Housing

Quick Take:  We look at some charts and see that housing prices are flattening in the SF Bay area compared to other tech centers.

This means that all media hype about a "housing crisis" is simply an attempt to sow panic.  The only ones who benefit from the fear generated are the developers.  They use the "crisis" narrative try to get legislation through Sacramento that would essentially outlaw single family home zoning in all of California and permit developers to put up pretty much anything they like, anywhere they want.

"Rent Burdened" Households and Homeless:  Rent-burdened households pay more than 30% of their income for housing.  We should help the most stressed of them and the homeless to find living arrangements they can afford.  They often need social services.  Providing a stable address is the first step in helping them get the help they need.  

For example, one family was entitled to social security and a military pension from the deceased husband.  They couldn't get it because they had no address. 

As the chart shows, every place has similar affordability problems - we are no different.  Better social services, and job training will  help the most disadvantaged.  A strong economy will help everyone to achieve the American Dream.

So what has this got to do with me running for mayor?  Glad you asked.  I am the only mayoral candidate that is fighting back against the big push by developers to turn all of the SF Bay area into an expensive knock-off of Manhattan only without their excellent transit system.

 

I don't buy the "crisis" narrative and have joined with other like-minded local elected officials from around the entire state of California to fight the bills in Sacramento.  Our group, ""The California Association of Local Electeds", met with with state Senators and Assembly members every week while the legislature was in session.  We explained why we oppose some bills and support others. 

As mayor I will continue this work with the added influence that comes with the position of Mayor of the largest city between San Francisco and San Jose.

Sacramento State Capitol

The legislation we opposed would have dramatically increased the density of all cities in California.  It would have enabled "by right" construction of high rise apartment buildings in single family neighborhoods.  "By right" means no town can prevent the construction of such buildings. 

 

Most of the nine bills in Sacramento that we opposed also removed any parking requirements - because we're all supposed to "bike to work" (and shopping).

We were largely successful this year, but it was very close.

Senate Bill 50 would have allowed up to a 5 story, 10 apartment building with only one parking space for every 2 units.  I helped defeat this by working in the group "California Association of Electeds" and lobbying numerous state senators and representatives.

 Now

If SB-50 had passed

SB-50

 Defeated!

SF Bay Boom-Bust CycleThere have been periodic "boom-bust" cycles in housing costs the SF Bay Area going back to at least the microprocessor revolution in the 1970's.  We're probably at the end of one now.  See graph below going back to 1985.  

US Boom-Bust CyclesThere have been periodic "boom-bust" cycles in housing costs in the US following the economic cycles.  Below is a graph covering 1963 to 2011.

Four Housing Boom-Busts in US

Four Housing Boom-Busts in SF Bay Area

PC bubble in the 1980s; "dot-com" bubble 1996-2000;   Facebook, Apple, Netflix, Google (FANG) 2012 to ?

Why the Cycles?  1960's "Great Society" + Vietnam War spending overheated housing prices & economy - causing the 1970's sharp increase in oil prices which depressed the economy & housing prices.  Mid 1970s low interest rates revived economy but caused inflation in housing and everything else.  In 1980 the "Fed" raised rates killing inflation & housing prices, etc., etc., etc.

Rising Costs: As the next graph shows, the SF Bay Area is not unique in seeing housing costs increasing above the US average.  For example,  Austin and Seattle housing prices have been rising faster than SF Bay Area housing since 1990.

Reading the graph: The graph shows housing prices based at 1990 = 100.  The graph shows housing prices in the San Francisco Bay Area rose to 3 times their 1990 value in 2007 (300 on the graph), dropped to 1.5X their value in 2009 (150 on the graph), and are currently at 3.7x their 1990 value.


Similarly, Seattle prices are now at 4.7 times their 1990 value, and Austin housing is now at 5X its 1990 value.  The US average housing price rose almost 3X in those 30 years.

They're still cheaper!  Obviously, Seattle and Austin started from lower 1990 values to begin with so they are still cheaper than housing in Silicon Valley.  As seen in the examples shown, disparities still exist, though they are diminishing.

Building more housing here is making it worse as we can see all around us.  The more that's built - the higher costs go and the more lower income families are displaced.  The real problem is the hyper-growth of big tech companies.

More importantly, it isn't the way people want to live as the chart of housing preferences shows (below):

Seattle $1 Million

Sunnyvale $2 Million

Austin $1/2 Million

Some urban planners want us to all live in apartments near bus stops and railway stations.  That isn't a solution to anything because that isn't how people want to live.  You can't force them to do that - they'll just leave for more sensible areas.

More high rise apartments also increases overall commuting because once people start a family, they want a single family home and will commute as far as necessary to get it.  Given the finite amount of land in a city, commuting is an inevitable fact of life in urban environments.

The Solution is to tell big tech it is a big beautiful state and they need to consider other places when looking at where to expand.  I'm not afraid to do stand up to the tech titans and the urban planners - that is a key difference between me and my opponents.

Further Reading: I've written a lot on housing in my blog.  Here are some of the most popular:

1. "The Myth of a Housing Crisis" A lot of twisting of facts are necessary to create a myth.  I look at some of them.

https://meetingthetwain.blogspot.com/2019/09/the-myth-of-housing-crisis.html

2.  "Forum on Senate Bill 50 (SB-50)" A truly bad bill which finally was killed this year (2020).

https://meetingthetwain.blogspot.com/2019/04/forum-on-sb-50.html

3. "Urban Economics on the Ground"

https://meetingthetwain.blogspot.com/2017/04/urban-economics.html

"...an increase in the population size has fairly straightforward effects. Indeed, a rising population makes competition for land fiercer, which in turn leads to an increase in land rent everywhere [emphasis added] and pushes the urban fringe outward"

4.  "Housing Costs and Density"

https://meetingthetwain.blogspot.com/2017/01/live-work-commute-2.html

Real estate involves a fixed amount of land within city boundaries.  Increasing demand for this land will not increase the supply, so the price must rise with demand.

What People Want

What Planners Want

Post Script:

Affordability is a big catch-phrase now.  Some of the data is misleading and can give a false impression of unaffordability.

 

For example, at Dean Sereni's Blog are some graphs showing only 18% of residents of San Mateo County can afford the median house, and that historically never more than 30% could afford a house there.  Yet 60% of San Mateo residents own their home, very close to the national average - as the US Census tells us

 

The key word is "median" house price.  The median is the midpoint of all values.  So, half of all the houses in San Mateo county are below the median value and affordable to many more families.  In addition, a lot of households have had one person drop out of the work force to raise children or simply retire at the end of a careerso their current income wouldn't qualify them to purchase the house they live in - yet there they are.

Single Family Homes are what 80% of people want to live in as the graph of consumer sentiment shows.  Over half of those in apartments or condos want to live in a single family home.  They will do what they must - commute or move to another state - to get that "American Dream".

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