Colman: CALIFORNIA HOUSING: LET THE MARKET WORK

SB 50 is a developer’s delight.  It will speed the gentrification of communities and force the poor further from the city.  Forcing everyone to use solar panels when building a new home after 1/1/20 will add $20,000 to the cost of a house—and if financing, add $40,000 to the cost of the mortgage.  The passage of the Split Roll tax, to increase property taxes on commercial and industrial property will also tank the value of private homes, since folks will see jobs moved out of State or closed.

 California now has 40 million people, a population that is greater than that of all of Canada, which has 37 million people.

 Clearly, too many people want to live in California, making the cost of housing extremely high.

 Instead of building 3.5 million housing units, the government of California should do nothing at all. 

 By doing nothing, people who want to live in California and cannot afford the cost of housing and other expenses will move to another state or another nation.

 California is no bargain.  Not only is housing very expensive, just about everything else is as well.  California has the nation’s highest sales tax, the nation’s highest or second highest gasoline tax, and the higher bracket (3.3%) for the state’s personal income tax.”

As Obama said, “elections have consequences”.  California being unaffordable for all but the very rich is one of the consequences.  The time has come to end the failure of government housing policy, by ending government housing policy.  What do you think?

CALIFORNIA HOUSING:  LET THE MARKET WORK

By Richard Colman, Exclusive to the California Political News and Views,  4/25/19 

California’s so-called housing crisis can be solved by letting the real-estate market work.

 By 2025, California Governor, Gavin Newsom, a Democrat, wants 3.5 million new units of housing built in the state by 2025.

 This extra housing may not be needed and should not be built.

 Admittedly, housing is costly in California, especially coastal California.  A single, detached family house can easily cost $2 million or more.

 If a buyer wants to borrow 80 percent of $2 million for a house, he would need a loan of $1.6 million.  However, under the 2017 federal tax law, the tax deductibility for mortgage interest is limited to loans of $750,000.  Thus, why should a buyer purchase an expensive house which gives limited tax deducibility?

 In other parts of the United States, $750,000 is more than enough to purchase a decent house.

 California now has 40 million people, a population that is greater than that of all of Canada, which has 37 million people.

 Clearly, too many people want to live in California, making the cost of housing extremely high.

 Instead of building 3.5 million housing units, the government of California should do nothing at all. 

 By doing nothing, people who want to live in California and cannot afford the cost of housing and other expenses will move to another state or another nation.

 California is no bargain.  Not only is housing very expensive, just about everything else is as well.  California has the nation’s highest sales tax, the nation’s highest or second highest gasoline tax, and the higher bracket (3.3%) for the state’s personal income tax.

 The expensive housing market may be generating an exodus of people from New York City.  On April 18, 2019, the Wall Street Journal reported that the city’s population dropped 0.47 percent to 8.4 million in July 2018.  According to the Journal, ” . . . New York’s population grew by about 7,000 in 2017, but revised figures show it actually dipped by about 38,000, a 0.45% decline from the prior year.”

 While one year’s drop in population does not make a trend, the possibility exists that in New York City the market for housing is producing the expected result:  Residents there are presumably leaving because the cost of living in New York City is just too high.

 If New York City’s population is dropping, then one might conclude that California’s population, especially in the coastal regions, may be headed in the same direction — down.

 Between June 2018 and March 2019, two surveys showed that about half of the San Francisco Bay Area’s population is considering leaving.  Statewide, two other surveys have shown that up to 75 percent of California’s population claims that maintaining a middle-class lifestyle in the state is becoming impossible.

By letting the housing market work, California might find building that extra housing is foolish.  However, foolish actions by governmental entities are not something new.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.