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Old 11-26-2017, 11:27 AM
 
Location: Paranoid State
12,672 posts, read 9,425,981 times
Reputation: 14930

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Quote:
Originally Posted by freemkt View Post
California homeowners decided that it is government's responsibility to protect people from being displaced by newcomers - when they passed Prop 13.
I disagree with your characterization of the implementation of Prop 13. What has actually happened is Citizens have imposed a restraint on Government.

Prop 13 is not an exercise of Governmental Power -- it is a restriction placed upon it.

Last edited by SportyandMisty; 11-26-2017 at 11:39 AM..
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Old 11-26-2017, 11:52 AM
 
146 posts, read 60,463 times
Reputation: 345
California has basically strangled itself by allowing such things.
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Old 11-26-2017, 01:10 PM
 
289 posts, read 427,012 times
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Quote:
Originally Posted by Fifty Percent Off View Post
California has basically strangled itself by allowing such things.
Most of the people I know in California would have lost their homes by now without prop 13. A house bought for a modest sum can suddenly be worth millions during an investment bubble, even tacky little ranch homes on postage stamp lots if the location is right. The taxes on the bubble-valued real estate can be astronomical. Taxing people en masse out of their houses which they legitimately bought and paid for is not a scenario that's compatible with the American philosophy of property rights.
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Old 11-26-2017, 02:15 PM
 
25,801 posts, read 49,697,815 times
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Quote:
Originally Posted by Fifty Percent Off View Post
California has basically strangled itself by allowing such things.
Yes... very much so regarding governmental over reach.
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Old 11-26-2017, 03:08 PM
 
700 posts, read 622,733 times
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I think this is a complex issue, from a perfect storm of variables.

The market alone will not provide affordable housing options. It's great at providing more profitable housing options for the top of the market, though. One may argue that new high end housing opens up older, more affordable housing units for lower earners, but this depends on a number of variables (i.e - Is older housing being destroyed for shiny, new construction? Is demand simply outpacing efforts to add new supply in hot markets? Etc).

Government-wise, it's probably a combination of factors such as dated zoning laws in certain markets, as well as a general stigma towards public/subsidzed housing (And perhaps a distrust towards government in general regarding taxation and responsible use of tax money) that make it difficult to provide new affordable housing that isn't market derived.

Education is another factor. Simply put, post secondary education is becoming ever further out of reach for many Americans (from a cost perspective). And secondary education itself is lagging behind much of the rest of the developed world in preparing people for college, and the jobs of now/the future.

In short, I don't think it's fair to blame the market or government alone.
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Old 11-26-2017, 03:38 PM
 
5,917 posts, read 4,056,688 times
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Quote:
Originally Posted by cedarite View Post
Most of the people I know in California would have lost their homes by now without prop 13. A house bought for a modest sum can suddenly be worth millions during an investment bubble, even tacky little ranch homes on postage stamp lots if the location is right. The taxes on the bubble-valued real estate can be astronomical. Taxing people en masse out of their houses which they legitimately bought and paid for is not a scenario that's compatible with the American philosophy of property rights.
This Californian says AMEN.
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Old 11-26-2017, 05:56 PM
 
Location: Tennessee
20,955 posts, read 15,275,811 times
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Quote:
Originally Posted by GeoffD View Post
It's not quite that simple in your "economy 'A'". If you have the good fortune to be born healthy and with above average intellect, sure. If you want to do well, you can do well. The top-20% do great. The next 30% can do OK if they really work at it. The bottom 30% to 40% have little shot at any kind of economic success. There's a fairly steady outward migration of 'average people' in those high cost of living places. They simply can't add enough value to command the pay that would allow them to afford the high housing costs.

Also, most people in those metro areas live in the 'burbs, not the cities. Take Boston, for example. The population of the city is only 675K. Boston metro is 4.6 million. In general, housing cost is tied to proximity to the big employers (or on commuter rail/subway) and quality of the school system. If you have both, it's sky-high housing costs.

New York City is really the only urban area where upper middle class people often live in the urban zip codes. Everywhere else, the lousy urban school systems chase most people out unless you make huge piles of money and can afford private schools.
I'm at the edge of that top 20% HHI in my local area . I'm just a nose above average nationally. $60,000 is good here but it really doesn't go that far. I'll get a whopping 2% raise come the first pp of the year. 2% is our top raise - a performance review below '3' gets evaluated down.

After a 12% 401k contribution, taxes, and other benefits, I clear $3,028 monthly. No one is going to live large here on this.

Rents and property prices are lower than national averages here. That's about all that is lower than national averages, yet the average person's income is significantly below those averages.

I recently bought a condo. Vinyl box outside, but interior was updated well. It was built in 1996. PITI + MI + HOA is under $525/month. It's about half the price of renting a similar unit. If I stay here two years, the delta between renting and owning works in my favor, even accounting for transaction costs on both ends.

My advantages? I'm a quarter mile from the best rookie league baseball stadium in the country. My condo is within a tenth of a mile of the Tweetsie Trail trailhead. I have a place to exercise for free if things get tighter. I can bike (or walk, if I don't mind to hoof it for ~30 minutes) to everything within downtown Johnson City. I can walk to local sushi, local pizza/Italian (owner also owns several farms which supply the restaurants with year-round local produce - it is excellent), "New Southern" (Tupelo Honey Cafe), a new chain brunch joint (First Watch). local Cuban, local BBQ, local German, a local Korean joint, a local taco chain, a food truck gathering spot (a couple of which are to die for), a better than average chain wing joint, local greasy spoon 5 PM - 5 AM diner, a music venue, several city parks, and three breweries. I'm barely over two miles from ETSU. I have a Kroger, regional grocery chain, Earthfare, Fresh Market, Target (not super), Sam's/Walmart, and local Indian/pho within a ten minute drive. I'm within five minutes of a large mountain park within the city limits.

My commute is 25 miles - about 30 minutes - but it's all interstate, and never congested. With my mortgage where it is, I could probably find something to pay it even if I lost my current job.

The Tweetsie Trail - Connecting Johnson City and Elizabethton

A lot of things are missing. The shopping sucks compared to where I lived in Indy. It's much more of a college town vibe, not an Alpharetta or Lexington. I can get most of the stuff delivered from Amazon, but not everything. There are compromises everywhere.

Yes, it can be comfortable in small areas, but you have to have a good town to prevent it from sucking. If I was living in the town I was born, raised, and worked in (Kingsport), I'd be miserable as all hell. A college town with more amenities makes being in a small area a lot better. There are plenty of small to rural areas that do not even have a college town like Johnson City within commutable ranges.
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Old 11-26-2017, 07:49 PM
 
1,300 posts, read 636,866 times
Reputation: 2088
Quote:
Originally Posted by Tall Traveler View Post
The market is always going to react to fulfill demand. The .
. .
Actually, this thought is correct - but it is also implied here that the market is going to fulfill ALL demand, and THAT is not true at all.



In CA in general you have a number of mitigating factors. There is a shortage of land. There is an excess of demand, where demand raises the price of housing well beyond the nominal economic value of the housing. In other words, to provide an example, if a person were making $100K per year, meaning they could reasonably afford payments on a $300K domicile. That domicile's economic value is the $300K that could reasonably be paid off by that resident. But, due to high demand, housing prices are much much higher than that. You can't buy any sort of residence within hours of silicone valley for $300K. About the best you might do would be 2.5 times that amount, and that with a heavy commute penalty. Anything within an hour's commute, and you are probably going to pay 3-5 times that amount.

What that means is that anyone making less is priced out of the market. There is demand, but the price the buyers are willing (and able) to pay is less than the suppliers will sell for.

So you find people leaving the state to work elsewhere. Or sharing housing. Or any of a number of other techniques to work around the problem. But all demand for housing is most definitely not being met by the market.
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Old 11-26-2017, 07:57 PM
 
25,801 posts, read 49,697,815 times
Reputation: 19248
^^^ I found myself in a similar situation starting out and with San Jose as my epicenter I found Oakland CA to have the lowest cost single family homes... I looked at everything on the MLS that was single family and the cheapest then was Rancho Rinconada (Cupertino) but it was still nearly 3x what I could buy in East Oakland... did the San Jose Oakland commute for 2 years... but I was a home owner at age 22 by buying the least expensive single family home on the Oakland MLS...

Last edited by Ultrarunner; 11-26-2017 at 09:23 PM..
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Old 11-26-2017, 08:06 PM
 
1,300 posts, read 636,866 times
Reputation: 2088
Quote:
Originally Posted by gunslinger256 View Post
it's a failure of capitalism because there is less profit in building a low income home. Builders always prefer to build the expensive home because there's significantly more profit/buffer the further up in the price range you go.
Again this is partially correct, but it reflects some incorrect assumptions.

If there is more profit to be had at the higher end of housing prices, it means that there is still demand at those higher prices. Of course a builder will prefer to maximize profit - but that is not the problem. The problem is that demand is sufficiently high to support the higher sales prices. The answer is more housing, period. When the demand for high end housing falls, then lower-priced housing will get built. THAT is how "the market" works, unrestrained.

But the OP did not propose an unrestrained market - the OP was talking about silicone valley - which is a very restrained market. There is a shortage of build-able land. There are very strong demand preferences. (You won't see anybody building a high-rise condo to provide thousands of housing units any time soon. And CA is STILL a highly desirable location, in spite of the massive discouragement to immigration that housing represents.)
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