Introduction
Housing costs today, particularly in California where I work and reside, are extraordinarily high. The poor and even middle class are getting squeezed out of certain cities where job growth has been the highest. Residents are getting priced away from places like San Francisco, San Mateo and San Jose to areas like Fairfield, Tracy, and Gilroy. According to Paragon, a major real estate company with land holdings in California, San Francisco real estate has appreciated by about 65-70% since the last trough in 2011 until 2016. By contrast, median household incomes have only increased by 17% in the same timeframe. This gap can only continue so far before something gives. By mid-2016, the housing prices seem to have stalled. Whether this is a temporary shelf, a plateau, or the beginning of a correction/bubble remains to be seen. Why does this happen and why does it seem to be particularly acute in California? Is it all supply and demand driven? Are there certain processes that are flawed? ...