patrick.net

edvard2 says

I imagine a lot of this growth has to do with housing prices.

Some of it does, but a lot of it has to do with unions and taxes as well.

My take- though not original- is that if you look at most bubble areas- primarily the coasts- more often than not there are myriads of anti-growth, anti-development laws within those metro areas and individual towns. The East Bay city I live in makes it almost impossible to build new housing and if you want to build multi-family housing, forget it. It will never happen. This sort of NIMBY attitude has probably contributed more towards making the coasts unaffordable than anything else.

On the other hand they're building houses as fast as they can drive nails in Texas. There are no zoning laws and as a result they can sell houses all day long for $150k or less. The middle class these days probably has a realistic affordability limit of around 150k. Thus to Texas they will go as well as to other Southeastern states.

edvard2 says

The East Bay city I live in makes it almost impossible to build new housing and if you want to build multi-family housing, forget it. It will never happen. This sort of NIMBY attitude has probably contributed more towards making the coasts unaffordable than anything else.

Yes, this is quite common in the Bay Area, and there are good studies on this, including one out of Santa Clara Univ. Land use restrictions do more to drive up Bay Area housing costs than anything else. There is plenty of land in the Bay Area, but so much of it is "open space" or otherwise non-buildable. Many towns here have several thousand people per square mile within town limits, especially if the town limits don't include open space (no reason to -- it doesn't produce income).

Furthermore, we can effectively create more land by upzoning certain areas. For example, there are tons of single family homes in San Francisco, and if the planning department there allowed more multi-family housing, there could easily be more housing in San Francisco without filling in any more of the Bay than has already been filled. This could be done gradually without alienating anybody, but the NIMBYs in SF won't allow any of it because they make flawed slippery slope arguments.

The Bay Area is full of NIMBYs who feel entitled to block any development project because they already have theirs. Despite being stereotyped as "progressive," the Bay Area is quite reactionary with respect to planning.

shrekgrinch says

And then there’s the fact that California and other coastals are being de-facto ceded over to foreigners like Hong Kong and Macau were in China.

No wonder native-born and acculturated Americans are migrating.

This is mostly propaganda, and I'd ignore it without data being provided. The comparisons to Hong Kong and Macau are silly -- those were foreign colonies and not part of China. Someone's been listening to too much AM radio, as the phrasing seems to be on Patnet from my short time here.

TX really has thier act together, very liberal policies financially. (and only financially). High property tax (2-3%) keeps house prices low (in CA the state/city will give you a loan for the down payment on a 800k home, but only if you cant afford the 800k home.....crazy huh).

Also you can only get a HELOC to 80% of property value (i think) that stops foreclosures from starting - it seems like half the state of CA has pulled out 200% of the value of thier home.......thus will now default.....

Plus they raise your property tax yearly in TX - none of this prop 13 BS where millionaires like warren buffet pay $400 a year in property tax on a beach house they had forever.

In TX you can sell your home and buy another one very close to work so you can have a zero commute lifestyle. In Cali everyone has to 'lock in' their p13 tax rate and cant easily move - so we all destroy our state by driving 200 miles a day on the freeways until we decide to stategic default our 1m McCrapshacks back to the bank but we can sqaut in them 2 years ez!

Most renters in Cali do not have nearly as long commutes as loanowners. The loanowners are destroying us!

I don't get about the whole NIMBY stuff in the Bay Area. Everyone talks about how greeeat it is here, yet when it comes to voting on measures for ANTHING- whether it be new bus stops, stores, freeways, housing developments, airports, power plants, and so on and so on, the tendency is to turn all of it down. Marin is a perfect example. I used to work out there and the traffic was an absolute nightmare: A single freeway runs through it and from what I understand it took decades to get that thing built due to resistance against it. As a result all of the traffic is squeezed onto a single freeway hence its always clogged. Same is true for Berkeley. I lived there for a few years and even though there was a whole slew of "forward-thinking" folks there, you better bet yer' boots they wouldn't ever allow anybody to build new houses. Anywhere.

There is not a single new homes where I live. The newest houses are all from the 50's. Most are from the teens-30's. Is it any wonder these little crappy houses still go for $500k? There's no new housing. Period.

edvard2 says

Marin is a perfect example.

I agree, Marin is by far the worst in all of this, and they have a lot of confidence because of what happened with the Marin Headlands and Marincello back in the day. Marin is smaller than Oahu, but it has less than 1/4 of the population, and they fiercely want to keep it that way (and if you ever read the Marin Independent Journal, look at the unveiled racism in the comments!). You get various levels of this attitude in Marin, but one of the most bizarre is the town of Bolinas. Never have I seen a town so hostile to outsiders (slashing tires, the teen-movie way everyone turns to look at you when you walk into a restaurant/bar, etc.). It's full of meth-heads and hill-folk and other types as well, and the way they constrain development is by saying that no one else in town can add another water meter. If you want a new water meter, you must purchase an existing one.

The rest of the Bay Area has followed the cue of Marin and is very reactionary and anti-development. The way CEQA and environmental impact reviews work in California, everyone gets input and it turns into a decision by committee with lawsuits to follow for the NIMBYs who don't get their way.

Another good example is the small in number but vocal NIMBYs of Palo Alto, Atherton, and Menlo Park who are trying to block California High Speed Rail. This project will make their communities safer by grade separation, will make their communities more valuable because of premium infrastructure, will make their evenings quieter because there will be no more train whistles and electric trains instead of diesel, and these NIMBYs are still protesting a perfectly legal project within a more-than-100-year old rail right of way. They purchased near the Southern Pacific line because it was cheaper, but also near transit, and now they are trying to have their cake and eat it too. It's shameful. This infrastructure is necessary for our continued prosperity, and I guarantee you that the increased highways and aircraft that would be necessary if CAHSR wasn't built would both cost more and have more negative impacts.

The way historical property is viewed in San Francisco is similar. The most famous example is the North Beach library, where the NIMBYs of North Beach/Telegraph Hill claimed that the library's bookshelves were historic so that they didn't lose 3 parking spots and no further development happened. You heard it right, bookshelves -- plain slats of wood that had no decorative flourishes.

Some people refer to it as "hysterical preservation" and that name is probably more accurate based on what I've seen in San Francisco. If you have a Victorian or just another old house, good luck ever doing anything with it without a review by the preservation committee. If you have an earthquake shack, you'd be better off burning it down than trying to get changes past the powers that be. The goal seems to be to make SF into a museum of sorts.

The rest of the Bay Area isn't that much better. Did you hear about what happened with the falling apart, not seismically safe (and near the San Andreas Fault), "historic" property in Woodside that Steve Jobs owned? These restrictions make housing a lot more expensive, and people rarely identify actual merit in many of these properties -- it's just a way to obstruct and add extra costs for the owners.

I look at it more as a age thing. Not everyone can move down south. Too many people banked on rising housing prices as a source of retirement. Even if their homes didn't go down in value if they cannot find a seller it will not work.

Having said that I think Miami may have hit a bottom..probably will stay there.

I grew up in Rochester NY and followed the migration of the late 80's to Texas, moved to Los Angeles in 1994, Orange County in 1999 and Florida in 2008. Last year I moved back to Southern California (living in Long Beach). You can all say what you want, but Californy is the place to be... for those of you that don't love it, please DO move (reduced demand will mean lower rent/house prices). Maybe if enough of you move to Texas, you can fix their deficit which is higher than Cali's on a per capita measure. Regarding FL, well... that's a tea party basket case. The real message? Aren't we lucky to live in a country where you can vote with your feet? Best wishes to all that move away... and please know that you are welcome to move back when the shine wears off your new state.

[quote]I imagine a lot of this growth has to do with housing prices.[/quote]

I'd imagine it has more to do with jobs, unless you're a retiree. Moving to a cheap(er) house won't do you a bit of good if you don't have a way to pay for it.

When I retired from the Silicon Valley area, I sold my home in 2006, and could have lived anywhere in the world (also sold my stock options). We did look at the South of France, Cayman Island, etc. but chose Southern California despite higher taxes - why?? Because living anywhere from the Newport Coast through La Jolla/Coronado area offers some of the best weather, ocean views, golf, etc. in the world. It isn't cheap, but most of my neighbors have come here from elsewhere - Ohio, New York, even Texas!!

SoCal beach communities will always be a magnet for the wealthy (and near wealthy like me), but the problem is the interior of CA is becoming very poor, while the "great White Homelands" (and wealthy people of color), of the coast become essentially gated communities.

I am afraid that the "California Model" (only rich and poor) is becoming the national model - I even see this in my native Canton, Ohio - great new golf communities (gated or semi-gated) for the few wealthy left, and ageing homes for the Walmart people (now likely 85%).

shrekgrinch says

2) It’s not propaganda when I’m standing in a mall anywhere in the Bay Area and realize that I am one of the few native-born Americans in there. Hell, I am one of the very few citizens in there too.
2.5) It is not propaganda when I get nailed for jury duty every year because the number of citizens that can only serve on juries out outnumbered by the number of non-citizens who can’t.
3) This is all very well documented by professional demographers and historians. So much so that your demands for ‘proof’ is just as much a waste of time as asking me to prove that the sky is blue.

That's very odd. The census bureau believes that in the 2010 census 35% of the SF population was born outside the US. Of that 35% I would believe that at least some have gotten citizenship over the years.

Could you please cite your professional demographers and historians or otherwise provide proof why the census bureau is wrong on this. Obviously the census people don't know the sky is blue and don't understand reality in the world of shrek.

Well, I think the whole " California is the best" mantra is open to debate. Perhaps if you're coming from one of the rust belt states then sure- its probably going to seem like paradise. Given that there seems to be a huge population of midwesterners in Cali makes me wonder if there's some truth in that.

But I've traveled the country and been to states like CO, NM, AZ, TX, GA, AL, HI and so on and there's more than a few places that I'd pick over Cali in regards to their natural beauty. I'll mention one thing that to me is highly annoying is that Cali is overcrowded to an extreme. Doesn't matter where you go- to the beach, to a park, to the grocery store- there are ALWAYS tons of people. Grab a number and wait in line. It might be beautiful but you're probably going to have to make reservations. On the other hand last time I visited my parents we took a 10 mile hike in a park full of huge stone arches over rivers. Crazy landscape. We were the only people on the trail all day long.

I think it also depends on the individual person. Some people seem to think they simply cannot live away from the water ( Even though the water in Cali is too cold to actually swim in) and thus they limit their living situations to coastal states and skip the rest. Also- if you moved here a long time ago back when the state really and truly was the golden state- where homes and everything else weren't crazily priced- then you've probably done well for yourself and get to sit on a nice fat bit of equity and pay next to zero property taxes.

Either way I could go on and on. I don't believe there is a single best place to live nor do I think Cali holds anything particularly advantageous over any other areas. Given the almost insurmountable problems the state faces these negatives in many ways outweighs the positives.

I think shrek is just unlucky with jury duty or exaggerating. In the last ten years I've been called for jury duty 4 times and only selected once. And I live in the SF bay area.

edvard2 says

I’ll mention one thing that to me is highly annoying is that Cali is overcrowded to an extreme. Doesn’t matter where you go- to the beach, to a park, to the grocery store- there are ALWAYS tons of people.

Yosemite Valley is crowded, Tuolumne Meadows not so much. Not at all if you walk a mile or two off the road. Mono Lake has light crowds in parts, while the hiking areas south of Mono are deserted (I'm fond of the Devil's Cauldron hike there). Santa Cruz beaches usually crowded, beautiful coastal access spots 10 miles north are utterly deserted. Monterey usually crowded, Big Sur not - especially if you go to some of the less well known beaches or trails instead of the iconic beach with the waterfall. Mendocino crowded, terraced terrain hiking south of Mendocino nearly deserted. Palm Springs crowded, Joshua Tree Monument not crowded except at the scenic overlook. Etc., etc. - go to the iconic spots and tourist traps and there will be crowds, go to many other interesting and beautiful places nearby that require a bit of walking and there won't (also the case in New Zealand, I found - a country roughly the size of CA but with 1/10th the population).

shrekgrinch says

bob2356 says

The census bureau believes that in the 2010 census 35% of the SF population was born outside the US

Obviously what is odd is your innate belief that the SF comprises the Bay Area when in fact it does not. And most of the immigrants can’t afford to live in SF proper, either.

Try looking up the stats for Daily City or Hayward or most of the rest of the majority of the non-gentrified Bay Area.

bob2356 says

Obviously the census people don’t know the sky is blue and don’t understand reality in the world of shrek.

Given how you arrogantly think that SF IS the Bay Area in its entirety, I’m not the one with reality grasping problems.

That's true, you are the one with the talking out your ass problem. The number of non citizens in the SF metro area (that's the bay area in case you can't grasp it) is 14.5%

http://www.bayareacensus.ca.gov/bayarea.htm

When Calif, AZ and NV went down the tubes beginning in late 2007, the Midwest saw an influx of Hispanic that was like a tidal wave. They were mostly early middle aged and from the West Coast and the deep Southwest. Couldn't get jobs there and moved here. Housing plummeted but, interestingly enough, the ones who saved whole areas were the Hispanics. They bought when other nationalities couldn't afford too. Fine by me. They've proved to be good neighbors.

bob2356 says

Obviously the census people don’t know the sky is blue and don’t understand reality in the world of shrek.

I can't see shreks posts on this computer, but that was amusing. I know his type. Maybe grew up in a bubble. If someone's ancestors are different from his, but European, then they are his brothers and sisters, but if they are brown or look Asian or Latino, then they are damn foreigners (even if they're not) and in fact they "probably aren't even citizens."

I too am fascinated by the upcoming demographic shifts. There must have been a lot of money going it to Florida on the assumption that it would be in high demand by boomer retirees. Obviously things aren't that simple, and also they were extremely premature and overdid it. Still, it has barely begun. That is the impact of boomer relocation in retirement.

Marcus,
Are you an ancestor of a pure native American blood line? Even though you were, you would be a foreigner to this land. Are you sure that United States of America will be known with the same name in far future, and its citizens will describe themselves as Americans. Anyways, it is useless to define these concepts, words, etc, cause the argument is not that here.
I think there will be more mixed races and migration all around the world, not just North America... When it comes to the effects of migration, it is going to become more competitive, and in this competition there always be people who do things extremely premature or overdid as you mentioned. Patience, good calculation and good timing is important in this race. ;)

Glibly, I want to say that Texas can pass California whenever they learn how to grow oil.

Less glibly, he lower taxes come at least in part from receiving more federal money than they collect from citizens. I truly want them to try seceding because of "oppressive federal taxation," so they can experience what it's like to have their taxes triple and then they still wouldn't have Social Security, Medicare, or public parks.

repo4sale says

But, the Politicians are STUPID & DUMB & GREEDY & LIARS AS FELONS!

Texas politicians are exactly the same. The big difference between California and Texas is that we only allow our state house/senate to meet for 90 days every two years. I think this cuts down a lot on the shenanigans(although the governor did call them back for a special session this time, they are only allowed to consider the items the governor has specified).

Texas has no state income tax, and although property taxes can run 2-3%/yr, the wealthy/well connected/smart do not have to pay anything close to that rate. I have a friend that keeps (or actually the high school 4H club) 4 goats in order to qualify as ranch. Yes, the city tax department does stop by once a month to count and make sure he still has the minimum livestock required.

President Bush II before he became governor, lived in a gated community surrounding a small lake that had manged to get zoned as recreational area and paid zero property tax.

F&*(ing BOOMERS!

I've been living in Los Angeles for over 14 years since I first landed in US and my husband's here for 6 years. We've planned to move to Tx in 3 years because:

1. housing price is ridiculous here
2. 9.75% sales tax is ridiculous let alone all kind of taxes are much higher than average
3. education is bottom 3 in the whole nation
4. Tx has no income tax even though they have higher property tax, at least our kid will get better education (currently we're paying nearly 20k state income tax in California, I don't think we will pay any amount near that for the property tax in Tx anyway)
5. we won't get much difference in salary in Tx
6. earthquake is coming

Today we went to see a fix-up tiny house in 91770 area. It's a 79-year-old 821 square-feet house asking for 369k. And the area is only little better than a ghetto area.

repo4sale says

California has better weather & infrastructure than most countries!

On infrastructure, it's hard to say. The Pan American Highway or roads in Delhi are better than California roads. A comparison to sub-Saharan Africa is silly.

repo4sale says

114 Civil Lawsuit cases as ProPer-Paralegal in California!

Why is this brag-worthy? At first glance, I'd say you were incompetent enough to get into 114 lawsuits, more so than anything else.

repo4sale says

But, the Politicians are STUPID & DUMB & GREEDY & LIARS AS FELONS!

The state politicians, not local, but I agree.

shrekgrinch says

3) This is all very well documented by professional demographers and historians. So much so that your demands for ‘proof’ is just as much a waste of time as asking me to prove that the sky is blue.
4) Your AM radio comment only proves that you want to see things according to your fantasy viewpoints and not as they truly are. I don’t listen to AM radio. But that hasn’t stopped you from believing it because you don’t want to acknowledge facts.

You've gotta be joking. Talk to an economist before you talk here, because you don't know what you're talking about. This is just one study:

http://www.americanprogress.org/issues/2010/01/raising_the_floor.html

From the executive summary, mass deportation would be incredibly costly to our economy and would lower wages for native-born workers who have real actual job skills and who actually provide valuable production in our economy. It would also result in lots of jobs being lost.

Mass deportation reduces U.S. GDP by 1.46 percent. This amounts to $2.6 trillion in cumulative lost GDP over 10 years, not including the actual cost of deportation.2 Wages would rise for less-skilled native-born workers, but would diminish for higher-skilled natives, and would lead to widespread job loss.

In contrast, comprehensive immigration reform would be a huge boost to our economy and would raise wages for native-born workers. This is without even considering that we would get massive fines/fees/taxes from the newly legalizing immigrants.

Comprehensive immigration reform generates an increase in U.S. GDP of at least 0.84 percent. Summed over 10 years, this amounts to a cumulative $1.5 trillion in additional GDP. It also boosts wages for both native-born and newly legalized immigrant workers.

Even the Cato Institute agrees that immigration reform would raise GDP. It's only the Tea Partier/AM Radio people who disagree, only on ideological grounds.

edvard2 says

Also- if you moved here a long time ago back when the state really and truly was the golden state- where homes and everything else weren’t crazily priced- then you’ve probably done well for yourself and get to sit on a nice fat bit of equity and pay next to zero property taxes.

Exactly. The California Dream of my parents' generation is long gone. It was when you got a house, a living, education for your kids, and a decent retirement all for a bargain basement price. What really happened is that they pushed all those costs onto future generations, and so that's why it seemed like such a good deal.

edvard2 says

Grab a number and wait in line. It might be beautiful but you’re probably going to have to make reservations. On the other hand last time I visited my parents we took a 10 mile hike in a park full of huge stone arches over rivers. Crazy landscape. We were the only people on the trail all day long.

I agree with you on going to stores. However, I don't know where you hike in the Bay Area, but I've never had this issue with *hiking* proper. I'm not talking about going to ridiculously crowded places that aren't actually that pretty.

For example, Fort Funston in SF is probably one of the nastiest least attractive beaches I've ever been to. Any east coast beach I've been to from Maine to Florida likely trumps Fort Funston in beauty by any stretch of the imagination.

It was only when I got up into the hills and dunes above the Fort Funston beach that there was any beauty, and there were almost no other people up there. I've been to similarly uncrowded spaces in San Mateo County, Alameda County, Marin County, and Santa Clara County. There is tons of open space in the Bay Area -- probably more open space than land you're allowed to build on.

E-man says

So let’s put things in perspective. Other than housing/rent/mortgage, other living costs should be very similar to other states.

I disagree that all other costs are the same. When I go out to eat in the Midwest/South at a local non-fancy non-chain restaurant, it can be incredibly cheap to eat. Not true in LA or SF. I've eaten at a diner-like restaurant in the South for $20 for 2 people including tip, and that was a substantial meal, including soup + 2 sides. Even in the Bay Area suburbs (not SF with its health surcharge and high rent), a similar diner-like restaurant will run you at least closer to $30, and probably not include the soup, and only have 1 side.

I've gone to a non-dive bar with pool tables in the South and bought 2 rounds of drinks for $20 including tip. I could never approach that in the Bay Area. If you go to a crappy chain like Red Lobster, it'll probably cost you the same everywhere -- $50-60 or more, and you're getting ripped off everywhere.

Also, what about things like health care or haircuts? Rents in Norcal and SoCal make all of these things more expensive than in the Midwest or South. All the costs get passed on to you, the consumer.

E-man says

In the Bay Area, it’s ALMOST a guarantee that a professional couple with 5+ years of experience make north of $150k. Are there any other states that could ALMOST guarantee this a couple of professional with this kind of salary?

I question whether it's almost guaranteed, but who cares if you make a 6-figure salary if you spend a huge percentage of it on cost of living? I had friends move from the Bay Area to Vermont, and maybe they make $50K or $60K each now instead of what they made here, but they have a huge house on a huge plot of land with a shorter commute, and their cost of living is very low, even if they have to pay a bigger heat bill in the winter. They probably feel far richer than I do, even though my household income is more than twice theirs. Maybe it's a mark of pride for you to say you make $X, but that's just vanity.

Sybrib says

- do they serve? - they better with those guilded retirement benefits.

You forgot to add, they almost get a job for life compared to industry. While many in industry during prior decades faced certain layoffs/downsizing, many cities/counties workers continued to have life long employment due to a unbroken tax revenue stream to leach off. Pension benefit was just a cherry on top.

E-man says

I came from a 3rd world country, and real estate in the Bay Area is CHEAP CHEAP CHEAP compared to other 1st, 2nd and 3rd world countries in my opinion, and real estate is dirt cheap in fly-over states.

This canard again? Based on what are you saying that the Bay Area is cheap compared to 3rd world countries? If you live in the extremely high income enclaves where foreigners live, then yes, it is expensive in 3rd world countries, but otherwise it's not even close.

E-man says

1) It’s all about jobs. If you notice, housing is generally expensive where there are high paying jobs regardless of weather. In my opinion, weather is just an added incentive. In the Bay Area, it’s ALMOST a guarantee that a professional couple with 5+ years of experience make north of $150k. Are there any other states that could ALMOST guarantee this a couple of professional with this kind of salary?

The median family income of the Bay Area is around $81,136 last time I looked. 3 times income equals to around $245,000. The median home price in the Bay Area is around $400,000 at this point. As we all know that number is only low because most sales these days are foreclosures. Realistically a house is around 500k for anything within striking distance of major job centers.

My Wife and I are one of those 6-figure earners. That said- we are basically in the upper 10% of the earning bracket for the area yet buying a house- even now- would eat up a significant portion of our incomes unless we just slapped down a huge amount of cash- which I don't want to because I value retiring earlier than owning a big Albatross of a mortgage.

So I would argue that no- wages are not really tied to home prices. If that were true then prices would be roughly $200,000 cheaper. As I pointed out and you agree with there are other factors such as NIMBYism playing a part in the reasoning behind lop-sided prices not tied to real incomes.

But getting back to the comment of where you can find other states that pay good money, well for example the median family income in Austin TX is $65,000. The median home price is $191,000- or about $10,000 below the national average. 3 times income for the area means $195,000 thus Austin is very slightly overpriced. But not to the extreme degree as the Bay Area.

You can't compare dollar amounts from one place to another. In TX $60k a year is more like $120,000 in the Bay Area. If someone were to swoop in and ask if I wanted to work at a job making 60k in Austin I would be packing bags tomorrow. Sure- it would mean a big cut in pay. But I would be able to live a lot better there in the end.

As far as the general comments about immigrants being attracted to SF, well there has been a number of reports lately showing that immigrants are increasingly shying away from traditional immigrant hubs like NYC, SF, LA, and so on and heading towards the interior because a lot of them- like me- realize that there is better value and perhaps better opportunities away from the coasts. This alone will probably play a significant factor in the economic growth of the 2nd tier, interior cities like Austin, the Southeast, and so on. Immigrants made this country and if they can't make it on the coasts they'll make it work elsewhere.

edvard2 says

You can’t compare dollar amounts from one place to another. In TX $60k a year is more like $120,000 in the Bay Area. If someone were to swoop in and ask if I wanted to work at a job making 60k in Austin I would be packing bags tomorrow. Sure- it would mean a big cut in pay.

Some people I know at Yahoo were given a the notice of termination and let go, their jobs however went to Nebraska.
Like many not given a choice to relocate. Relocation package is rare these days.

edvard2 says

So I would argue that no- wages are not really tied to home prices. If that were true then prices would be roughly $200,000 cheaper. As I pointed out and you agree with there are other factors such as NIMBYism playing a part in the reasoning behind lop-sided prices not tied to real incomes.

For decades prior to year 2000 prices were not disconnected from incomes.
So why now ? Whats changed?

thomas.wong1986 says

For decades prior to year 2000 prices were not disconnected from incomes.
So why now ? Whats changed?

John Talbott in his book "Sell Now!" argued that it's all about status and the increasing income inequality in the US.

He has some nice charts that show for every high-status good like elite housing, elite schools, and even yachts, prices have far outpaced general inflation as income was redistributed from the middle class to the top 1% by eight years of Republican economic policies.

So that 1% is vastly richer than it was, while the middle class and below are actually earning less in inflation-adusted terms. What do the top 1% do with all that money? They show off.

He has some nice charts that show for every high-status good like elite housing, elite schools, and even yachts, prices have far outpaced general inflation as income was redistributed from the middle class to the top 1% by eight years of Republican economic policies.

If we were talking about some glitzy places like Beverly Hills, Newport Beach, or Miami mansion, but we are not.

I started a new topic using that explanation about the top 1%:

http://patrick.net/?p=855508

thomas.wong1986 says

If we were talking about some glitzy places like Beverly Hills, Newport Beach, or Miami mansion, but we are not.

Lots of the Bay Area is very glitzy.

You can also find run down areas in the far east bay, but prices there are actually pretty reasonable compared to rent.

I admit this does not explain some of the crappier areas on the peninsula that remain very overpriced...

Lots of the Bay Area is very glitzy.

LOL! Really! Not much of Menlo Park or Los Gatos has changed over the years. Reality is SFBA has been around for a very very long time. Natives like myself dont see the hype others claim.

thomas.wong1986 says

Lots of the Bay Area is very glitzy.

LOL! Really! Not much of Menlo Park or Los Gatos has changed over the years. Reality is SFBA has been around for a very very long time. Natives like myself dont see the hype others claim.

The one neighborhood I can think of that has changed character significantly -- from working class to crazy expensive -- is Noe Valley in San Francisco. Other than that, what other towns or neighborhoods have changed significantly in character over the last few years? Sure, a few places have gentrified slightly, but I'm talking about big changes. Somewhere like Los Altos was always on the expensive side, although the housing value to income ratio was far lower than it is now.

I admit this does not explain some of the crappier areas on the peninsula that remain very overpriced…

What areas are you talking about, Patrick? Somewhere like Daly City where housing prices are still more than twice as much as national median?

thomas.wong1986 says

Not much of Menlo Park or Los Gatos has changed over the years.

What? Menlo Park, where I live, is in a continuous state of destruction of small cheap houses and replacment with large expensive houses. Though I agree that land is most of the cost now.

corntrollio says

What areas are you talking about, Patrick? Somewhere like Daly City where housing prices are still more than twice as much as national median?

Yes, for example.

Yes, for example.

I posit that at least part of that comes down to land use. There is plenty of land in the Bay Area, but you can't build on most of it. Compare how much land area is between 280 and 101 on the Peninsula between 380 and 92, and then compare how much land there is between 280 and the coast in the same area from north to south. Granted, some of this latter land is not buildable because it's mountainous, the fact that this will forever be open space makes a huge difference. Some of that is prime land in relatively easy commute distance to San Francisco or Silicon Valley.

Look at Marin County. The Marin Headlands area was once to be a town called Marincello. They were targeting housing for only about 30,000 people. Could you imagine if that land, about 2000 acres, which is prime commuting distance to San Francisco had been developed at the density of Daly City? 2000 acres is a little over 3 square miles, and Daly City is over 13,000 people per square mile, so it would have been over 40,000 people. The whole of Marin County's 520 square miles of land area has only about 250,000 people currently.

During the housing boom, this left places like Morgan Hill and Antioch as the overflow housing areas essentially, because the rest of the Bay Area that can be built on is so built up, but these are in some ways exurbs with no big job base. The biggest employer in Morgan Hill is Morgan Hill USD, and Target and Safeway are 12 and 13 with about 150 employees each, although there are a few companies with outposts there of 200-500 employees.

Antioch, with over 100K people, at least has some jobs because of its hospitals, but the top 5 list is as follows:1 Kaiser Permanente 2,070, 2 Antioch Unified School District 1,786, 3 Sutter Delta Medical Center 891, 4 Contra Costa County Social Services 427, 5 Wal-Mart 318. Government and Walmart doesn't an economy make.

The topic of "why are housing prices disconnected from incomes" is a curious one for me as well. I have my own uneducated thoughts about it. My take is that we experienced a dramatic yet for some reason unnoticed shift with the socioeconomics of the country- most notably in the bubble-zones like the Bay Area. To put it plainly, the middle class is now the working class and what used to pass for upper middle is now lower middle. All those folks working as engineers making what should be more than sufficient wages- or wages that just a few years ago gave you financial security- are now more or less lower middle class: The struggle to slap down a 100k down payment on a house that at one time was probably owned by a plumber, car salesman, or teacher.

I say unperceived because I don't think many people who wind up buying some tiny little house for 500k realize the irony. They're paying more to live in less.

I used to work not too far from Menlo Park by the way. Communities like that give a whole different meaning to the term "Overpriced housing". Tiny little houses with 1 million+ asking prices. Its pretty unbelievable. After having spent years living in the East Bay and commuting to Silicon Valley, it seems that many SV communities are in their own little overpriced world.