool-aid.

well we obviously don't have to wait for an angry malcontent to come in and make a bunch off base generalizations and assumptions about those that prefer to stay in CA.

[sav858]

CA is NOT overcrowded, it just has not handled its growth that well. Just look at the population density of the state and compare that to the east coast, especially northeast and then tell me CA is overcrowded. CA is just maturing and it will continue to be expensive and have issues with having a lot of people. People will continue to come and go. The Northeast has been bleeding people for decades but they still manage to do well despite it being very crowded there as well and is still desirable for many to live. CA I think will be the same way, people will pay the price to live here and many will not and move away. I think high prices will help CA reach an equilibrium where its not growing too much anymore but not losing a bunch of people. Of course unless Ca can get its crap together then the state may end up not being desirable at all, even to those that can afford a good lifestyle here.

[edwardius]

Housing prices are set on the margin. Housing costs are high in California, because the housing market in California is highly regulated and because of prop 13.

If you compare California and say Texas, in both places people expect to have local schools, libraries, police and fire departments. But California has prop 13 which limits the growth of property taxes to less than the rate of inflation. In general in California, housing doesn't pay for itself. The services required by new residents are not paid for by the property taxes on those new residents. In Texas which has higher property taxes and no prop 13, not only do new developments pay for themselves. In California the incentive is to not approve new development.

Now if housing prices shoot up high enough in California, then even with a much lower tax rate, the cost of new development will start to cover the cost of providing new government services to that development. This is part of the reason California has housing price booms and busts. For local governments to approve new developments housing prices have to get high enough where it makes sense to approve new developments. In Texas, property taxes are such that local governments will approve new developments willy nilly.

In California there is usually a shortage of buildable lots, local governments are reluctant to rezone land from agricultural uses to housing. Ag land in California sells for 10k an acre. In California they are putting up to 11 homes per acre. But when that land is rezoned from ag to housing, its not selling for less than a 1k per acre because there is an artificial shortage of buildable lots. In Texas, ag land is a bit cheaper, but residential lots are lot cheaper because local governments rezone land from ag to housing based upon demand.

When interest rates were lowered nationally, California experienced the the housing boom much more as a price spike than in Texas where the housing boom there was experienced more as a construction boom.

Before prop 13, California had fairly affordible housing. If this region wants more affordible housing it should just repeal prop 13.

But new growth need not lead to high housing costs and expensive housing. Atlanta, Dallas, and Houston are among the fastest growing regions in the country yet they have also managed to retain very affordible housing.

High housing costs in California are the results of bad housing policies in California. If you fix them, you can make housing more affordible here as well.

[sheri257]

Originally Posted by sav858

well we obviously don't have to wait for an angry malcontent to come in and make a bunch off base generalizations and assumptions about those that prefer to stay in CA.

That's to be expected I guess. I just thought it was interesting that migrant workers are also leaving the state due to the expense ... since so many people cite immigrants and overcrowding as a reason to leave California.

Ironically, if you're moving to another state because of the expense and the illegals ... guess what, there's a good chance the illegals are moving with you. It makes sense since, obviously, these people aren't rich either.

And I wouldn't pay a $5K a month mortgage so I don't expect other people to pay that either.

I just thought it was an interesting question, especially for people who are moving to these cheaper places since those places, more than likely, will get overrun and overcrowded also.

[hsw]

Agree...healthy, free markets allow both jobs and people to migrate to places that make sense from a COL/QOL vs income basis....no one needs to live or work in CA...it's a free, individual choice

Ironically, if one analyzes costs of residential land in desirable suburbs of SiliconValley (e.g., Woodside) vs desirable suburbs of Chicago (Winnetka) or Dallas (HighlandPark)....SV is actually cheaper and has many houses, each on >>2acre lots, in the bucolic hills above allegedly congested SV

And traffic really depends upon where one chooses to live and work....lots of people in places like BeverlyHills or Irvine or PaloAlto area live within 20mins of their office w/deminimus traffic hassles....and CA weather means few of the snow/ice-related slowdowns (and risks) of Winter commutes back East

[vegaspilgrim]

Actually, I disagree 100% with the OP's claim that "cheap leads to overcrowding." Wrong. Expensive leads to overcrowding. The more expensive rent gets, the more people start packing bodies into houses and apartments just to make ends meet. Can't afford to live in a 1 bedroom apartment? Pack in 2, 3, or 4 bodies in a one-bedroom. Put 6-8 people in a 2-bed house. Expensive land, expensive rent is the #1 factor that creates overcrowding.