Posted on 02/01/2025 9:32:59 PM PST by SeekAndFind
Everything seems to be more expensive in California - even the politicians. But housing is getting to be - nay, scratch that - has been a real problem for some time. Young families are surrendering their dreams of owning a spacious California house in the suburbs as Mike and Carol Brady did, and that's because housing has grown prohibitively expensive in California - and in plenty of other places, too. For the moment, though, California makes a good cautionary tale.
The Petersen family’s two-bedroom apartment in northern California is starting to feel small.
Four-year-old Jerrik’s toy monster trucks are everywhere in the 1,100-square-foot unit in Campbell, just outside of San Jose. And it’s only a matter of time before 9-month-old Carolynn starts amassing more toys, adding to the disarray, says her mother, Jenn Petersen.
The 42-year-old chiropractor had hoped she and her husband, Steve, a 39-year-old dental hygienist, would have bought a house by now. But when they can afford a bigger place, it will have to be another rental. Petersen has done the math: With mortgage rates and home prices stubbornly high, there’s no way the couple, who make about $270,000 a year and pay about $2,500 in monthly rent, can afford a home anywhere in their area.
Describing home prices in California, especially in places like Campbell - a stone's throw from Silicon Valley - as "stubbornly high" is to indulge in the greatest understatement since the English King Harold Godwinson described the Norman invasion as "a bit of a bother." Prices in the Bay Area, of which Campbell is broadly a part, have been sky-high for some time now. Interest rates are climbing, too, although before young people get too agitated, I would caution them to look at the interest rates of the Carter years.
Supply and demand, as always, apply here. But while this piece recognizes the lack of supply of housing, what they don't do is ask why.
The biggest driver of this trend, experts said, is simple: There are far too few houses on the market to match pent-up demand, driving prices past the point of affordability for many people who are relatively early in their careers. Coupled with high mortgage rates, many have concluded that renting is their only option.
“Wage growth hasn’t kept up with the increase in home prices and interest rates,” said Domonic Purviance, who studies housing at the Atlanta Fed. “Even though people are making more money, home prices are increasing at a faster rate.”
Oh, sure, there's one "why" there. There are far too few houses, sure. But why are there too few houses?
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I spent many years conducting root cause analyses and teaching major corporate employees, mostly engineers, how to do root cause analysis. One of the tools for root cause analysis is what some call "5 Whys," but I always called a "Why-Why Analysis," as sometimes it may take two "Whys" and others, ten. In this case, there are too few houses. But they don't ask or answer the next question: Why?
This is going to take us down a long road, involving onerous building codes, landscaping regulations, zoning issues, and much more, but most of these rules, regulations, restrictions, and requirements were put in place by state and local governments that are, in this part of California, overwhelmingly Democrats, who never saw a rule or regulation that didn't make them dance a buck and wing.
When asked, "How do you know when you've arrived at a root cause," my stock reply was, "When you arrive at the point where some person or group of people made a decision, that's likely to be your root cause." People who decided to vote in California's overwhelmingly Democratic state legislature and the big coastal cities' overwhelmingly Democratic municipal governments would seem to be the root cause here. Oh, the linked article also mentions another city - Boston - and we could say the same things there. Or in the Denver area, where two of our kids live - and can't afford a house, even with a three-income household. Real estate is cheaper in other places, like small towns scattered across flyover country, but that's not an option for everyone, and there are good reasons why some people can't or don't want to move.
Fortunately, there's an answer. Vote in politicians who vow to deregulate, remove roadblocks for developers, establish only minimal structural standards for safety (this is earthquake country, after all), and then get out of the way and let developers do their thing. Supply and demand. Raise the supply to meet the demand, and the prices will moderate.
The American Dream will be real again. Mike and Carol Brady would smile at the thought.
When you have the best weather in the world, 1.25 % property taxes, no hurricanes, very few tornadoes, no fire ants, no chiggers, and rich people from all over the world come here and buy homes, the value goes up much faster!
You forgot cockroaches and earthquakes.
Yes. As a Nation and Civilization itself, WE are “Dying from Complexity”.
The stupid Internet and the networks that make it work have totally strangled the last hope for sanity.
The gatekeepers are totally clueless.
If I am correct, none of the replacement homes would be eligible for grandfathered property taxes. Nor would they bypass the undoubtedly lengthy license/permit process. Couple that then with enormous insurance costs for the home you’re talking APARTMENTS to replace all those single family homes.
Too many illegals?
Wait a minute
The example couple make 270,000 annual
That’s 22,500 PER MONTH.
their current rent is 2,500 per month. About 10% of their monthly net.
They cannot afford a mortgage?
If CA would vote for this, then why does Deep State have to steal its elections, hmmmm?
That’s gross, not net.
And it’s not just thr mortgage.
It’s also the property taxes and insurance.
We see the sane thing in NYS.
People can maybe afford the mortgage, but not the four figure on up property taxes and soaring ancillary costs that come along with the home.
When you drive around California, you can easily notice huge swaths of empty spaces, right next to crowded cities.
They could be easily developed and the prices of CA real estate will go town to reasonable levels.
Why they do not do that? Politics!
They seem to forget Economics 101 - Supply and Demand. Artificially pumped up demand (by allowing, nay inviting millions of freeloaders into the system). Goes for food prices, too.
A decent house in a good neighborhood where they would want to raise their kid probably runs in the 2-3 million dollar range.
That is why they cannot afford a house.
One of my goals was to buy a home—a decent home in a nice neighborhood—and I wanted it to have at least an acre of land on it.
I crunched the numbers based on my career path at the time and calculated the number of years it would take me to make that work.
My conclusion—it would never happen.
I had a good job in a strong industry at the time. I visited an industry headhunter and explained my situation. He asked me if I was willing to move out of CA to make my dream happen and I said yes.....
Fast forward a few months and I have accepted a job at the exact same salary far away from CA and I walk into the office of a local real estate company. It was a smaller community and this was basically just one guy.
I told him I was a single guy but wanted to own a decent home in a decent neighborhood with enough land for privacy.
He asked me my salary and I told it to him.
He pointed up to his wall that had a picture of about one hundred homes of all kinds and said:
“Take your pick and tell me which ones you want to visit. You can afford any of them.”
Crazy California....
“Four-year-old Jerrik’s toy monster trucks are everywhere”
If they’re on the 2nd floor, I shudder to think what that would sound like to any downstairs neighbor.
$270K per year is a lot of money. How much have they saved up for a down payment?
After a 20% down payment, your loan amount will be $960,000. With a 30-year loan loan at 6.75% interest:
Monthly payment = $6,227
Total yearly payments = $74,719
“They are not part of the problem when someone fools others to believe a 750 square foot house, built in 1955, in the middle of the California desert, is worth 350,000.00. It is criminal.”
Fools?
In my Montana town a house that size would sell for $500,000 in a week.
All markets are different.
My thought wasn’t the toy budget, it was the sheer number of them crowding the family out. Toys are bulky, and take up a lot of space. It sounds to me like it’s time to weed out and donate some of those toys, just as adults need to clean out closets occasionally.
One of the advantages of being a professional, i.e. a chiropractor, or a dental hygienist, is that you can get a job anywhere. These two should give a serious look at many states where they might not earn as much, but could afford a nice home nonetheless.
We have plenty of land. The democrats block new home building.
Look at what they will do for the Pacific Palisades and Eaton area where approx. 17,000 homes were destroyed. They will slow walk any rebuilding and raise the costs.
I rest my case. By the way, that California house needs a roof and sewer system, not to mention us surrounded by dirt roads. The Market, as you state, has been artificial manufactured and no longer follows long standing economic principles.
“The Market, as you state, has been artificial manufactured and no longer follows long standing economic principles.”
I made no such statement.
My full comment:
Fools?
In my Montana town a house that size would sell for $500,000 in a week.
All markets are different.
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