There are two solutions to this:
1) Build more. But this is outrageously difficult due to a well-meaning political view of safety / fairness / etc. These restrictions employ an awful lot of bureaucrats for enforcement but add $10s of thousands in fees and delays for builders, that are IRR driven and would rather concentrate their efforts in more favorable markets (1)
2) Prop 13. For those unfamiliar this essentially locks in property taxes at the owner's basis (with a maximum 2% adjustment for inflation). Meaning if in Silicon Valley you bought a house for $250,000 in the 1990s that's now worth $2,000,000 you're paying about $3,000 a year on taxes instead of $30,000 a year in taxes your next door neighbor is paying that just bought in. Oh and if you sell your house, and then buy a new house that's less than you sold your old house for, you get to transfer the low tax basis! This was put into law due to the "sentiment that older Californians should not be priced out of their homes through high taxes" which I think is noble, but it's also not realistic or fair. In many Bay Area neighborhoods you have a bizarre composition of young families hanging by their fingernails to pay for these "entitlements" for the retirees, and then the retirees that have a gigantic financial incentive to stay put which minimizes inventory and inflates home prices.
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1 - http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou...
2 - https://en.wikipedia.org/wiki/California_Proposition_13_(197...
What Prop 13 did was to say "the best indicator of the value of your property is the amount the market settled on at the last transaction". It also tries to cover some edge cases (the biggest of which is the McMansion remodel -- look at Palo Alto where $2M gets you a teardown and then you build a $6M house on the lot). Still seems reasonable to me, although of course it's not perfect.
It also means you could sell your home, move across town into a home that costs the same as the one you sold, and your property tax could quadruple. That's not reasonable either.
> here's no great system for appraising houses
The problem for the retirees is quite often they have a fixed income - solution to "unlock" that equity is maybe it's held as a liability against the equity @ the eventual sale price.
Telling people to think of their homes as a commodity upon which market forces should be brought to bear in order to ensure production of housing services at competitive prices is obtuse. People purchase property, rather than renting, largely to gain security and control, to escape the vicissitudes of the market.
https://www.interfluidity.com/v2/6287.html
(It's actually a really good article, I would encourage others to read it for a contrarian view on housing deregulation.)
People want to be able to buy a home and raise their kids or grow old in it. If your ideal market structure doesn't allow for that then you're missing the point.
I understand it's frustrating to outsiders who are new to the city and are trying to "make it" but forcing families out of their homes isn't right.
He would not “lose” his house immediately. He would be forced to sell it for an outrageous profit and move somewhere he can afford to pay the taxes. Subsidies are subsidies, and I have zero sympathy for those who don’t feel like they’re getting enough when people are literally being forced into homelessness from the knock-on effect of this policy to low-net worth renters.
BTW, I don't live in the Bay area and never have. I live in Detroit area and we have this same rubbish and I've had to pay 3x property tax of folks who own 5x the value of my property. It sucks but I understand.
I do not know of any place that caps the property taxes of commercial or rental property.
The redistribution gets rid of a deadweight loss in commuting, easing traffic and transit congestion and allowing more housing to be within commuting distance of jobs.
The US is full of affordable housing in places that are not (despite what you might think) utter cultural wastelands.
Do not wait for Prop 13 to be repealed, you will be in your grave before that happens.
Have you considered that some people might be attached to locations in the urban core for pretty much the same reasons you're attached to those non-wastelands in Middle America? For instance, family history, or workplaces that don't do remote work.
If you want to tax wealth or income just do it directly.
Traffic is a big factor there. We have a total and complete lack of modern/fast public transport reaching out into the outlying areas and unlocking their potential.
You might make 20% less in Seattle or Austin but you will have access to housing, which will have much a much more profound long-term impact on your finances than toughing it out as a renter in a "better" job market.
If you wake up at 45 still renting, you can probably forget about anything resembling a traditional retirement.
Uh, no, that's nowhere close to genocide.
Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who made an offer... I suspect some collusion on the part of the real estate agents.
I live in Fremont, work in south-bay and I pay 2.5k/per month for my own house on mortgage, bought a year ago. I think you are overpaying by a lot.
The housing market is fairly efficient and with so many participants effective collusion would be implausible. Asking prices are essentially meaningless, just the starting point in a negotiation.
Things have changed in SV. I don't know if it is the higher interest rates or something else, but the market has cooled off quite a bit in the last 2-3 months. I bet you can find houses very near their asking price now. Days on market is going up.
When we discuss inequality, I think there are a lot of assumptions made that make it hard to really judge. For example, TFA trots out the high number of people on minimum wage, and the high percentage of people below the poverty line. This is misleading, because it misses out on some key ways that "capitalism raises all boats," which are tricky to measure.
Off the top of my head...
The first is the commodification of goods. Fifty years ago, a washing machine, refrigerator, and color TV were high end, luxury goods, available only to the relatively wealthy. Living on minimum wage today, you likely have access to all of these things. Food, education, clothing, building materials, and luxuries are all cheaper (by hours of labor) than ever before.
The second is the quality of goods. That washing machine, fridge, and color TV that your local Best Buy employee uses are all unimaginably better than their equivalents 50 years ago. It's a washing machine with multiple programmable spin cycles. The fridge has controllable temperature, no freon, uses less energy, and is quieter. The color TV is a flat screen 42" with a remote control. This is also really hard to nail down, and it is a serious limitation for inflation measures, many of which are based on a fixed basket of goods - ignoring that the quality of a "raincoat" or "dental care" changes greatly over time.
The third is the invention of new goods. That person on minimum wage today also likely has Internet access, maybe even in their pocket. They have Netflix, GMaps, spreadsheets, online travel agents, and wikipedia. In concrete terms, this access to information and services is an infinite improvement over 30 years ago.
Finally, these comments ignore the historical context. Yes, some 12% of Americans are below the poverty line, and that's awful. 50 years ago, it was above 20%... and in the meantime, the population exploded. According to the US Census, the number of people below the poverty line has remained flat at about 40,000 since 1959, despite the population as a whole doubling in the same time. That's an amazing feat. It's terrible to have 12% of people in poverty - but let's not forget that we're moving in the right direction.
So, yes, it sucks that a lot of people are on minimum wage, and we should work to improve that. It's terrible that 12% of people in this country live in poverty. But the enormous improvement in what minimum wage MEANS in concrete terms, and the downward trend of extreme poverty, are largely due to the success of places like San Francisco. These measures are not the "dark side of capitalism" that TFA suggests.
Progress is good, but it's not victory. America is far from healthy.
Medical costs have skyrocketted beyond reason, housing is rising, food costs are rising, and now we're starting a trade war with the nation that supplies cheap consumer goods possible.
Netflix is cheap - so what? People in poverty were not complaining about boredom.
Simply staggering.
The color television - yes, but washing machines and fridges are older mass market appliances than most people think (75+ years) - and before that they had effective but sometimes inferior counterparts like root cellars and hard ice deliveries.
No contradiction there. Inequality was always both a feature and a bug of capitalism. Inequality is kind of the whole motivation for participating in capitalism. People start or invest in businesses because they want a little bit more "inequality" in their bank account. It's not to enrich everybody equally.
If you make widgets for $4.50 and sell them for $5 each to a million people, you just extracted $0.50 from a million people and made yourself $500,000. Inequality. It's weird how people have this blind spot where they fail to integrate the big bad word "inequality" they see in the headlines, with the supposedly good and morally harmless act of making oneself rich a.k.a. unequal. I guess it's a disconnect between the micro & macro scales.
A rising tide of water will lift all actual boats, but a 'rising tide' of money doesn't lift all boats, unless there's some intervention in a more socialist direction, such as progressive taxation, to make the money act more like water. Water spreads out flat and covers all ground equally, that's how it manages to lift all boats.
You've identified a want and delivered a product to a million people. What is the proper compensation for that? Should people not be allowed to identify wants and address them for profit?
I think the error in your view is that any sale is predatory, when in reality both the consumer and seller can profit. One gains something they need or want and the other gets money. Sure, buying consumer crap isn't going to lift you out of poverty, but you're still getting a benefit from the transaction.
Edit: Also, there's short-term and long-term enrichment. The widget I sell might be a capital good that earns an income for its buyer, or it might just as easily be something that only depreciates or even destroys other wealth. Whereas the money I've collected can reliably be made to earn an income in any number of ways, which is why I always argue that the money is usually inherently worth more, and nobody on HN seems to agree with that.
If Bay Area governments had simply gotten out of the way developers would have build more than a million new units of housing over the past 40-50 years. Real home prices would have only have increased slightly due to the increased costs of building up.
Instead we got only a tiny fraction of the housing needed to meet demand and huge rent/price increases resulting the highest cost of living in the world. This is a mad-made problem.
Some of the other aspects: 1) The weaponization of profiling and targeting capabilities
2) Complete eradication of of the cultural notion of "Privacy" :- most people coming of age today think nothing of sharing the most private info in search of a few baubles (Likes, discounts, whatnot)
3) Pervasive and inescapable monitoring in every facet of our lives
In short - all of the preconditions are there for a venal system that might give rise to a (technologically)ultra-capable fascist.
