Bill seeks to ease California's affordability housing crisis


#1

latimes.com/business/la-fi-affordable-housing-20140416,0,6854937.story#axzz2z2VCzKV8

Most Californians can’t afford their rent.

The state’s affordability crisis has worsened since the recession, as soaring home prices and rents outpace job and income growth. Meanwhile, government funds to combat the problem have evaporated.

Local redevelopment agencies once generated roughly $1 billion annually for below-market housing across California, but the roughly 400 agencies closed in 2012 to ease a state budget crisis. In addition, almost $5 billion from state below-market housing bonds, approved by voters last decade, is nearly gone.

A state bill seeks to replace some of those funds and create more than 10,000 low- and moderate-income homes annually through a $75 fee for recording real estate documents. But the proposal has drawn criticism from some in the real estate industry who say it unfairly saddles homeowners and businesses with added costs.


#2

What a blatantly false statement the writer begins the article with. If the majority of Californians couldn’t afford their rent, rent prices would plummet.


#3

The first place I would look to solve the problem of housing affordability is excessive regulation. Zoning regulations drive up housing prices and make it very difficult for low income people to move into some communities.


#4

I never understood why CA has one of the highest rent prices in the country, after all, the entire area is dangerous to live in, earthquakes are a given, they know eventually the big one WILL happen and it will likely destroy the entire southern half of the state!!! Along with fires every year in the hills, landslides, dust storms, and other natural things, in reality, it should be one of the cheapest places to live.

Yet, here in KY, we have little to no chances of any kind of serious natural disasters, (to the degree CA does anyway), and our rent prices are MUCH cheaper than CA, so why arent people from CA rushing to come live here and other areas like this?

Another thing, I know a man and wife that used to live in southern CA, they recently moved here to northern KY, and they were telling me, they sold their little 2 bedroom house in CA for over $550K, but here in KY, with that kind of money, they are able to afford to live in a HUGE mansion if they wanted to, they didnt, but they did have money left over to put in bank, even they said alot of people living in the slums of southern CA, their homes are worth close to $200K or more, they didnt understand why these people are not selling and leaving CA, then coming to an area like this and be able to afford a very nice house in a very nice part of town…doesnt make sense?

Is weather really that much of a determining factor in an areas cost of living? Seems like it is in this case, because here in KY, we have absolutely worse weather anyone could imagine, we have extremely hot and humid summer, and extremely brutal cold winters, so we get the worst of every season here, this does explain why cost of living is so cheap here though.


#5

No California experience, but from my Illinois experience I can tell you that shortages of affordable housing are 100% manufactured crises caused by government regulations in the first place.

I work in the land development business. If you folks had ANY idea how much of the cost of a new house is actually disguised fees and stickups by local municipalities, county transportation agencies, school districts, park districts and so forth, you’d be buying muskets and tricorn hats by the boatload.

You see politicians proclaiming their concern about affordable housing on TV and in interviews, but when they meet with developers, the REAL agenda shows up. “You want approval? You’d better make the three car garage standard, 2,400SF minimum home size, I want an 8 acre park donated, I want you to bury the overhead power lines on the main road out front, I want a 4 foot tall landscaped berm screening the back yards from the main road, you’ll rebuild the existing external road to provide a left turn lane into the subdivision (at your cost, of course), go ahead and dedicate about 15% of your land for a detention pond, put up street lights every 300’ feet so nobody can see night stars anymore, give us sidewalks on BOTH sides of the street, don’t forget a nice classy entrance monument and sculpture and we expect mandatory landscape packages for each home.”

Same guy that lamented the lack of affordable housing on TV the night before is, a day later, adding $25,000 to the cost of each home in regulatory extortion demands. They’re liars and hypocrites. They don’t WANT affordable housing because poor folks pay less in tax base than they consume in city services. They pay lip service, but they’re REALLY working to keep the poor out.


#6

Didn’t read the article but I live in southern CA (SoCal) so I’ll add a few things.

Can’t speak for the rest of the state, but in SoCal most of the good paying jobs or even decent jobs are centered in a handful of dense cities. But rent and housing prices are high, so it’s a balance of distance to work vs rent. There are actually articles citing stats that a great number of people have left LA County and moved to cites 50+ miles away. Doesn’t sound far since it’s an hour in no traffic but typical traffic turns 60 miles into 1.5 - 2.5 hrs each way during rush hour. (Rush Hour is 6:30a - 10:00 & 2:30p - 6:00p). Basically, rent gets cheap if you leave the city, but then you are at the mercy of spikes in gas prices.

And as for weather and disasters. We have summer and not summer. But as for natural disasters we are truly luck. Only a small portion of us are at risk for wildfires or landslide. And building codes (a costly factor) means most quakes do not cause any real damage. I’d rather have earthquakes than tornadoes, hurricanes, blizzards or storms. At least major quakes seem to happen every 8 years, though we are overdue.

If I had found another place without tornadoes, hurricanes, or blizzards that had a good standard of living is have moved there years ago. But I haven’t. That move will have to wait until retirement when a good job isn’t a requirement.


#7

One of the reasons rent prices are high is due to our stringent building code designed to dramatically reduce fatalities from an earthquake. which will probably cause a death toll in the low to mid triple digits if that.

Adjusted for size California is far safer than Kentucky.

You mean like landslides, mudslides, rockslides, flooding and tornadoes?

Because many of them don’t own their homes, they rent.

Large parts of California are quite affordable.


#8

You’ve literally just described every subdivision around me.

:eek:


#9

I live in the SW. Mo. Ozarks. Recently talked to a fellow from NY who moved here a few months ago. He’s an engineer, and was going broke in NY affording his housing, enormous fuel bills getting to and from the places where he performed his services, taxes, etc, etc, etc. He and his wife found themselves working ever more hours just to pay their inescapable obligations. Got a chance to move here doing the same thing for almost the same money if calculated hourly, but works a lot fewer hours. He and his wife are ecstatic about their newly-found ability to live comfortably and even save some money.

Odd how that all is. One would think more people would move from a high-cost area if they can’t get their income to pay for it all. But not many do. It’s mightily disruptive to do it, of course, but one would think at a point one would.

I doubt Ky is any hotter than SW Mo in the summer, however. :wink: The couple I mentioned has not yet spent a summer here. I mentioned that to him, and he said others have told him about it too, but he said he can live with the heat if he is able to actually live. He can do that here, but couldn’t do it in NY.

One big factor in places like this (probably KY too) is the fact that one can just go outside of a town, buy a few acres and build a house at a reasonable cost, with a very minimum of regulations. The only regulation here relates to septic tanks and wells, both of which have to meet quite reasonable state standards. Otherwise, you do what you want.


#10

The Western region of the US has the smallest average square footage in new construction and the North East and Midwest feature the largest, the size difference is nearly a thousand feet. Can someone explain who the hell is buying such huge houses in the Midwest and North East that the average is 3000 square feet‽
source


#11

I got that one. First, that data is overall averages for a decade, not necessarily current info. It’s dropped a bit since the crash. The answer is simple: anyone who wanted a new construction home during that time period.

The home building industry operates on some very simple rules of thumb. The total cost of the developed lot can’t be more than 1/3 of the base home price. So if the municipality balloons the land development cost the way I described above to the point where the developed lot costs (with all fees, offsite improvements, etc built in) hits $100,000, then the base price for the cheapest house in the subdivision has to be $300k. The builder then looks to find what people value the most and spends the money on product accordingly. Around here, the base home has LOTS of SF and modest features. You pay extra for the fireplace, skylights, granite counters, oak bannisters, etc.

Who can afford it? Nobody as it turned out in 2008. I can recall asking a client in 2007 how if I, as a specialized professional in the business couldn’t afford one of his homes, who could? HE didn’t know or care. All he cared was that the banks were approving the loans. I’d say the average suburban home around here has dropped to about 2,500 SF again. And that’s really only viable because builders are still enjoying the federal bank bailout. You’ll love this one.

In the boom days, the builders knew it couldn’t last, so they were clever. Every subdivision they began was a separate, free-standing LLC (limited liability corporation). Thus, one failure couldn’t bring down the whole company. When the market tanked, the builders simply walked away from their projects and let the banks take them back. The banks were left glutted with massive inventory of developed lots and no demand. The SAME builders then bid at auction on the developed lots and bought them back often for less than the price of the improvements that had been put into them (negative raw land value!). Now the builders are selling homes there at much lower prices effectively subsidized by your tax dollars that went to bail out the banks. Expect home prices to rise dramatically once that inventory of lots is depleted and builders have to develop them again at full prices.


#12

Of course. We build them all from the same cookie cutters that we’re handed and told to conform to. It’s professionally rather depressing sometimes.


#13

Same could be said about St. Louis. It’s a great place to live and very reasonably priced. We have a world class symphony, major league baseball, hockey, football, zoo, art museum, etc. Very little traffic problems.
People consider us hicks.
I can’t believe people live in places like California considering the cost of living. My sister just retired and moved to LA to be near her sons and her new grandchildren. Luckily, her one son has a guest house (converted garage) where she will be living. She said a first floor 500 Sq foot condo was $650,000.00. No privacy, everybody on the sidewalk can look in. One bedroom, one bath, dated condition. She has spent many of her professional years buying and updating property. Her last few properties were in my condo complex. They were updated two-bedroom, one bath units with balconies, underground parking, and a storage locker. She put in Granite countertops, wood floors, latest appliances, and fixtures. The complex is very nicely landscaped (see my photo album), woodsy, has a pool and tennis court, convenient to the highway. It is in an inner suburb, so very close to the city and amenities. They went for $125,000.00. And yes, she made money on them.

I’m willing to bet the entertainment industry is at the basis of why home ownership is as high as it is. I’d like to see some data on that, but not sure how that could be accomplished.

The rest of the poor working class has to live in dumps in bad neighborhoods and contend with the horrible traffic.

I have lived in Boston, Philadelphia, and Cincinnati. So, I have some experience in living in different cities. Cincinnati is a gem too.


#14

One would think.


#15

As big cities go, St. Louis strikes me as one of the most comfortable to be in. LOTS of Catholics, lots of churches, easygoing and casual to the point of almost (but not quite) being Southern. Very friendly people. Not horribly expensive.

One difference, I am sure, in the cost of housing there versus California, is land cost. It’s my impression that in much (but not all) of California, land costs and land development costs are really high.


#16

This would be the same St. Louis that ranks #2 in most dangerous cities in the US beating out Oakland?

In general where people want to live the land costs are high in California.


#17

Certain parts of the city, yes. Unfortunately there is a lot of black on black crime. I don’t know where your statistic of #2 in dangerous comes. Chicago and Detroit strike me as much more dangerous.

But overall, the St. Louis area is very safe and hospitable.


#18

That usually goes for any city. For example, the high crime areas in the city of St.Louis are very cheap to live in.

The lower crime areas a bit more expensive. But much lower than prime real estate in places such as Chicago or California.


#19

One needs to realize that the City of St. Louis itself is not, by far, the largest part of the St. Louis metro area. The very, very old City itself is a rather smallish area geographically, completely surrounded by other (much larger, taken as a whole) municipalities and the Missouri and Mississippi rivers. With a few exceptions, the City itself is virtually all “inner city”, to the extent it isn’t commercial. Over the years it has declined massively in population as commercialization has taken over, just as the surrounding municipalities have grown and proliferated a great deal.

So, while technically accurate, characterizing St. Louis as “dangerous” is equivalent to selecting the worst part of any major city and characterizing the whole by reference to it.

In Missouri, when one refers to “St. Louis”, one generally means the metro area, not St. Louis City alone.


#20

California is a desert. It cannot supply a large population without changing the climate via irrigation and other such means. Its water is mostly imported. All the grass planting and watering has changed the climate from arid to more humid. Additionally, unsustainable building, such as on mountainsides is at the root of the mudslide disasters we hear about on a regular basis. Are we really surprised there are droughts and wildfires?

Large parts of California are quite affordable.

I’d like to know if it is a reasonable commute between these affordable locales and work. My understanding and observation of Southern California traffic is that it is in constant state of gridlock.

Here is a sign my sister saw on the bus (she is learning how to the public transportation system in LA/Santa Monica):

Only dogs and miniature horses helping people with disabilities allowed. (paraphrased) :slight_smile:


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