
A Brief History of California’s Housing Crisis - jseliger
https://www.citylab.com/life/2020/02/affordable-housing-california-cities-american-history-book/606913
======
rcpt
> The infamous Proposition 13, a 1978 ballot initiative that capped property
> taxes, meant that new housing could cost cities more in services than it
> would bring in through taxes. In response, cities privileged much more
> lucrative commercial development—setting the stage for the state’s severe
> jobs/housing imbalance—and tacked hefty fees on new housing construction.

Good take right here but it's not the main reason that prop 13 is making
housing expensive imo. The insane market distortions causing landowners to
never sell and instead stay put and NIMBY like mad is a larger reason that
Prop 13 makes housing more expensive.

~~~
ping_pong
This is the biggest problem with people who oppose Prop 13. They claim that
owners "never sell", however if you look at the number of sales, there's
nothing to suggest Prop 13 stops house sales. It's basically a lie, and
there's no actual data to suggest that California house sales are drastically
lower because of Prop 13.

California has 39,512,223 people and 441,900 homes sold in 2018.
[https://journal.firsttuesday.us/home-sales-volume-and-
price-...](https://journal.firsttuesday.us/home-sales-volume-and-price-
peaks/692/)

Texas has 28,995,881 people and 344,030 homes sold in 2018.
[https://www.prnewswire.com/news-releases/texas-housing-
marke...](https://www.prnewswire.com/news-releases/texas-housing-market-
breaks-record-for-home-sales-median-price-in-2018-300799910.html)

Florida has 21,477,737 people and 277,827 homes sold in 2018.
[https://www.prnewswire.com/news-releases/flas-housing-
market...](https://www.prnewswire.com/news-releases/flas-housing-market-sales-
new-listings-median-price-up-at-end-of-2018-300793508.html)

New York State has 19,453,561 people and 134,066 homes sold in 2018.
[https://www.democratandchronicle.com/story/news/politics/alb...](https://www.democratandchronicle.com/story/news/politics/albany/2018/01/24/ny-
just-had-record-year-home-sales/1062216001/)

I used 2018 data because I couldn't find consistent 2019 data for all those
states.

California has 1 house sold for every 89 people and Texas has 1 house sold for
every 84 people, Florida has 1 house sold for every 77 people and New York
state had 1 house sold for every 145 people.

Per capita, the rate of housing sales in California is not so disparate
compared to the other large states, so anti-Prop 13 people need to come up
with real data to show how Prop 13 is actually affecting things instead of
whining about how existing home owners don't pay their fair share.

There's nothing to suggest that Prop 13 has affected real estate transactions
in California. And especially in the Bay Area, the amount of turnover is
healthy. In my city alone, I used Redfin to calculate that about 50% of the
homes changed hands over the last 10 years. That means that the property tax
was getting reset to more current levels.

If you look at the property tax rate that California pays, it's higher than
Florida and New York, but less than Texas. However, Texas doesn't have state
income tax, so overall the taxes being paid in California are exorbitant
compared to other states.

~~~
rcpt
> It's basically a lie, and there's no actual data to suggest that California
> house sales are drastically lower because of Prop 13.

There is real research and data backing my statement. This kind of stuff has
been published in serious economics journals for years now. There's no reason
to rely on back-of-the-envelope estimates of housing turnover. Please take a
look:

[https://www.nber.org/digest/apr05/w11108.html](https://www.nber.org/digest/apr05/w11108.html)

~~~
ping_pong
Adding a year of house ownership equates to "lock in"? That's hogwash and you
know it. It's obvious that the so-called Prop 13 effects are total BS. You
would expect a much more pronounced effect but the per capita number of house
sales are in line with other states without Prop 13. There is zero evidence
that Prop 13 is the cause of home prices skyrocketing.

Do some people have a massive advantage? Sure, just like everything else. But
I prefer to have property tax stability because as I get older, if I get
priced out of my house because I can't afford my property tax because Googlers
and Facebook employees are raising the house prices, that would be completely
unfair.

------
justinzollars
It's impossible to build anything here. This overregulation at work. I wrote a
blog post about a plot of land in Bolinas which I hoped to build something on:

[http://jz.io/2018/05/12/development-is-difficult-in-
californ...](http://jz.io/2018/05/12/development-is-difficult-in-
california.html)

TLDR there is triple overlap of legal authorities (City, State and County) who
prevent you from building anything, with a 48 year old "water emergency" in
place.

~~~
3fe9a03ccd14ca5
Shhh, the city and state governments don’t want people to know that _they_ are
the reason we have a housing crisis. It’s much better to blame rich people,
tech companies, foreign investors etc etc.

~~~
toomuchtodo
1) "Rich people" want their property values to be stable or increase. They
want their communities to be somewhat static. If I paid $1MM+ for a property
in a dense CA metro, I can't say that'd I'd disagree with those desires. I'm
buying a home and a location, not "housing" as a commodity.

2) Tech companies unnecessarily demand butts in chairs in the Bay Area,
foisting the externalities onto the commons (infrastructure and housing). Tax
them more if they won't go remote/support remote work. Destroy demand for
dense housing and the associated infrastructure.

3) It's documented that there's substantial Chinese money flowing into
specific US markets (the US isn't alone of course; Canada, Australia, and the
UK also have this problem). This pushes up the price of real estate, whether
these properties are lived in or simply used as a store of value outside of
the CCP's reach.

Due to property owner/voter and governance momentum, it is unlikely you will
see the will to increase development inertia in any California market that
requires it, ever. Your options are to complain and put up with it, find an
economic path to leaping onto the ownership ladder ("startup lottery",
inheritance, etc), or eventually abandoning hope and moving somewhere
cheaper/more development friendly (such as Colorado, Texas, Utah, Tennessee,
North Carolina, Florida, etc).

Disclaimer: Not a CA resident, too expensive!

~~~
marcusverus
Houstonian here. We have plenty of rich people, more fortune 500 companies
than San Francisco, wads Chinese-owned properties, and a median home price of
$230K. The difference is the regulations, my dude.

~~~
seanmcdirmid
Houston is flat, not hemmed in by mountains or water, and hasn’t really been
worried about sprawl. I’m sure it isn’t the worst place in the world, but it
isn’t on my list, at least, even if the housing is cheap. At the end of the
day, supply and demand are real market movers.

As far as Texas goes, what about Austin? Housing is probably cheaper, but
rising quickly because of tech interests. Houston, on the other hand, should
be suffering from a downturn in the oil sector.

~~~
jimthrow
Nope. If you count growth by population increases, Houston is growing more
than 4 times faster than SF and still able to keep housing costs low.

------
fbonetti
It’s illegal to build denser housing. It shouldn’t be hard to see why this
policy would cause housing prices to skyrocket.

------
jxramos
Searching for the word "supply" in the article yields 0 hits. I thought I read
somewhere recently that two cities in Texas built more housing in 2017 and
2018 than the entire state of California over that same period. It would be
great to see a dynamic map of housing being built through the years to see how
many rooms or square feet a given region has in aggregate across the various
years. Does Trulia let folks in on their data with an API or anything that
would permit public data analysis? Is there a public datasource for this
information?

------
omgwtfbyobbq
Prop 13 does play a part in housing costs in CA, but I suspect it contributes
less than limited supply in California metros and low interest rates.

Some of the limited supply is due to building restrictions, but addressing
those requires more than just issuing building permits. We can't build high
density housing and ignore transportation and infrastructure, and upgrading
those tends to be more difficult than building more units.

~~~
Decade
Prop 13 also contributes to the limited supply because existing property
owners don’t pay their fair share toward transportation and infrastructure.
The property taxes rise slower than inflation, while the cost of living
(important for paying for infrastructure maintenance, let alone new
infrastructure) increases faster than inflation.

Therefore, California cities charge outrageous impact fees on construction.
The time of construction is the only time the property can contribute its full
share toward transportation and infrastructure. These impact fees are passed
to the consumer in the cost of new housing. Thus, new housing does not get
built until the shortage has inflated the cost of all housing enough to cover
the fees. The vast majority of that increase becomes homeowner windfall
profits.

In this respect, low interest rates are actually good because they raise the
cost of existing housing high enough to make new housing worth the
extortionate impact fees. Even better would be the repeal of Prop 13.

~~~
hellisothers
“The vast majority of that increase becomes homeowner windfall profits.”

I see this sentiment a lot in these threads, that somehow the fat cat
homeowners are laughing all the way to the bank. For most of these homeowners
this property is their home, just because it goes up in value quickly over
5-10 years doesn’t net them any “windfall”, and it could all vanish as quick
as it came.

As somebody mentioned in response to a similar article, individual homeowners
aren’t in it for the increased property value. They’re in it for lower taxes
and a safety net against change. Just like (individual) “NIMBY”s aren’t in it
for property values, they’re in it because they don’t want change.

~~~
closeparen
If the appreciation isn’t important, then the solution is clear: charge the
difference in property taxes when the house is sold.

------
jelliclesfarm
I don’t understand why ownership of property should be taxed. And increasingly
more and more.

Consumption should be taxed. I get that. Why should be income be taxed? Are we
being taxed for being productive and making money? It makes no sense to me.

It’s like taxing rent. That makes no sense, does it? Why should property be
taxes? Why should income be taxed? Inheritance tax is like taxing death.

We have accepted taxes as a way of life that we have ceased to question its
usefulness and purpose.

------
starpilot
It's interesting how liberal politics lead to conservative housing policies,
and vice versa.

------
einarvollset
I think it strange that everyone who thinks that repealing prop 13 will
magically “fix” housing affordability appears completely ignorant of the fact
that most of the western world have effectively zero property taxes.

~~~
repsilat
The problem with Prop 13 isn't that it keeps taxes too low, it's that it
disincetivises downsizing by making your taxes jump when you move into a
smaller place.

I don't think it's all (or even most) of the problem, but it's bad legislation
and definitely contributes to the housing shortage.

~~~
toddh
Depending on where you move to in CA you can keep your previous tax basis.
That's prop 60/90 I think.

------
pacala
CA 1970: 20M

CA 2020: 40M

~~~
drdeadringer
If housing hasn't similarly increased [or "just doubled"?] during that time
frame, here we are.

~~~
mixmastamyk
LA tent was $200ish for a 2bd apt in the seventies, now $2000ish.

------
foogazi
just read the article and not the book

Are there states that are not in a housing crisis? What are they doing
differently?

What would California land prices and rent look like in non-housing crisis?

Anyone seen analysis like this: Show a house on Zillow and instead of it being
worth $x figure out it should be $y

------
jacobwilliamroy
What if real property worked like cars? Like the land is worth half as soon as
you buy it, something like that?

~~~
jacobwilliamroy
Or maybe every structure built on a lot decreases its value?

I just dont understand why real property should appreciate just by existing
and being bought and sold. Isnt that just money for nothing? Doesnt that run
counter to the old calvinist ethos of WORKING for money?

What? Are people just going to live and sleep outside just because there's no
more profit in drawing imaginary lines on the ground?

~~~
foogazi
> Or maybe every structure built on a lot decreases its value?

That is actually how it works right now

Structures depreciate - a new house is worth more than an old one (unless
there is some unique historic/sentimental value)

~~~
Gibbon1
It's a bit tricky because part of the valuation is 'replacement value'. A
problem with San Francisco is building now costs something like $600-1000 a
sqft.

