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? Are there artificial forces that distort the market signals? Is it a land shortage? Is it because of all the tech jobs?
I work in the architecture industry and over the years, I have taken notice of many inefficiencies that cost consumers money. In this blog, I will focus, though not exclusively, on the architectural design process and the process of getting a structure or development approved as it relates to housing prices. By no means is this the sole reason for wacky pricing, but I believe it is a significant contributor.
Some of my posts may contain sensitive information and commentary though most, if not all, that I post should be public information. Therefore, I will be refraining from posting names or any identifying information if it is a criticism that could be potentially disparaging to any person or groups of people. In some instances, I may not even post the city names since some commentary may be directed at some staff decisions. So if I leave out this information, please do not ask me for it. The omissions would be very much intentional.
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? Are there artificial forces that distort the market signals? Is it a land shortage? Is it because of all the tech jobs?
I work in the architecture industry and over the years, I have taken notice of many inefficiencies that cost consumers money. In this blog, I will focus, though not exclusively, on the architectural design process and the process of getting a structure or development approved as it relates to housing prices. By no means is this the sole reason for wacky pricing, but I believe it is a significant contributor.
Some of my posts may contain sensitive information and commentary though most, if not all, that I post should be public information. Therefore, I will be refraining from posting names or any identifying information if it is a criticism that could be potentially disparaging to any person or groups of people. In some instances, I may not even post the city names since some commentary may be directed at some staff decisions. So if I leave out this information, please do not ask me for it. The omissions would be very much intentional.
Comments