Reader Lisa found this letter-to-the-editor
in today's SF Chronicle
Fallout from bad loans will reset market
I've spent the last several years watching people take preposterous loans to purchase homes well beyond their means...These people knew what they were doing...They were gambling that the market would continue to rise...If the government wanted to act, it should have acted years ago to provide better lending regulation...To come in now, after the damage has been done, and prop up the market can only forestall and worsen the necessary correction...In the meantime, responsible buyers will continue to be shut out of the market.
Spot on. People thought it would be a good idea to pay stupid prices for houses.
And then, in the same issue of the Chronicle,
is an article
about the increasing frequency of school closures due to the fact that people are fleeing the Bay Area because it has become so crushingly unaffordable here even for people making a six figure income:
Public education is in danger of sinking along with the fortunes of its departing middle class.
By now, most San Franciscans are familiar with the dismal litany: the soaring cost of housing, the resulting loss of some 800 kids [at least] from the public school system each year, the constant battles over school closures.
Its fate is tied directly to the city's ability to muster the resources and political will to come up with yet another program with widespread benefits, one that would provide affordable housing for all its families. This is a challenge of enormous proportions, in a city where not just the poor, but families pulling in $100,000 or more are struggling to find adequate housing.
San Francisco's primary family support group, Coleman Advocates for Children and Youth, estimates that some two-thirds of this city population is experiencing some form of housing crisis.
[With regards to building affordable housing in both poor and wealthy neighborhoods] You can't achieve the goal of quality schools throughout the city, and good schools in every neighborhood, without economic integration in every neighborhood. Bringing the middle class into the affordable housing mix, in neighborhoods like the Bayview -- "deconcentrating pockets of poverty" -- as one mayoral aide put it, is one way to help achieve this.
But there's no point cleaning up your act if your audience is leaving. Can this city come up with a housing program that will keep not only its school kids but also its teachers here? To do so, the city will need to go far beyond the mayor's plan to provide a little more than 3,000 housing units in the next four years. No one really knows what the true cost of a comprehensive, float-all-boats housing program would be, but it is sure to run in the billions.
And time is of the essence. The client base for any affordable housing program is shrinking daily, with every U-Haul that heads out of town.
I hope you are all proud of yourselves.
The solution is not to figure out some über-creative way to intermix so-called "affordable" housing amongst unaffordable housing while at the same time desperately trying to keep property values up. That will only cause a big mess. The only viable solution is to admit that housing prices are way out of whack, get out of denial, stop making excuses for ourselves, bite the bullet, and do everything possible to encourage property values across-the-board to reset back to sustainable and healthy levels. By sustainable and healthy levels I of course mean levels that are justifiable given people's incomes and what is in line with the notion that a house is a place to live, to raise a family, to make memories, not an investment like a stock, not a means of funding one's retirement. We need to eliminate the housing speculation mentality and remove the protections (both direct and indirect), both legislated or otherwise encouraged by vested interests, that are intended to keep property values moving in only one direction -- up. Of course I speak of endless regulations on building, Prop 13, tax-based incentives, "toxic" (too easy) lending, our fraudulent appraisal system, privatized control of real estate related data and information, a real estate industry that does not provide an incentive to the buyer's agent to see prices go down, etc., etc., etc.