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Is it only California?

The Economist ran a special report last week comparing Texas and California strengths and weaknesses.  What's unavoidably obvious is that many of California's weaknesses stem from housing affordability.
  • The finances of their schools are severely hampered by 50% higher salaries for teachers.  That's not largesse, it's driven by the higher cost of housing.  Teachers in California need that money to afford to live there.
  • Net migration is negative (though population is still growing), and the overriding factor here appears to be housing costs.
  • California spends a lot to help it's low-income population, almost 120% more money than Texas per person, yet still ends up with only a marginally lower rate of poverty after transfers despite a much higher average wage.  Housing explains about 80% of the higher cost of living that negates California's more substantial efforts to have less poverty.
So, if you care about any of these issues, you should ask, are high property values helping California address any of them?  In theory the property taxes help, but California has a complicated thicket of property tax freezes and abatements.

To the degree that property value is driven by demand, driven by higher job opportunity, that helps California, but that's second order effect, and demand is only half the equation.  Where property value is driven by supply limitations, it's hard to see a positive aspect for these issues.  It might benefit property owners, but if it's harming the state's economy overall, that's only going to be a short-run benefit.  And they won't benefit until they sell, at which point they are either:
  1. Moving to another house in state, in which case the negatives are greater as the positives, since now their cost of relocation via closing costs, broker fees, transfer taxes are all higher.  Only if downsizing can they realize a "gain".
  2. Dead and passing on their estate.  Not much personal benefit there.  Certainly not much for California.
  3. Moving out of state.  Not much benefit there.
With this in mind, how does California not take an initiative like SB50 seriously? Local zoning rules will never incentivize the type of change necessary to tackle that problem.  Why?  Well, who has influence and is harmed? It's not the people out of state who might move to California in the future.. they have no influence.  It's not the residents who will move out of state, they aren't harmed.  It's the residents who will move in-state.  To a lesser degree, those that just stay put are harmed too, but they're often protected temporarily by rent freezes and property tax freezes, so tend to be more of a force for status-quo.

Will local zoning changes help a in-state mover? No, because they can only vote where they live, not where they're moving too, and those are likely different places. They can vote to weaken zoning locally, keeping their own property value from rising too high, but they can't cast a vote that has any relevance to the property value where they are moving too.  The only vote they have that is relevant to a policy that would help their plight is at the state level.

California is the apex of housing affordability problems, yet their local zoning issues apply to many other places.  It sounds great to be for local control, but we might want to remember that the U.S. is not just a country made from international migrants, but from an even larger amount of domestic migration.  I don't have to live in a place today to have some stake in its future.

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