The high price of California

I don’t think about money very much. I try to live sufficiently below my means that I never have to do math to figure out if I can afford something. Since I’ve had income, I’ve had enough money, and that’s all I need. I don’t often think about the salary associated with my career choices, figuring that I’m bound to end up in something that pays well enough. Even a foundation or a think tank would remit, I imagine, something low on the scale of technical professional salaries, but high enough on the scale of regular people that I wouldn’t worry about it.

And then I read something like this, and wonder if I’d have to be a millionaire to ever buy a house in my home state. Basically, the 11 least affordable housing markets in the U.S. are in California (my home town of Santa Cruz, incidentally, is number two). This is due to several factors, like a high birth rate and immigration, natural boundaries to growth, and pathologically low property taxes. But the interesting one to me is the political limits to growth, which for environmental reasons and concerns about congestion, are pervasive in California.

Santa Cruz, for instance, has both an urban growth boundary1 and a maximum house size regulation2 While it is disputed whether urban growth boundaries increase home price very much, they certainly have an effect. In Santa Cruz, I wouldn’t be surprised if it’s a large effect. And while it is unfortunate how gentrified the place is becoming, it is nice that there isn’t a new sprawling mess of development every time I go back home to visit, they way there would be in most metropolitan areas. The town changes continually, to be sure, but it is mostly turnover and infill development, which I have come to embrace as a sign of good planning.

But will I ever be able to afford to live in a place like Santa Cruz? Especially as a person who doesn’t want to spend 60% of income on mortgage payments, it’s an open question. Meanwhile I’ll keep my fingers crossed for a housing market crash or another major earthquake3.

  1. We always here about Portland as the poster child for the urban growth boundary and “smart growth”, but surprisingly a lot of communities in CA also have boundaries. []
  2. Wilson, A. and J. Woehland. 2005. Small is beautiful: U.S. house size, resource use, and the environment. Journal of Industrial Ecology 9(1–2): 277–287. []
  3. Kidding on the square, of course. My vague recollection is that the housing market was depressed after the 1989 earthquake as fewer people wanted to move to the area. Although I hear that the Katrina disaster has actually pushed housing prices up in New Orleans since, presumably, so much of the stock was destroyed. []

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