I hear people often complain that the reason California is expensive is because “illegals” and “free-loaders” are jamming the system and cheating the taxpayers out of their honest money, and driving up prices of everything. Is there any evidence to back this up, as opposed to say problems of the free market, or the “sunshine tax”? Or perhaps over-regulation in general and policies that favor certain industries over others?
Or is this just hateful right-wing rhetoric that has little or no basis in reality?
There may be a tiny amount of truth. But mostly, California is expensive – in particular, real estate is expensive – because lots and lots of people want to live there.
Some big sections of California’s economy have hit some problems. Defense industries dropped with the end of the Cold War. Computer industries boomed during the nineties but now they reached a plateau. Agriculture is facing water problems.
So California is a state that got used to constant growth and now has to figure out how to handle some shrinking.
Due to a confluence of California’s natural beauty, car culture, and topography it became the birthplace of the environmentalist movement. Environmentalism along with NIMBYism, over regulation, fear of earthquakes, and overly generous tenant protections have made it very difficult to build any new development in the most desirable parts of California. This has made prices for existing real estate skyrocket. This has led to a bifurcated real estate market in many places where you have the hollywood and silicon valley rich living in big houses and everyone else having to have many roommates to find a decent place to live. Immigrants have a much different expectation level as far as living arrangements so they mind less squeezing a bunch of people into a small residence. Thus in many places you have only rich people and poor immigrants with the middle class being squeezed out to far flung suburbs.
The same dynamic is true with taxes. Their income taxes are the highest in the country but this does not affect rich people enough to have them move away from industry centers and many of the poor don’t pay income taxes. The middle class ends up being hit hardest by the taxes. Due to prop 13 property taxes are low but the sky high real estate costs prevent that from keeping overall cost of living low.
The illegals and freeloaders help keep taxes high, but the primary driver of California being so expensive is real estate costs and the illegals are a symptom of that and not a cause.
The computer industry has reached a plateau? What decade are you living in anyway? Santa Clara county is the county with the highest job growth in the entire country - and most of that is from Silicon Valley (though everything is doing well.)
We’re growing quite nicely thank you. While all states have problems, our state has a nice surplus, unlike, say, Kansas.
We’re suffering so much that the price of my house has gone up 25 - 30% since the end of the recession, unlike the houses I just looked at in a very nice part of New Jersey which are still at below pre-recession prices. My old house there has not quite doubled in price in the last 17 years, my new house has tripled in price.
We’ve done quite well since we voted enough Republicans out so that they have no real power. And our budgets are done in time.
We could use a bit of rain, though. Them immigrants must be stealing it.
Proposition 13 itself is responsible for many of the real estate cost problems because it so distorts the market. In particular, it’s a disincentive to sell: you keep relatively low taxes with very limited annual increases as long as you don’t sell, but buying somewhere new possibly means a huge increase in taxes even on a property of similar size/location/value. That means, e.g., that if you’ve been living in the same house for many years, downsizing to a smaller cheaper property in retirement can still mean paying much more in taxes; thus, it’s more sensible to stay put, which means fewer properties for sale. More buyers and fewer sellers = rising prices.
If you are over 55, there’s a way to transfer the tax base for assessment purposes to a newly purchased property, provided that it’s of equal or lesser value to the previously owned property. There’s some other restrictions as well, but in general, a retired person should be able to downsize their home without seeing their property taxes increase.
Demand keeps our real estate so high that no one wants to live here. :rolleyes:
You speak of fear of earthquakes as if that were stupid. Not hardly. What is stupid is that Portland, for instance, has just started to use earthquake codes so that when the big one hits there (and it could be bigger than the one that will hit here) they are screwed.
No development? I wonder what all those massive condo/apartment complexes being built in San Jose are? Terrible neighborhood - about a mile from Levi Stadium and down the street from Cisco.
Taxes? I just checked places in New Jersey. I’d pay double the property tax there for a place worth less than half as much. When I look in the fancy house section of the NY Times, I find that most of the property taxes are a lot higher than what I pay for places worth less. Especially in Louisiana which has immense taxes, it seems. I rather suspect my tax burden is not so bad, and in fact it should be more if California did the rational thing and reassessed so that people in the same value house more or less pay the same amount.
When you talk about expenses here, remember that median income in Santa Clara county is about $100K. Yeah, house prices are crazy due to demand, but so are salaries, and with a commute there are still tons of nice places to live. The commute, btw, is about what my father did in the '50s when I was growing up. That was New York, not California.
By the way, million dollar houses are not mansions - in my neighborhood anything above 2,000 sq ft. is going for a million.
Now, the hourly workers are the ones to feel sorry for, but that is true everywhere. Good reason for $15 / hour minimum wage here - we can afford it and they need it.
The real reason that a lot of new houses aren’t getting built is that there is no room for them close by. My city won’t let people build on the side of the hills, which is good. The houses won’t fall down, and won’t be an eyesore. But when they tore down an old shopping center a block from my house new houses were up in no time. The requirement to put in affordable housing, to address the very issues you raised, seems to be a bigger problem than ecology.
I thought the old canard is that California is so miserable that everyone wants to move out. Is the new canard California is so miserable that everyone wants to move here?
They reached a plateau, combined with companies moving to more affordable regions, hence the dozen or so places claiming to be the “next/new Silicon Valley.”
In the nineties, computers were being introduced into the marketplace. Millions of people were going out and buying their first computer.
That’s never going to happen again. People now have computers. There’s no vast untapped market out there. Computers now are selling at a normal rate like cars or televisions - some young people entering the market, some people buying replacements, some people switching from one company to another. But there aren’t a hundred million potential new customers out there like there was in 1990.
I am a beneficiary of Prop 13, and I’m grateful for it. But honestly, it is indeed a major source of California’s problems. (FWIW, I’d like to sell the house. I wouldn’t have to pay California income tax on the rental income, collect the rent in the first place, pay the property taxes, pay the business license fee…)
When you talk about employment in Silicon Valley and computers, you have to be a bit broader than PCs. Otherwise you might as well say we’re dead because no one buys minis any more. I think the kind of computer people are buying - tablets, smartphones, etc., is doing pretty well. No one makes them here any more, but we sure design them. Plus we’re the center of the infrastructure surrounding them. Which is also doing pretty well, such as the new Facebook building in Menlo Park, the massive new Apple HQ under construction plus the office buildings they just grabbed up.
The 2000 crash, which I lived through, didn’t come from a drop in PC sales back then, but from the realization that not every company was going to need massive new servers for absurd sales projections. The stupid startups started canceling orders, the server makers cut way back, and boom.
We worked through that overhang a long time ago. Remember, all the data that Apple and Google collect on you and where you go on-line and in real life has to be stored somewhere. IPOs today make money. Some will die, but there is nowhere near the level of absurd expectations there was back then.
Unfortunately.
Yeah, I agree Prop 13 is a problem., Because the Prop 13 assessment value generally grows slower than the market value, if you move to a new property (and there’s no exemption), your property taxes will likely go up. But, remember, before Prop 13 was passed, people who were on fixed incomes used to find themselves forced out of their longtime homes when the taxes suddenly shot up because of rapidly increasing property values. There’s probably a happy middle-ground somewhere, and Prop 13 isn’t it, but I’m not sure what would be (although I’ve seen suggestions, such as capping property tax rates for people on fixed incomes or tying property tax rates to gross income).
But, I think the land-use/zoning issues mentioned up-thread are a much bigger problem. Of course, you don’t want to build buildings too close together because of earthquake or fire issues. But a place like Los Angeles could easily accommodate much denser living just by allowing multi-family dwellings (like duplexes or tri-plexes or small apartment complexes) in more places. But, people feel those things would destroy the character of their neighborhoods, so it probably won’t happen soon.
Hmmm. Looking at Stockton, our problem was that it was too easy to build new developments. But we’re a midrange city. The maximum range between downtown and the edge of the suburbs is about seven and a half miles. I’m going to guess that the problems of mega-cities are complex, but probably aren’t driven by socialism and welfare abuse. I’d guess the biggest problem isn’t immigration, either, but the big cities would be magnets for anyone looking for jobs, so maybe it contributes.
I used to live in a tiny suburban town about 15 miles south of LA. The biggest problem with development there is that there’s no more room. If you want to build something, you have to tear something else down. That’s always more difficult and expensive. Fly into LAX some time and look out the window. If you see a green patch, it’s either a golf course or its a cemetary. Asphalt, roofs, and swimming pools as far as the eye can see.
Economics is boring and difficult. If I’m driving down a California street, I can’t see any economic factors or property trends standing on the sidewalk, but I can see the guys clustered for pick-up day labor. And if I hit search on the radio, I may hear more Spanish stations than when I was a kid. So it would be really easy to start thinking Immigration Increase = Any Other Thing That’s Been Increasing During The Same Time.
I think we have concensus that it isn’t socialism and welfare abuse.
I live in a reasonably big house with kids who have moved out. I’ve checked.
Alas, I understand the senior real estate tax discount in NJ is pretty pitiful.
That’s okay - taxes will eat up my profit in 60 years or so. I’ll be upset on my 120th birthday.
It’s got a basis in reality. A lot of California regulations are cutting edge on things like the environment, so that ends up costing them more for gas prices, say, or energy in general. California also has a lot of social services, and a lot of government workers…and they are paid more than the national average because it’s more expensive to live in California because of things like the price of gas and energy (and everything else) and housing, since so many people have and do want to live there. California is extremely rich as a state (it’s actually in the top 20 COUNTRIES for GDP if it was it’s own nation, IIRC) but due to quirks in California’s constitution and in the varied political landscape (everything from deep blue to brightest red and everything in between politically speaking) but they have run a large deficit because a lot of things that get voted on don’t always get funded by the voters, which leaves California scrambling to pay for stuff voters vote for but don’t fund…which leads to deficit spending. They also have other, systemic issues such as the perennial water problem that costs them tons trying to keep everyone in pools, drinking water and most importantly walnuts, pistachio and other nuts.
