California housing

Felix Salmon writes about Solar energy in California and offered this (largely paranthetical) statement:

...but the problem is that most of the wealth being created by rising housing prices is going to property developers, while none is going to the state.

Well I wonder if Felix is factoring in the profits which accrue to people who already own a house? I would think that such an increase in value vastly oustrips the profits to builders from increase in value which happen every now and again in very hot markets (i.e. between the time they initiate a project and when they bring it to market.)

In either case such increase in value is reflected in transfer taxes at closing. (I assume that California has some sort of transfer tax.) Plus of course there is a higher base from which the annual Property Tax is figured on all houses. (I am not clear on the reach of Prop 13(?) which fixed property taxes but I think it ends at the sale of a property. No?)

So the State does gain, which if you think that's a good thing, then there you are.

Moreover, there is a larger point that rising house values are to some degree a creation of public policy. One may agree or disagree with growth-management restrictions but I think it's accurate to pin a signficant part of the increase in housing to a general sense of scarcity -- which benefits almost everyone except those people who do not have any property. So one can argue that the State should not be in a position to directly profit from a scarcity which it has a large role in creating. Why give government policy makers an incentive to let prices float higher by giving them a larger share of such increase?

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Miss Representation also comments (oh so gently) on Solar energy in California:

I'm going to set a fire in Postel's kitchen and see if she calls the fire department. Fucking libertarians. What about the inherent facism of building codes? Shouldn't the market determine how much or little insulation is necessary? Or the inclusion of a vapor barrier? And what about requiring specific 7 and 28 day load bearing capabilities for concrete? Dictatorship!

Nice. Play nice now. Unless it makes you "feel better."

Comments

[Miss Representation]

David: we gaze steely-eyed across the room at each other, arms stowed temporarily. This is Nic, from Design-L, back to lob potshops across the Internet using these fancy blog tools. You never responded to my comment about Said (which still amazes me). So, did you know John Y. when you were at Columbia?

[Miss Representation]

Oh, and how is California responsible for scarcity? California has had tremendous population and urban area growth since Prop 13 (which, no matter how you slice it, was a result of the governing structure of California, as much as it is always characterized as a taxpayer revolt). Did I miss something, or is LA basin a collectivist vision of controlled growth?

[Adam Krom]

Yes, the high price of housing has to do with scarcity, but the real estate adage still holds true. Value is determined by three things, location, location, and location.

We can see this most clearly in revitalizing cities. I am looking for a house now. To live within 1.8 miles of Philadelphia City Hall (the literal epicenter of the city) I would have to pay about $300,000 for a sixteen foot wide rowhouse (1,500 sf) with a nine foot rear yard which has received no real upgrades since about 1965.

This is before such niceties as new wiring or air conditioning. This price level holds constant for miles from city hall, but in a decidely asymetrical pattern based entirely on neighborhood demographics, reputation, and especially the availability of current restaurants. Product is more or less interchangeable. If you have a nice house in this area you can get more than $400,000.

So as a homebuyer I am faced with this prospect: paying all that I can afford for a run down house on a very run down street because suddenly everyone realizes that they want to live in the middle of one of most fantastic cities in America (the city with the largest share of population walking to work). That has absolutely nothing to do with growth management, except in the sense that Philadelphia restricts supply through neighborhood neglect.

[Miss Representation]

Boy, can't beat 'em, can't join 'em. First it's too much government, now it's 'neighborhood nelgect.' My history is rusty, but since the epicenter of Philly was established, oh, three centuries ago, isn't scarcity an effect of finite resources? As in, no more buildable space? Look, I think King of Prussia is the equivalent of hell too, but you can't blame the goverment for Cartesian geography.

[David Sucher]

Hi Nic. No I never knew JYA. But I did know Said and I have another funny/revealing story to tell about him, which I will, someday.

As to the government "creating scarcity." I am not blaming the govt and of course it creates abundance simultaneously as-- through its various and often-conflicting programs -- it creates abundance.

[Ironchef]

The "problem" is that the STATE is not getting enough money?

Nope.

[Adam Krom]

RE: Epicenter and cartesian geography:
fortunately, in our universe area increases with the square of the radius (e.g. a 3 miles radius is 28 square miles). Of course, in Philly, the Delaware River gets in the way, so a perfect circle isn't possible.

The problem isn't a lack of space per se, its mostly a factor of desirability as based on upkeep and amenities. For instance, if the local school is atrocious, this will tend to blunt demand. While you can blame some of this on the parents and demographics, a good chunk of responsibility for school quality falls on the government (the City has influence over schools here). Street repair, local parks, quality of policing, utility design -- all these are public activities that influence the desirability of neighborhoods before you even get to architecture.

[Sheri Harris]

I attempted to have solar panels installed on my house a few years ago and thoroughly researched
the manufacturers and available systems for the San Diego area. Unfortunately, or fortunately, I was better informed than the ONE local company.

[John Doe]

The entire country is going to be 'californicated' in the next 50 years as the population rises to 550 million.