Middle class can’t afford CA

Middle class can’t afford CA

california coastal commissionPoliticians of both parties like to boast how they work for the “middle class.” Well, there isn’t much of a middle class left in California, at least along the coastal areas.

According to data provided by Trulia, the three least affordable areas in America are San Francisco, where just 14 percent of homes are affordable to the middle class; Orange County, where I live, and where just 23 percent are affordable; and Los Angeles, at 24 percent.

Next is New York City, at 25 percent.

Then California picks up again, with the fifth-least affordable area being San Diego at 28 percent; followed by San Jose at 31 percent; and Ventura County at 32 percent.

So, six of the seven least-affordable areas in America are in California.

Nor is this likely to get any better. The main culprit is the California Coastal Commission, imposed by voters in 1972. Most of those who voted for it now are dead; it’s been 41 years. Yet their descendants have to live under its dictatorial prevention of adequate housing along the coast. If the voters of 1972 had been told, “Your grandchildren will not be able to afford to live in California because of the CCC,” it would have lost overwhemingly.

Gov. Reagan

I recently asked the Reagan Library to research for what Gov. Reagan’s position had been in 1972. Jennifer Mandel, Archivist, wrote back to me:

“The Reagan administration did not generally support the creation of new government entities in principle, and did not support the establishment of the California Coastal Commission.  Although the administration may have agreed with the concept of coastal controls, there were several objections to Prop 20.  Most notably the initiative was considered too ambiguous regarding key definitions and unbalanced in the areas of jurisdiction.”

Indeed. The CCC is the closest thing in America (at least until Obamacare) to a Soviet-style arbitrary government agency, which just does whatever it wants, trampling on property rights all the way. Other regulations also severely restrict housing construction in the coastal areas. But the CCC is the key one, and sets the tone for everything else.

The CCC boasts its mission is:

“Protect, conserve, restore, and enhance environmental and human-based resources of the California coast and ocean for environmentally sustainable and prudent use by current and future generations.”

But the “future generations” of 1972 now are here, and they can’t afford the “prudent use” of the coast, or anything else in California. They only can afford to leave.

It’s not going to get any better because the CCC is not going to be repealed. Little new housing will be guilt. Meanwhile, high state taxes and anti-business regulations are keeping wages low, preventing the middle class from moving up to higher income brackets.

Only a tiny elite of oligarchs and the environmental elite now can afford to live along the coast. It’s their playpen.

7 comments

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  1. Queeg
    Queeg 16 October, 2013, 15:01

    New York City is a hell hole for immigrants, low achievers, service workers and the generic have no idea types.

    They do not leave.

    You will stay in California……..misery likes company.

    Reply this comment
  2. Let It Collapse
    Let It Collapse 16 October, 2013, 15:37

    By the time Obama leaves office just the federal debt will be north of $20T. This, of course, does not take into account the future amount owed on social security, medicare and medicaid which are not included on the balance sheets. That would push the debt past $120T.

    But let’s just focus on the balance sheet federal debt of $20T. The historical norm for interest rates is about 7%. What is 7% of $20T? $1.4T. That amount would consume about 37% of the current federal budget. For every 1% rise in the interest rates tack on another $200B. For every 1% rise it consumes about another 5% of the federal budget. Should the interest rates surge to 10% (very possible if the bond markets go wacky) the interest on the debt would be in the area of $2T and consume over half the federal budget. Sustainable?

    Currently, the nation is like a man who makes $27000 a year and spends $38000 a year who has accumulated $170000 of debt on his credit cards. Imagine him walking into his banker’s office and asking for another $20000 credit for his card. What do you think the banker would tell him?

    None of this is sustainable by any standard of reason employed by any sane man.

    The young generations will pay dearly.

    Reply this comment
  3. dltravers
    dltravers 16 October, 2013, 21:56

    Come on. Do you think homes built on the coast will be “affordable” even if you built a string of homes from north to south on every inch of coastline?

    The middle class does not own ocean front property of the type affected by the coastal commission. What the middle class can do is go to places on the coast and vacation.

    Given opportuntiy, the wealthy would own every inch of California coastline and keep the middle class off the beaches.

    That is reality.

    Reply this comment
  4. Queeg
    Queeg 17 October, 2013, 09:27

    The cooking frog has not sung yet……he has not paid his first installment of property tax yet!

    Reply this comment
  5. Skippingdog
    Skippingdog 18 October, 2013, 11:26

    That’s quite a mangle of metaphors you’ve posted, Queen.

    Reply this comment
  6. Richard Rider
    Richard Rider 18 October, 2013, 15:19

    Two other disturbing aspects of this Trulia housing study worth noting:

    1. The average home square footage of a California affordable home in these terrible markets is from 1,000 to 1,200 sq. ft. My San Diego market average is 1,056 sq. ft. Such modest CA homes are significantly smaller than the “middle class affordable” square footage in other markets. And not included is the amount of LAND one acquires with the home, but almost surely CA lots are much smaller.

    2. In the past 12 months, there has been a dramatic drop in the number of homes for sale that meet the middle class affordable home classification. More than likely this has to do with the housing recovery, coupled with higher mortgage interest rates. Check out the chart below. San Francisco dropped from 24% to only 14%. San Diego dropped dramatically from 46% to 28%. These percentages dropped in almost all the markets this past year, but the drop is far steeper in the CA markets.

    Note that the study looks at ONE HUNDRED U.S. real estate housing markets. CA “houses” 6 of the 7 worst spots — 1, 2, 3, 5, 6, 7.

    Reply this comment
  7. Richard Rider
    Richard Rider 18 October, 2013, 15:48

    dltravers, this is NOT about beach homes. Get a grip!

    Only a TINY number of houses in these six CA communities are on the beach. TINY!

    The overwhelming majority of homes in these areas aren’t within a MILE of the beach. My pricey home in Scripps Ranch is SEVEN miles from the beach.

    Check out my other comment here on the average size of a San Diego affordable middle class home — 1,056 sq. ft.

    Governments owns most of the land, and severely restricts and hinders any building on private land. We are EXTREMELY anti-housing (unless it’s “affordable housing” paid for by taxpayers at incredible cost).

    FACT: AS A STATE — the ENTIRE STATE — California ranks 49th worst for percentage of home ownership.
    http://riderrants.blogspot.com/2013/02/more-dismal-california-economic-rankings.html

    FACT: The average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!
    http://www.newgeography.com/content/003882-california-homes-require-real-reach

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