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Economy

Perplexing Mystery Finally Resolved - Here's Why Housing Is So Expensive

2019-09-01

[National Review] Julian, Calif. ‐ Right outside the comfortable and delicious Jeremy’s on the Hill Restaurant in this scenic former gold-mining town northeast of San Diego, Jack Green offers a glimpse of why homes too often are so expensive. The real-estate developer stands near the patio of a Cordon Bleu‐trained chef’s mountainside eatery and gets indigestion just thinking about what a mess homebuilding has become.

"I have to spend $80,000 before I can drive one nail into a piece of wood," Green says. Just preparing to manufacture a house can take four to five months. This includes permits, land-use studies, appealing to various boards, and pleading with politicians. How long did he wait to reach this starting line when he began in this business in the late 1990s? "Three to four weeks." Thus, he has seen a five- to seven-fold increase in the time needed to launch projects in just two decades.

In fact, "Jack Green" is a pseudonym by which to shield this gentleman’s identity, as he requests, "since I still deal with these people."

Green once aspired to create 60 homes on land that he purchased. By the time officials finished with him, he actually wound up creating only 13 homes, a 78 percent decrease in planned housing stock. Since he had fewer homes to sell, his asking price per dwelling soared 233 percent ‐ from roughly $300,000 to $700,000. "And you wonder why homes have become unaffordable?" he asks.

Green recollects another project in which he got his paperwork in order, and all systems were go. "At the last minute, an official told me, ’We need a streetlight at a certain corner,’" Green recalls. "I said, ’That’s nice. But I don’t see that in any of the approvals, plans, or anything else.’" Basically, the functionary told Green that the city wanted that streetlight installed, and Green had to pay for it. He threatened to sue. "’No, you won’t,’" Green says the official told him. "’You want to build this project, and you need our final approval. And you won’t get it until that streetlight gets built.’" Green replied: "That’s extortion." According to the builder, the bureaucrat said: "Yes, it is."

Posted by:Besoeker

#6 Back in the 90s, the folks in central New Mexico got a clue. No new development till the developer can come up with new water. That put breaks on a lot of speculation. Didn't exactly stop it. They Kelo'd a farm to get water rights but there are only so many available cause its high desert country. When the market tanked in '08 there was minimal effect on housing as speculation had been choked way earlier. It's also helped by the state law that if you lose a law suit, you pay the winner his/her expenses. Keeps the water claim jumpers to a minimum. However, housing is far more accessible than big metro markets. It's a matter of supply and demand.

Posted by: Procopius2k 2019-09-01 21:13

#5 Wrong.

California's politicians and developers are determined to turn the whole state into one vast slum. We don't have enough infrastructure for the houses that have already been built and the people who are already here. Check out Interstate 5 from the Mexican Border all the way up through Los Angeles. It's a frickin' parking lot. When there's a drought they tell us not to water our lawns and to take only three showers a week. Hell, they've started telling us not to run our dishwashers until 9 p.m. because we don't generate enough electricity to meet the demand. And, if you really want a nightmare, take a trip to one of our hospital emergency rooms or, even worse, one of our schools.

Politicians like Governor Gavin Newsom (D) and the developer in this article cry about affordable housing. They want to make California affordable for millions more illegal aliens than we already have. The same kind of crooks have been singing that same song for as long as I can remember. They've been building houses as fast as they can as long as I can remember and the cost of housing keeps rising while the quality of life keeps deteriorating. More affordable housing is not the solution, it's a scam. Developers bribe the politicians to overwhelm our infrastructure, make life miserable for the people who are already here, and then they get rich.

They lie. Without all those fees, permits and various boards the developers would have made a bigger mess than they already have. That streetlight? With all the traffic that developer was going to generate, a streetlight was probably the least he could do.

Property rights are one thing but property owners must also be responsible. You don't want a nuclear waste dump in your back yard and, trust me, you don't want some vast, new housing tract in your back yard either. Last I heard, this is still California and not Mexico City but they're doing their best to change that.

The real reason why housing in California is so expensive is that too many people want to live here. I've said this before and Rantburgers always inform me that they don't. But billons of other people all over the world do and our politicians tell us we need to sacrifice our quality of life so they can. Bullshit. There are other places where people can live quite nicely.

Coastal California is prime real estate. It is supposed to be expensive. If you can't afford it, try your luck elsewhere.

Posted by: Abu Uluque 2019-09-01 16:23

#4 The approvals and permits regime is a clear encroachment on property rights, over self-owned capital and land use. In almost every capitalist economy, bureaucracies have gradually usurped the landowner's right to use it whichever way he wants turning it into a quasi communist system. They convinced the legislatures citing accidents and mishaps that regulating everything down to the color of the paint was necessary. I'm sure they engineered such outcomes as Town Planning Acts and House building Control Acts in connivance with rich builders of plaster and drywall boxes.

You may own it on paper, but you can't hammer a post into it until you satisfy the bureaucracy of thousands of prerequisites. It's just another way to make you feel that it's not really yours. The State cannot be profiting from such a system, that only increases costs and lets resource go unused.

One word. Corruption. It's everywhere.

Posted by: Dron66046 2019-09-01 14:13

#3 ..the term is 'raising the drawbridge'. More colloquial phrase would be 'I got mine, s**** you'. All impediments meant to prevent others from getting what you have.

Posted by: Procopius2k 2019-09-01 08:52

#2 "I have to spend $80,000 before I can drive one nail into a piece of wood,"

The story in one sentence.

Posted by: JohnQC 2019-09-01 08:27

#1 Unless I missed it, not mentioned were bank closing costs, real estate fees, Home Ownership Association (HOA) fees and HOA initiation costs.

Posted by: Besoeker 2019-09-01 07:53

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