The Housing Bubble

A report from ABC 7 News in California. “In the competitive Bay Area housing market money talks, but one family says singing set them apart. Natan Kuchar is a high school music teacher, his wife Lili teaches elementary school, and the two rented a Berkeley apartment in the Poets Corner neighborhood. When a charming home in their neighborhood went on the market back in November they put in an offer. Outbid by $20,000, the seller had an odd request. ‘They want you to offer something creative beyond the money. Um, that’s what she said,’ said Kuchar, recounting the phone call from his real estate agent.”

“So Kuchar sat down at his piano and started recording with his phone. ‘Hi Cathy and Joshua, this is Natan and I thought I would just show you how much my family and I would love to purchase your home,’ he said in the recording. ‘Who has the words to say choose me,’ asked Kuchar and it came to him. He’d play Our House by Crosby, Stills, Nash, and Young. Kuchar sent the soul-baring rendition to his real estate agent Maya Karpinski.”

“‘And I cried that’s basically what happened,’ recalled Karpinski. ‘No joke, three minutes later Maya texted me back saying that we won the house,’ said Kuchar. Karpinski says always write a buyers letter, ‘Write this letter with your heart making your story a part of that house.’”

From Mansion Global. “San Francisco’s luxury condo market, which comprise 10% of the city’s housing market and start at $2 million, are concentrated in the southeast quadrant. The newest crop is there, too. Sales have been robust in all areas, said Patrick Carlisle, chief market analyst at Paragon Real Estate, except the Financial District, where the sinking Millennium Tower has also sunk sales in the district by 50%.”

“He is, however, more cautiously optimistic about the ultra-luxury housing market. ‘For houses selling for over $5 million and condos and co-ops priced at $3 million or more, the supply of listings has been surging well beyond demand,’ he said. ‘And many of these listings are expiring without selling.’”

From City Watch LA. “The urban growth machine, including its enablers in public office and academia, dish out endless cover stories to camouflage their hidden agenda of priming the pumps of real estate speculation. When one of their self-serving theories bites the dust, they quickly advance another one, knowing they can depend on the corporate media and ‘business-friendly’ policy experts to quickly pickup the beat.”

“In the face of such overwhelming evidence that their ‘build more market housing’ (in Hollywood and elsewhere) version of densification would worsen climate change, the density hawks nimbly turned to other ruses. But, as you will see, their back-up claims are equally specious. Like greenwashing, they, too, are just frail stalking horses for their real objective: supporting this year’s most profitable type of real estate investment: apartment houses.”

“In San Francisco, like LA, a major center of gentrification in an expensive housing market, the same forecasts of an impending population boom were cited to justify rampant land use deregulation and up-zoning. But, in SF more people are leaving than moving in. In fact, the Wall Street Journal reports that despite the riches of the high tech boom, San Francisco declined by 24,000 people last year, mostly because too many residents were priced out of its expensive housing market.”

“The final justification for the build-more-market-housing business model is that it will increase the supply of desperately needed affordable housing. Since there is zero evidence of expensive housing trickling down to become affordable housing in Los Angeles, the density hawks then invoke another out-of-context economic theory: supply-and-demand. They imagine that a glut of expensive housing forces the price of housing down to the point that it becomes affordable and apartments that rent for $2000-3,000 per month will be discounted to $600 a month because of high vacancy rates.”

From the American Spectator. “Economic illiteracy has an astoundingly high cost. California’s leaders have created a housing crisis thanks to myriad policies that make it difficult — at times, nearly impossible — for those ‘greedy’ developers to build new homes, condos, and apartments even as the state’s population grows. They can’t figure out why the rent is too darned high and U-Hauls (heading east) are so hard to come by.”

“To most normal Americans, supply and demand is a concept as basic as gravity. To the Left, it’s something that can be overcome by central planning. So listening to the state’s Democrats debate housing policy is as mind-twisting as listening to Venezuela’s leaders argue about changing the numbers on the currency. It’s almost unfathomable, actually. And, in fairness, California’s leading Republicans don’t have a firm grasp on the concept, either.”

“My favorite story about California’s housing crisis involves San Francisco’s housing market. In a city where modest apartments routinely cost $4,000 a month, thousands of landlords have pulled apartments from the market and let them sit vacant. Who foregoes that kind of rent? People who understand that under rent control and the city’s tenants’-rights laws that it’s nearly impossible to evict tenants, or later convert apartments into condos or to raise the rent if market conditions change. It’s far safer to leave them empty, which has sparked calls by San Francisco’s leaders to impose taxes and penalties on those who do so.”

“The housing statistics are daunting. The median home value in the state has topped a half-million dollars. California’s cost-of-living-adjusted poverty rate is the highest in the nation due primarily to housing costs, according to the Census Bureau. Homeless encampments are spreading.”

From Mother Jones. “When I ask Christine Hernandez, a mother of four, slender in stature and bold in manner, how best to scout for abandoned homes—the bleak dwellings with the boarded-up windows and ripped-out drywall, their innards packed with leftover syringes, rotting debris, and the peculiar loot of previous dispossessed tenants—she says it’s best to send someone who won’t draw too much suspicion from cops or neighbors. ‘I’m a woman, and small,’ she notes. ‘Not super intimidating, you know?’”

“It was about two years ago when Hernandez, who works at a community development organization, and her husband, Emilio, a painter, were forced to leave their ramshackle home in Oakland, California, after trying to get their landlord to make repairs. They started touring listings and seeking out ‘For Rent’ signs in windows. But in the nutso housing crisis plaguing the Bay Area, where one-bedroom apartments in Oakland rent for more than $2,000 a month—never mind a home with space for a family of six—they found themselves, like so many others, hopelessly priced out.”

“What they did notice was a shocking abundance of forsaken properties. They started performing reconnaissance. On a clear October morning in 2015, they found a three-bedroom, one-bath house that had been a haven for drugs and prostitution. They pried open a section of the chain-link fence surrounding the property, scurried inside, and explored by flashlight. The kitchen had no counter, no sink, no pipes. Burn marks scoured the home. ‘It was a total mess,’ says Hernandez, but a mess could be cleaned up. They got to work.”

“The housing crisis is often described as a shortage, the only solution being that we build our way out of it. But for every American living on the street, there are 13 empty, off-market units. In Oakland, where buyers routinely offer hundreds of thousands of dollars over asking prices, there are nearly four vacant properties for every homeless person. It’s not so much an issue of scarcity, but of distribution.”

“Squatting, or ‘occupying,’ as its practitioners tend to prefer calling it, is a shaky existence, Hernandez’s family immediately discovered. Steven DeCaprio, and his organization, called Land Action, was dedicated to helping squatters. Hernandez and her family went off to find him. Not long ago, DeCaprio was facing several years in jail and tens of thousands of dollars in fines for felony conspiracy charges stemming from assisting two Oakland squatters in 2015. When those charges were finally dropped in late 2017, DeCaprio and his colleagues interpreted it as a confirmation that adverse-possession claims might be a viable strategy for housing for at least some of the Bay Area’s burgeoning homeless population.”

“On a stormy night in January, I tagged along with DeCaprio as he drove to a city commission meeting about a homeless encampment in Berkeley. As he steered through the rainy streets, he said that in his nearly two decades of working on housing rights, he’d ‘never seen such an acute amount of displacement and homelessness.’ The dot-com boom and the foreclosure crisis were nothing compared with the speculation that’s occurring now, ‘this new real estate bubble that keeps expanding.’”