CA suffers country’s most expensive real estate

Who can afford to live here? The Los Angeles Times reported:

Los Angeles County is the second-least affordable housing market in the country for a middle-class family….

That’s according to a new report out Tuesday from real estate website Trulia, which found that a household earning the median income of $54,000 can afford just 22% of homes in L.A. County on 31% of their income or less. Only in San Francisco, at 15%, can fewer middle-class families afford to buy. Six of the seven least-affordable markets in the nation are in California, including San Diego (25%), Orange County (26%) and Ventura County (33%).

Why is this? A couple of reasons.

First, the California Coastal Commission wields dictatorial powers over coastal building, severely restricting new housing. This ripples inland at least 30 miles. This year, the Legislature and Gov. Jerry Brown gave the CCC the power to assess fines itself, something that in free societies is carried out by court actions (except for such relatively minor matters as traffic violations).

Second, local restrictions are repressive. According to a CATO Institute study:

In the 1960s, California was growing much faster than it is today, yet housing was no more expensive than in most other parts of the country. California was growing so fast that cities often competed with one another over which would get to annex (and collect taxes on) land suitable for development.

To minimize such competition, in 1963 the California Legislature created a local area formation commission (LAFCO) for each county. These commissions could approve or veto the formation of new cities or special service districts and annexations to those cities or districts. Most commissions were dominated by representatives of the city councils in each county.

The cities soon realized they could use LAFCOs to keep most taxpayers within their boundaries. No longer could a developer build houses on vacant land outside of a city’s limits and incorporate a new city or service district to provide the water, sewer and other infrastructure needs for those homes.

After eliminating the competition from such developments, cities could impose costly and time-consuming planning restrictions that further drove up housing costs. What was portrayed in public as a war on sprawl was, in reality, a war on taxpayers seeking to escape the high tax rates imposed by cities.

Third, California’s high-tax and anti-business environment keeps down wage increases that would allow regular folks to afford the high-cost housing.

None of this is likely to change.

It’s simple Econ. 101: Restrict supply and the supply rises.

If you’re in the middle class — and didn’t buy your house in California before about 2002 — the only way to find affordable housing is to leave.