House Rich in Cali

An absolute insane stat out of California that highlights the housing problem in the Golden state. The Mercury News was reporting on the SB 9 fight which is the state’s effort to encourage and increase building (aka inventory) to help create more affordable housing. The particular measure “would allow a developer to replace an aging single-family home on a large lot with three new houses and an accessory unit.” Here is where things get interesting…(Mercury News)

• “…geared toward house-rich but cash-poor homeowners, who could reap a windfall by developing their property. Nearly 2 in 5 Los Angeles residents own homes worth more than $1 million but earn less than $99,000, according to company research.”

Insanity. Almost 40% of residents in Los Angeles own a home that no one who makes less than 12k a month should own and they make less than 8,000. That is a problem. This of course can happen because in California property taxes are fixed whenever you bought the home. So if you bought a home in Cali in the 1980s you are probably close to having paid off your mortgage and your property taxes are very reasonable. You not only have no reason to move, but you also have a disincentive to move. Geoff Butler had a good point on Twitter as well,

• “Not going to lie, if I had a million in equity, I might be hesitant to support policies that would bring the cost of housing down.”

I think this is a great and unfortunate point. If you are a middle-class Californian and you have million dollars tied up in your home you 100% don’t want to housing prices drop. So by embracing NIMBY’s philosophy they have created more NIMBYs and less affordable housing. I’m glad they are finally trying to fix this problem, but this should be a cautionary tale for other states. Just say no to NIMBYs!