The California housing crisis is built on two Great Myths. Both cherished. Both false. And both are stopping hundreds of thousands of Californians from ever owning their own homes in the least affordable housing market in America.Myth #1: New Housing Does Not Pay For Itself
The first Great Myth is that new housing does not pay for itself. We hear this chanted at every public hearing for every new home in California. New homes increase the demand for police, fire, parks, animal shelters, boat docks, public art, historical societies, schools, roads and everything else, the mantra goes. Thus it is only ‘‘fair” that new residents should pay for these extra services with extra taxes.Myth #2: New Homes Cause Growth
That is why government-related fees and expenses often exceed $100,000 per new home in California.
But these armchair economists forget new homeowners already pay new taxes – higher taxes – than existing residents. Their property taxes, for one, are often several times higher than their neighbors. That, of course, is a loophole from Proposition 13 that guarantees the longer you live in a house, the smaller share of property taxes you will pay.
New residents also pay more in sales, gas and other taxes because they buy more items for their new homes. Not because they use more services. They use fewer. So much for fairness.
New housing is a cash cow for state and local government. But local government is piggish in spending it.
In high-growth Riverside County, property taxes to the county government increased by more than $300 million this year. Yet county officials have no answers when they are asked why less than 5 percent of that new money is going to build new roads to relieve the worst congestion in California.
But they definitely love imposing higher fees on new homes, as if there is no limit. As if record high fees have no effect on record high prices.
They actually say that. And this belief is turning the California housing crises into a full-blown disaster.
In San Diego, fewer than 9 percent of the families can afford the price of an average home. The rest of the state is equally bleak. High fees are pricing people out of the market. Out of the state.
But lots of public officials don’t really care about that because of the second Great Myth of Housing: New homes cause growth. Not the other way around. New homes are for people who move here from out of state. And don’t forget its Great Corollary: Stop the new homes – and we can stop the growth.That's right. You children of California are no longer welcome here. California is just for the financially savvy, successful, rich. You losers who cannot afford a house on your lower six-figure salary are just, well, losers and should go somewhere else where you can find a house you can afford. How often have I heard that said on this and other blogs?
But the facts ruin that story.
Last year in California, we had one of the lower population increases in years. Even so, most of last year’s increase came from the place it has for the last decade: The maternity ward.
More than 65 percent of the new residents in California are from the increase in births over deaths. The remaining 35 percent are from immigration, legal and otherwise.
Last year 29,000 more people moved out of California than moved in from other states. In Southern California, 150,000 more residents moved out of state than moved here from other parts of the country, largely replaced by foreign immigration, legal and otherwise.
California residents are leaving in record numbers, mostly because they cannot afford the housing.
Media repeat the myth; and no-growth activists worship it like a holy relic to stop new housing wherever they can.
For promoting these myths, councilmen get promoted; planners get prizes; reports get plaudits. And first-time home buyers get a one-way ticket to Oklahoma, wondering why they cannot buy a home where they were born and raised, but no longer welcome.
(For those new to this blog, that last paragraph was intentionally sarcastic and most definitely does not represent the opinion of the blogger.)