Reading the fine details of the report, you see that the top-line metric is real income, adjusted for inflation and local cost of living. And the #1 factor that's proved ruinous to local cost of living in the Bay Area these past two decades is of course housing prices. If zoning restrictions were relaxed and more housing was allowed to be built, costs would be reduced and a lot of these problems would be solved. The Bay Area has a critical lack of housing, which is driving all these prices up and causing most of the decline in CoL-adjusted non-tech wages.
Reading the article the whole time waiting to see the words “real” or “adjusted” — thank you for doing the leg work.
It is no surprise that all but the fastest growing wages cannot outpace all but the fastest growing real estate prices in the world.
If those wages were nationally adjusted for inflation instead of locally adjusted for housing costs, the story would be entirely different. The middle-wage jobs aren’t fully pricing in real estate I suppose because the people who hold those jobs don’t live in the “Real Bay Area” and must commute long distances to work.
It’s terrible for just about everyone for housing prices to raise faster than 2-3% annually, certainly any faster than national inflation rates will impact mobility.
Thank you! I had no idea what they were talking about in that article. Not only did they not link the report, they didn't even explain how they were measuring real income. Which matters a lot.
My #1 issue is housing. We have got to build more in the Bay Area. It's a social justice issue.
If only we could aloe property assessments to increase with a local cost of living index, we would at least have enough property tax revenue to pay teachers.
I think we should be careful with this. Currently, because of the frozen property tax law, many houses worth millions pay very little in property taxes; if they did have to pay taxes on the millions of dollars their property is worth, they would have had to sell their houses ages ago. This would have likely created a downward pressure on the prices; making it unlikely that the home prices would reach the levels they are now.
All of which to say that assessing the property tax on the current market value of all those properties isn't an accurate number; there is no way there are so many people making that much money living in California.
Given the scale the only sane way to unwind it is to grandfather all sales before a certain date. Otherwise you’ll have masses of people forced out of their properties and chaos.
I mean, there are many solutions to this which aren't an immediate hike in property taxes which would cause much market disruption. But its important to acknowledge that the California Housing market is indeed a market distortion on an Epic Scale. There is just no way that everyone can get the prices they're asking for. And this is perhaps the major reason why I won't personally invest in the CA housing market even though I love the state otherwise.
Anyway, here's the report in question: http://www.everettprogram.org/main/wp-content/uploads/TIGHTR...
Reading the fine details of the report, you see that the top-line metric is real income, adjusted for inflation and local cost of living. And the #1 factor that's proved ruinous to local cost of living in the Bay Area these past two decades is of course housing prices. If zoning restrictions were relaxed and more housing was allowed to be built, costs would be reduced and a lot of these problems would be solved. The Bay Area has a critical lack of housing, which is driving all these prices up and causing most of the decline in CoL-adjusted non-tech wages.