Posted on by Californiacontrarian

A Better Use of Tax Money? Part 1

I realize that many of my readers, especially in California, are going to scream, “Of course there are ways to better use my tax money. In fact there are many ways!” However, instead of ranting and screaming . . . “focus” . . . focus on just the following.
In California one of the major problems is housing. Here, there are multiple issues including the basic economic one of supply and demand. For a variety of different reasons, the housing supply has not kept up with the demand, and so the natural consequence is a rise in the price of that which is in short supply, in this case, housing. This is a basic economic principle, and lately there are multiple ideas on how to increase the supply of homes. Again according to the same economic principle, the price of housing will not go down until there is an over supply or at least a competitive abundance of places to live, and unless there is a major recession, I do not seen the price of housing coming down in California for decades.
However, let’s assume for a second that the price of housing in California stabilizes sometime in the future because there is an increased supply. Who is going to buy these houses? Perhaps this question would be better phrased . . . “Who will be able to afford to buy these houses?” These days if one is not already in the market and thus has some equity, it is extremely difficult for that person or family to be able to save enough to afford a down payment on a house. A lot of those who are presently renting would like to buy a house in the future, but because of the high cost of living and the high taxes in California, they are lucky if they are able to stay afloat.
Switching gears, in general which general economic group are we talking about? Which class of people are we talking about that would like to own a house, but just cannot afford it? Many in the upper class already have a house, and for most the cost of housing is not even in the top ten on their problem list. Likewise those that are in the lower economic group are usually swimming upstream just trying to survive. Again for the most part their inability to purchase a house is not in the top ten on their problem list. So who are we talking about? No surprise here. Those that want to, but just cannot save the down payment to purchase a house are those in the middle class.
Recently my tree guy said that he may not be coming back to take care of my trees because he might be moving. “Moving? Why, Francisco? Where to,? I asked him. He replied, “Probably back to Mexico. My wife wants her own house, and even though we are both working, we cannot afford to buy a house here”!
His moving to Mexico is bad for me, as he is a nice guy, as well as a great tree guy, but more significantly it is not good for California, as he is a hardworking, responsible member of the middle class. The real problem for the state is that he is not alone. At present the exodus from California is mainly a middle class exodus, and unless something can be done to improve the standard of living of the middle class, they are going to continue to leave, and this will lead to the economic downfall of California.
Here in San Diego County in 2016 there was a net exodus of 17,194 people with 2,478 in the 18-34 age group, and 3,953 in the 35-54 age group. The main reason that those interviewed gave for leaving was the lack of affordable housing, and for many specifically the inability to ever own their own house.
What to do? Is there any way to improve the chance that those in the middle class will be able to buy a house in the near future, and thus remain in the state?
Does anybody have an idea?
Of course, I have an idea! See the next essay to see an example of thinking out of the box to solve an apparently unsolvable problem.

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