Mar172016
Root cause of California’s housing problems is homeowner greed and hypocrisy
The worst social problem in the most heavily Progressive-dominated political districts is a lack of housing caused by selfishness and greed, two characteristics hypocritical Progressives like to criticize Conservatives for.
California has a housing problem. Anyone who lives in California copes with higher housing costs than nearly everywhere else in the United States. This problem is a boon to landowners and high wage earners, but it’s a bust for lower middle class wage earners who often put 50% of their income toward housing. Why do we have this problem?
First and foremost, the problem is one of supply. California has a chronic shortage of housing. The lack of supply is the primary reason prices are so high. When supply is limited, people substitute downward in quality just to obtain any housing at all. It’s why an income in Southern California that barely affords a condo would buy a McMansion anywhere else in the country.
Peninsula economy thought experiment
Imagine an isolated economy, perhaps an island, or perhaps a peninsula in Northern California. In this peninsula economy we have 10 workers and 10 houses. Each worker can afford to buy one house, and everyone has one.
Now lets imagine some new resource is discovered, and the local residents need help to develop it. Two new workers come to the area to develop the new resource, and they create demand for two new housing units to accommodate them. In a totally free market, two new houses would be built, and the 1:1 balance of 12 workers and 12 houses would be maintained.
Imagine instead that when the new workers moved to the peninsula there wasn’t room for two more houses. In that instance, 12 workers would be bidding for 10 houses. The 10 workers with the highest salaries would all need to put a larger percentage of their income toward housing, but they would outbid the two lowest paid workers in on the peninsula, and they would end up with the 10 houses. The other two workers would either leave, commute from outside, or live on the peninsula homeless.
In the real world, there is always room for two more houses. If all the land were developed, it could be redeveloped at higher densities. In other words, if cities can’t build out, they can always build up.
But what happens if the 10 workers who had houses banded together and passed a law forbidding the construction of new houses. This completely artificial constraint would cause a permanent shortage of housing, and it would make the value of the homes of those 10 workers go up and up and up.
Those 10 owners gain a tremendous reward. The value of the real estate they own inflates dramatically, and they avoid all the problems of traffic and crime often (falsely) associated with population growth. It’s the best of all worlds — for the existing homeowners. For everyone else, not so much.
Some of these homeowners feel a little guilty for the way their exclusionary policies crowd out their neighbors, co-workers, and children, so they support affordable housing policies that are as effective as fighting a forest fire with a garden hose. These owners feel Progressive and enlightened despite their obvious hypocrisy.
Blame Zoning, Not Tech, for San Francisco’s Housing Crisis
Wealthy districts work hard to prevent new housing from being built in their neighborhoods.
Kriston Capps, Mar 11, 2016
The real fright-feature is the lack of housing. And the nightmare behind it is other people. … The problem is that San Francisco won’t build housing, and making matters worse, residents work tirelessly to prevent more housing from being built.
“Acting in a way that prevents everyone else from living in your pretty little city because you already have a place that you like does not make you a progressive,” he writes. “It makes you greedy.”
He’s got that right. While it’s by no means an article of faith, the lack of adequate housing supply is the consensus culprit in the housing crisis sweeping the country. A lack of new housing is tearing San Francisco apart in particular.
The housing crisis is both a regional and local problem. Looking at it two ways leads to two different conclusions about gentrification and displacement. From a regional perspective, any and every city in a metro area could be building more. Any and every new housing unit adds to the supply and lets out some pressure. … building new housing units anywhere—whether they’re set-aside affordable units or penthouse condos—goes in the win column from a regional perspective.
The answer is to build. Build more fucking housing, just like Nolan says. But the answer is also to zone: To take away land-use decisions from neighborhoods and hand them over to cities. And for cities to act in concert with other cities toward regional goals for new market-rate and affordable units everywhere. Not just where developers can get away with it, but where incumbent residents have already soldered shut the gate behind them.
A lack of supply inflated California house prices since the mid 1970s. The problem is not physical, it’s political. Unless lawmakers approve many more dwelling units, the shortage will worsen.
In California local opposition groups possess too much power to stop development. The market for housing in most of the United States is much more stable, and house prices are much less inflated because the local political system does not restrict new home development near as much as it does in California. (See: Affordable housing in California requires ignoring the NIMBYs.)
The problems with chronic shortages, inflated house prices, and the substitution effect to lower quality housing is a direct result of the development approval process in California being 100% in the hands of local politicians. In California no State or regional entity has the power to override a local political body that rejects a reasonable development project.
Further, since local governments are highly dependent upon commercial and business tax revenue, they zone for more commercial than residential land uses, which in turn creates imbalances between the number of jobs and the number of available housing units, exacerbating the problem.
California will only have housing that’s affordable in a free-market, non-subsidized way when State legislators shift some power away from local governing bodies — a course of action that will not be popular on the local level. This could take the form of direct approval override of local governments by a State or regional decision-making body, or it could take the form of mandates for development. In whatever form, some State or regional body must be given power to stop NIMBYs from lobbying local government officials to stop development that benefits everyone.
[listing mls=”OC16054590″]
“It’s why an income in Southern California that barely affords a condo would buy a McMansion anywhere else in the country.”
I think you would be surprised when you compare Irvine to other places across the country with the best schools and proximity to high paying jobs.
There are Irvine’s everywhere. Start looking in the best neighborhoods with the best schools around Houston, Chicago, Dallas, Florida… you would be surprised at the high housing prices.
Irvine is like everywhere now that has the best schools in proximity to high paying jobs. You can’t escape it in any location that has anything close to long term sustainability. You can find a job in the middle of nowhere but as soon as that job is gone… time to move.
The American hate-hate relationship with lenders appears to be growing
The director of the Consumer Financial Protection Bureau, the nation’s most powerful financial services regulator, provided a semi-annual update to the House Financial Services Committee this morning.
So how are things going at the CFPB?
Short answer: The American hate-hate relationship with lenders appears to be growing.
In fact, consumer complaints against lenders and servicers are nearing half a million complaints.
This is so bad, Cordray is reporting that the CFPB is working to improve consumer access to the database, by making it easier and simpler for consumers to complain.
As of September 30, 2015, the database passed 465,000.
The semi-annual report covers April to September 2015. During that time, the CFPB reported $5.8 billion in consumer relief. There is also $153 million in civil money penalties.
The growing number of complaints, however, is not a concern for the esteemed members of Congress.
Cordray uses credit unions as a shining example of CFPB success and, hilariously, they respond back that he is flat out lying and they are being forced out of business by CFPB regulation.
I would say a more appropriate title would be “The CFPB hate-hate relationship with lenders appears to be growing.”
I think the CFPB is a new model for good governance. Any regulatory body that reports to Congress will be captured by the industry it’s supposed to regulate. Since the CFPB reports to the federal reserve and not to Congress, blowhards like Hensarling can pontificate all they want, and it comes to nothing, which is what you want in an independent regulator. If the CFPB were to get out of control, Congress could always change the law, but that won’t happen by the action of a few well-connected and well-funded industry-owned politicians like Hensarling.
California property report: Median house price falls 2.3%
While single-family home and condominium sales slightly change in February from its revised 24,273 in January, cash sales soared to 25.3% of total sales, the highest in 23 months.
Sales volumes were at 43.2% below last year’s peak summer sales. In February 2015, sales were down 2.4% from a revised 25,022, condominium sales increased to 19.4% of total sales compared to last year’s 18.6%.
For the month of February, single-family home sales went down 2.1% from last year, condominium sales gained 1.1% for the month but were flat year-over-year.
According to PropertyRadar, director of economic research Madeline Schnapp, the California’s real estate market went into an early “hibernation starting in October 2015.”
“On a year-over-year basis, sales have been remarkably flat. That’s good news because the California real estate market continues to shrug off broader national and global financial turmoil. The bad news is that resilience has translated into flat markets for the foreseeable future,” Schnapp was quoted saying.
“Lack of inventory and high prices continues to stifle activity”, said Schnapp. “Our October 2015 headline, ‘Flat is the New Black’, looks more and more likely for the rest of 2016 as economic growth slows and real wages remain stagnant.”
Per the PropertyRadar report:
The February 2016 median price of a California home was $390,000, down 2.3% from a revised January 2016 price of $399,000. On a year-ago basis, median home prices were up 3.7% from $376,000 in February 2015. The median price of a condominium was $379,000, down 2.8% from $390,000 in January 2016 but up 3.7% from $370,000 from a year ago.
“Not surprisingly given current economic conditions, year-over-year price growth halved this past month,” said Schnapp. “Price appreciation has definitely slowed which is good news for a market suffering from sticker shock.”
Cash sales for single-family homes and condominiums increased in January, but were down 1.9% from the year before.
Out of California’s 26 counties, San Francisco, Marin, Santa Cruz, Tulare and Fresno were the highest in cash sales percentages.
“Fortunately for the real estate markets, El Niño has made its presence known in Northern California, providing much needed snow to Tahoe ski resorts and filling reservoirs,” added Schnapp.
“With the Sierra snow pack close to or above normal, easing the statewide drought, water-critical areas such as the Central Valley and tourism based economies, can now breathe a sigh of relief,” concluded Schnapp.
First-time homebuyers lose out during the busy U.S. homebuying season
With the U.S. employment rates on the rise and apartment rents increasing, millennials are turning to the busy and competitive U.S. homebuying spring season and trying to purchase a new home.
According to Bloomberg author, Prashant Gopal:
Before beginning the hunt for their first house, Tennessee residents Brittany and Craig Murphy pared their student debt, saved for a down payment and got an income boost from her new job. The major hurdle was what came next.
In the last month, the couple lost two bidding wars on Nashville homes to competitors willing to pay more than 10 percent above the asking price.
“I was not expecting the actual finding of the house to be the difficult part,” said Brittany Murphy, a 26-year-old Web designer whose husband, 27, is a software developer.
Many house hunters are facing difficulty in purchasing a home by the lack in homes being built as well as facing limited inventory and finding a home in in-demand cities like Nashville, Tennessee.
Per Bloomberg, Doug Duncan, chief economist of Fannie Mae estimates the U.S. single-family home prices will climb 5% in 2016 while sales will increase by 3%.
“Affordability is a challenge this spring,” Duncan was quoted saying. Prospective buyers “would have gotten their credit in shape and they’ll have a job. But they will be frustrated because, in their market, there simply won’t be affordable homes.”
What is the competitive advantage for non-QM lending?
The introduction of the Qualified Mortgage rule in January 2014 brought about the concept of non-QM lending; loans that do not meet certain Consumer Financial Protection Bureau requirements.
Now that the QM rule is a little more than two years old, what is the competitive advantage for non-QM?
Within the first year of the rule taking effect, lenders started to come out, saying that they would originate non-QM loans due to the need. .
Mike Fierman, managing Partner and CEO, Angel Oak, reiterated a lot of similar points to those lenders when asked the question during Goldman Sachs 2016 Housing Finance Conference panel on the “Re-emergence of originator growth and innovation.”
“Our product development started off as me originally applying for a refinance and I couldn’t get a loan,” Fierman said.
As a result, he realized that there are some product opportunities out there that need to be looked at.
“What are the good loans that make sense that aren’t being done?” he asked at the time.
Now the company sees growth in this area, nothing when he introduced his company at the beginning that they are building up their non-QM platform.
While the Federal Housing Administration is known to be a big competitor in non-prime, there are still a lot of reasons borrowers can’t go FHA, he explained.
One of those reasons is loan size.
After non-QM, several lenders announced they would originate non-QM jumbo loans.
“We believe there is an underserved market for these programs where certain borrowers are finding financing for purchase or refinance is either non-existent or available with stringent and costly parameters,” Bill Ashmore, president of Impac Mortgage, said at the time.
Impac Mortgage announced at that time that would begin offering the non-QM market 4 new products: Alt-QM Jumbo, Alt-QM Agency, Alt-QM Income and Alt-QM Investor.
With a sufficient downpayment (30%+?), the non-QM risk might be minimal. The argument is, no borrower is going to get to the foreclosure stage in default when they have a decent amount of equity. They would just sell the house.
However, what if the reward on your non-QM loan for allowing your mortgage to go into default, regardless of equity, were pretty big? Will three years’ finance charges, actual damages, court costs, and attorney’s fees be sufficiently large to encourage borrowers to delay selling and file a complaint against their creditor?
If attorneys start taking this work on a contingency basis, then yes, it will be sufficiently rewarding. We will have an entire new niche industry similar to personal injury attorneys who specialize in extracting money from lenders.
Goldman Sachs expert on the key takeaway for Millennial homebuyers
The number to watch when it comes to Millennials is the sheer amount of them. There are approximately 92 million, with the biggest age bucket sitting at 24.
That’s a lot of resting potential for the housing market.
During the Goldman Sachs 2016 Housing Finance Conference, Hui Shan, vice president of credit strategy research with Goldman Sachs, was asked during the Q&A sessions, “Are Millennials ever going to buy houses?”
Unlike a lot of reports out there on how this young generation does eventually, hopefully this year, want homes, Shan explains why housing will be okay.
“The key takeaway is the quantity prompts the quality,” answered Shan.
Yes, she noted that there is a lot of talk surrounding their growing debt, living with their parents, failing to get a job and choosing to not get married and so on and so forth.
But it’s quantity versus quality.
All these things impact the exact quality of the Millennials.
And she said, “They probably have lower housing demand compared to parents.”
But the quantity is so enormous it offsets this, she explained.
“For each individual, their net demand is lower,” she said, “But on a macro housing level, the quantity will make up for that decline in quality.”
I’m glad somebody finally gets this. Even if Millennials have fewer job prospects and more debt, on average, the sheer size of their generation ensures that there will still be housing demand volume comparable to prior generations.
The Great Let’s-Totally-F*ck-Up-Kansas-Experiment Is Nearly Complete
If it were possible for Congress to place a state into some kind of democratic receivership, Kansas would be a really good candidate. Governor Sam Brownback—excuse me, twice-elected, god help us, Governor Sam Brownback—turned the state into a lab rat for all the worst policy ideas produced by the modern conservative Republican party. The legislature went gleefully along for the ride. The state has cratered and, as it cratered, it sank deeper and deeper into madness. The latest chapter in this sad saga came when the state’s Supreme Court began to rule that, all Randian wet-dreams aside, Kansas had an obligation to fund its public schools at a decent level. If you think that the legislature response was to carefully consider what it’s been doing over the past few years and pull itself back from a course of action that is so obviously harming so many of the people that put it into office, then you probably live in a state not presided over by the likes of Sam Brownback.
A committee in the GOP-controlled Senate plans to vote Tuesday on a bill that would make “attempting to usurp the power” of the Legislature or the executive branch grounds for impeachment. Impeachment has “been a little-used tool” to challenge judges who strike down new legislation, said Republican Sen. Dennis Pyle, a sponsor of the measure. “Maybe it needs to be oiled up a little bit or sharpened a little bit.” The proposal has considerable support in a Legislature in which Republicans outnumber Democrats more than 3 to 1. Nearly half the Senate’s members have signed on as sponsors. It’s unclear whether its novelty could complicate passage.
Don’t like what the Court’s been doing? Don’t abide by its rulings, just 86 its justices.
Since Gov. Sam Brownback and GOP supermajorities won control of the statehouse in 2010, conservatives have passed a steady stream of bills cutting income taxes and spending, expanding gun rights and restricting abortion. The state Supreme Court has issued rulings to force increased spending on public schools, citing a constitutional requirement that schools be adequately funded, and threatened last month to shut the schools this fall if lawmakers don’t comply. The court also has overturned death sentences in capital murder cases and is reviewing a case that could toss out abortion restrictions. “I believe the court has a tremendous problem with overreach,” said Republican Sen. Mitch Holmes, one of the impeachment bill’s sponsors. Callie Denton, executive director of the state trial lawyers’ association, said Kansas is “really ground zero” for conservative antagonism toward the courts. Legal groups like hers fear Republicans will be motivated to initiate impeachment proceedings if the bill passes.”We’re taking it very seriously,” Denton said.
They recognize no limits to their power, no curbs to their desire. There are few frontiers in democratic government that they will not work to violate, or to twist to their own purposes. And they absolutely will not stop. Ni shagu nazad, as Stalin said to his army. Not one step backwards.
Conservative groups are expected to mount a major effort to vote out four of the Supreme Court justices on the ballot this fall. But critical lawmakers also hope to make impeachment a tool. Currently, the state constitution allows impeachment only for treason, bribery or other high crimes and misdemeanors. No public official has been impeached since 1934. In other states, conservative groups are spending heavily in contested judicial elections. Two Arkansas Supreme Court candidates were defeated last week after two groups spent more than $850,000 on broadcast ads targeting them; one was a sitting justice seeking to become the chief justice. Brownback and GOP lawmakers already have tried unsuccessfully to change how the justices are selected and to cut the judiciary’s budget. “The attacks on the courts in Kansas have definitely been coming faster and more furious than in other states,” said Debra Erenberg, spokesman for Justice at Stake, a Washington-based group promoting judicial independence. “It just seems like the Legislature has been throwing everything it can think of at the courts.”
The experiment in Kansas is nearly complete. Government has been refashioned to work splendidly for the wealthy and connected, and not at all for the people who need it most, who then develop within their hearts and minds contempt for it at the ballot box, and contempt that perpetuates itself with every new atrocity, which has been the plan all along. As we point out often here at the shebeen, the problem with lab rats is that most of them die.
Sounds like California’s conservative alter-ego. Since there is a supermajority of conservatives elected in Kansas, we can conclude that the legislators are just following the will of the majority of people. The disaffected minority can only cast protest votes. California’s been like that for decades. Where’s the outrage from the left about that? Why don’t we put California in receivership?
We’ve done some crazy things here, the best example being that train to nowhere.
I remember discussing HSR with a colleague after the measure passed. He was all for it. I pointed him to a study showing the real cost was upwards of $80B not $8B, and that ridership projections were based on Japan and Germany where people already ride a train every day, just a slower one.
His response was that he thought it would be nice to be able to take a train from here to SF in 2 hours. Well that’s now 5 hours, and the SUBSIDIZED per-ticket cost is anyone’s guess.
California Rail Fail
In California, the Trains Never Run on Time
http://www.the-american-interest.com/2016/03/06/in-california-the-trains-never-run-on-time/
New York’s chattering classes have spent the past week mocking the city’s new $4 billion subway station. Meanwhile, across the country, California continues to pursue its own lofty transportation dreams. The LA Times reports that California’s bullet train proposal has once again been significantly revised:
The 2016 business plan, released last month, shows that the Los Angeles-to-San Francisco rail link has proved to be politically and technically more complicated to build than foreseen in 2008, when voters agreed to help finance the project with a $9-billion bond.
The plan acknowledges the biggest of those problems: The costly and geologically complex crossing of the Southern California mountains cannot be completed by 2022, as the rail authority had long contended.
And that’s just the beginning. Although the new report lowers the final cost estimate to $64 billion, it does so mainly by proposing narrower tunnels that would need to be entered at lower speeds. The revised, more modest proposal still has no plan to fill a $25 billion funding gap beyond the quixotic hope that 49 other states will agree to foot the bill. Even if Congress somehow gets hoodwinked into allocating the funds, completing the rail system will require another $21 billion from private investors.
With an eye toward attracting that money, the planners’ first step is to build a section which can demonstrate profitability. Yet the segment they’ve chosen is the one between San Jose and the Central Valley—not California’s most popular destinations. Given that the trains on the first segment are likely to be pretty empty, we suspect the planners are equating profitability with proof-of-concept.
High speed rail enthusiasts figure the idea of super fast trains is itself so awesome, everyone will fall in love once they see the thing in action. Maybe. But will they love it so much they’ll pay huge amounts of money (through taxes and ticket prices) to expand the system and keep the trains running? Private investors aren’t holding back because they don’t realize how sexy high-speed rail can be—businessmen with billions of dollars can hop over to Tokyo and Beijing for a test ride. The problem is that no one wants to bet on Americans paying what will surely be very high ticket prices.
California’s HSR project has always been about politics, not economics. Whatever its cost to taxpayers, it appeals to two big California interest groups: construction unions and environmentalists. It’s presented as a bold vision for a state that likes to think of itself as more advanced than the rest of the country. Yet it’s not clear that the idea is really so forward-thinking. Decades from now, when it’s scheduled to be completed, there will be new modes of transportation and telecommuting will be more widespread and attractive. In an economy that increasingly prizes flexibility, something that needs tracks might not be the most sensible people mover.
Passenger rail enthusiasts often don’t know that America actually has a wonderful rail system—for cargo. America’s freight rail system is the best in the world. And the environmental benefits of replacing trucks and planes are pretty comparable to the benefits of replacing cars and planes. Freight does not need to be shipped at hundreds of miles per hour, nor does it require new tracks or signals. Of course, the idea of a crate of iron pipes lumbering through fields of golden wheat doesn’t inspire much enthusiasm. But as Warren Buffett, who is investing heavily in freight rail, will tell you, it has one big advantage over passenger rail: it makes money.
The chairman of California’s rail authority, Dan Richard, admits that the bullet train isn’t exactly coming along as he had hoped. For one, he knows starting with the L.A. to San Diego segment would be more likely to prove the system’s profitability. But Richard has an explanation for the challenges he’s facing: “If we had started with all the money in the world, this program would have probably proceeded differently.” Even hard-nosed skeptics can’t disagree with that.
I don’t know the facts other than what’s presented in this article, but based on what’s written here, it sounds like a white elephant that needs to be killed.
“Since Gov. Sam Brownback and GOP supermajorities won control of the statehouse in 2010, conservatives have passed a steady stream of bills cutting income taxes and spending, expanding gun rights and restricting abortion.”
The conservative side of me thinks, “This is great. States have a certain level of autonomy (federalism) to experiment with political ideas and see what happens.”
The liberal side of me knows the unfortunate consequences tend to fall to the least powerful citizens in the state.
This will be a great test case for Conservative idealism. Either they will create a Utopia that serves as a model for the rest of the country, or they will create a disaster that shows how bad their idea of governance really is. It doesn’t matter to me as how it turns out because either way we learn something. This is a great experiment.
The minority can always vote with their feet. Presumably other Midwest states offer similar lifestyles with more liberal politicians in place. To build on Russ’ point, that’s what’s happening in California as businesses flee the state en masse. The purveyors of extremist policies eventually will have to deal with the consequences of their actions.
“A lack of supply inflated California house prices since the mid 1970s. ”
Lack of supply? Just like every other major job center you can move 40 miles away and buy a house for $200,000.
It’s not a lack of supply, people feel entitled and/or choose to rent in the best school districts next to high paying jobs.
Traffic? try the traffic in Houston, Seattle, or Chicago….. where the best surburbs in the best school districts also start at $750K and go over $1M for a house.
California’s biggest reservoirs recover, putting water limits in question
http://www.sacbee.com/news/state/california/water-and-drought/article66078267.html
With California’s two largest reservoirs hitting historically average levels following a weekend of heavy storms, the state’s chief water regulator is cautiously optimistic that the drought may finally be relaxing its grip.
If the wet weather continues, she said, the urban conservation mandates that turned lawns brown and have Californians taking shorter showers may be eased in the weeks ahead.
“In May, we’ll be either lifting it or changing it significantly,” Felicia Marcus, chair of the State Water Resources Control Board, said Monday. “The more precipitation we get, the more snowpack we have, the better it is.”
Over the weekend, the state’s largest reservoir, Shasta Lake, surpassed its historic average for this time of year. The second largest, Lake Oroville, hit that mark Monday afternoon before dropping back just below average. It marks the first time since 2013 that the reservoirs have reached their historical averages for this time of year, said Doug Carlson, a spokesman for the Department of Water Resources.
“That is some cause for optimism, because it has been a long, long slog trying to come back up from the real lows that Oroville, for example, has hit in the past couple of years,” Carlson said.
The two reservoirs represent a substantial portion of the state’s water supply. The 6.07 million acre-feet of water recorded Sunday in Shasta and Oroville account for more than 40 percent of the total water now stored in California’s largest reservoirs. Folsom Lake, a much smaller reservoir, has been at average levels since early February. That in itself was something of a milestone. Two months earlier, Folsom Lake stood at the lowest depth in its 60-year history.
Marcus said that when these reservoir levels are factored in with relatively normal Sierra snowpack, the state’s water picture has grown bright enough for officials to consider relaxing the conservation orders in place since June. On Monday, water content in the Sierra snowpack was 92 percent of average, according to Department of Water Resources data.
Gov. Jerry Brown ordered the state’s first-ever mandatory water cutbacks last spring, as the state’s water supplies suffered in a fourth year of drought. Last month, Marcus’ agency extended the conservation mandates through the end of October. They required cities and towns across the state to cut water use by a combined 25 percent, with heavier users targeted for the biggest reductions.
Marcus has said that regulators would revisit the mandates before summer to take into account the precipitation totals from winter and early spring. She said Monday that the weekend storms certainly point to tweaking the order if the trend continues.
“That could include differences between regions, obviously,” she said. “It could include lifting it entirely.”
In the meantime, she said it’s imperative for Californians to keep conserving, since their local water suppliers still may face sanctions if they don’t hit their targets. And, she noted, even with average water levels in Shasta, Oroville and Folsom, the state’s total reservoir supply is not yet at normal.
As of Monday, the combined supply at all the state’s largest reservoirs was around 78 percent of average, with Shasta, Folsom and Oroville included. Marcus said there’s no guarantee enough storms will emerge to bring the entire system up to normal. No rain is forecast for greater Sacramento until Sunday night.
“That’s what February taught us,” Marcus said. “It felt glorious in December and January and people were saying, ‘See? The drought’s over,’ then the tap got turned off. We had record heat, and it was frightening, so thank God for the ‘Miracle March.’ ”
Sacramento-area residents – typically among the state’s heaviest water users – have faced some of the stiffest cutbacks under the mandates. Most water agencies in the region are under orders to cut usage 25 to 33 percent over 2013.
Area water officials have been saying for weeks that the state should ease those restrictions given that recent storms have filled Folsom Lake – a primary source of the region’s water – to the point that dam managers had to make releases to ward against floods.
Einar Maisch, general manager of the Placer County Water Agency, said it’s going to be hard to convince customers the region is still in a drought “when Shasta and Oroville get to average, with snowpack above them.”
“I’m very concerned (about trying) to tell our customers a story that they do not believe,” he said. As it stands, Placer County Water’s customers are supposed to cut usage 29 percent compared with 2013.
Marcus’ office already has given some concessions to local districts. The extended regulations approved in February relaxed the conservation mandates for many inland communities, where hot, dry summers make it harder to keep lawns and trees alive. Many of the water agencies in greater Sacramento saw their targets fall by 3 percentage points.
Despite the rains, it’s still uncertain how much of Northern California’s water may be shipped to the farms and cities south of the Sacramento-San Joaquin Delta as the year progresses. The Department of Water Resources, which delivers water through the State Water Project, has tentatively promised to deliver 30 percent of what customers such as the Metropolitan Water District of Southern California have asked for. Last year, they received 20 percent.
Terry Erlewine, general manager of the State Water Contractors, an association of SWP customers, said a big problem in getting additional water is that the reservoirs that help supply the lower Central Valley, such as the San Luis Reservoir in Merced County, aren’t doing nearly as well as Oroville, Shasta and Folsom.
“That’s the part that’s missing this year,” Erlewine said.
There is one more immediate benefit to having so much water flowing through the system. It’s turning turbines that supply electricity for the Sacramento region’s power grid.
The Sacramento Municipal Utility District said Monday that it will drop its hydroelectric rate surcharge on customer bills effective next month, a byproduct of strong storms filling reservoirs in the utility’s hydroelectric generation system in the Sierra Nevada. The current 1.3 percent surcharge went into effect in April 2015. SMUD said the impact was about $1.20 a month for residential customers.
Brandi Merlo, a spokeswoman for San Francisco-based Pacific Gas and Electric Co., said her company isn’t ready to take the same step. PG&E customers are paying 1.4 percent more this year than they otherwise would be, but “it’s still too early to know what the effects of the rain would be.”
Do we have enough reservoirs located in the right places? Since we are now releasing water from reservoirs during a drought, why aren’t we building more reservoirs?
I wonder if reservoir capacity growth is matching population growth. There is also growing agricultural demand on water resources to consider. Environmental impact studies can draw out the approval process for new reservoirs, not years but decades.
The drought restrictions wouldn’t have been nearly as bad if we had larger reservoirs to carry us through the drought years. Why isn’t any one talking about this in Sacramento?
People talk about the need for new reservoirs constantly in Sacramento… it just doesn’t make it down to the news in Socal. Amazingly there are people that called for the closure of Hetch Hetchy and Lake Oroville to rehabilitate Trout populations. I can’t even begin to understand their thinking.
The issue is a reservoir usually does serious damage to a river and/or an ecosystem so they are almost impossible to build since CEQA was passed. We haven’t had a new significant reservoir since the 1960s.
It’s one of those issues where laws collide.
“The issue is a reservoir usually does serious damage to a river and/or an ecosystem…”
Unless the river runs dry, which is even more damaging to the ecosystem. At which point the animals would probably prefer to have a source of fresh water. Anyone bother to ask the animals what they want?
But it’s all good, population hasn’t grown much in California since the 60’s. Plenty of water to go around.
I minored in Resource Management as an undergraduate. Since the 1970s environmentalists have been against new reservoirs. They completely remake an ecosystem destroying what was there in favor of something completely different and generally much less diverse. Also, over time, these reservoirs silt in and become useless, or they require more dredging and maintenance that further disrupts the environment.
Most advancements in water management hasn’t been in the area of surface water. Much of California’s water management has been to create collection basins to help recharge ground water. Ground water is much more plentiful than surface water, and it isn’t subject to problems with surface evaporation, so its currently favored among water managers.
The big political hot potato is the California Aqueduct. Many environmental groups would like to see it turned off. Since Southern California depends on it, that isn’t likely to happen any time soon.
Perhaps desalinization plants like the one that just opened in Carlsbad will provide a long-term solution, but these are difficult to permit and costly to construct and connect to the water system.
Why have there been no media articles attributing the replenishment of California’s reservoirs to climate change?
Not on message. Unsupportive or contrary facts will be summarily ignored, suppressed, or executed, as need be. Is it global warming again, or still climate change? I forget…
Let’s re-frame the argument here.
California doesn’t have a shortage of housing.
California has a surplus of people.
Mass out=-of-control immigration is the problem here, and most people involved in real estate don’t want to discuss it.
Exactly
A massive amount of people who won’t move 40 miles away where homes cost $200,000 or less
Immigration is a far smaller contributor to the California population than births. Most of California’s population growth comes from people who are born here.
Further, high home prices do serve as a barrier to immigration, legal or illegal, because when they get here, they can’t afford to either rent or buy a place to live.
Do you not see this as a social problem? Or is it that since you have yours the others don’t matter?
it’s not a social problem
it’s your own personal decision to either rent or buy 40 miles away
the new building in Irvine does absolutely nothing
There are plenty of cities with plenty of jobs all over the US, so no, it’s not a social problem. This is equivalent to arguing that many people can’t afford to eat at Outback Steakhouse so there’s a shortage of food. We should mandate that all steak houses have a value menu so anybody that wants to can afford to dine there.
or worse… actually see that building new homes in Irvine does nothing to affordability…
just like adding a lane on the 405 does nothing to traffic, more people drive and less people car pool to get the same net effect
the problem is too many people desiring to live in close proximity to jobs… supply can never match that
Other Americans do matter. Others from Mexico, Asia, Africa who move here and are not required, do not.
California and the US simply do not need millions of foreigners moving here. The economy does not need them. US taxpayers do not need them.
Japan, for example, does just fine without mass immigration.
Too much growth, too many people.
Exuse me sir, I speak bigot. He is just saying all of the brown skinned ones have to go. You missed the code words.
They have to go, and they will.
California’s problem is too many people. Mass immigration is the problem.
We don’t need the third world moving here. Neither can we afford it.
Of course, we can’t really expect the slumlords and others who make a living off California real estate to admit there’s a problem.
Talk about greed…!
I totally agree with the blogpost. Development and zoning as decided by local cities and counties has to be overseen at the state level.
While I’m 100% for eliminating urban sprawl and bad/haphazard/no long term planning development, there has to be a plan for providing housing to the population. I’m fine if you say “no” to a project cities, but then you have to say “how” you are going to meet your objectives. In california this is going to mean a lot more condos and townhouses, so cities have to plan to accomodate these. Antedotely, I am seeing a lot of these projects in LA.
LA continues to be 60-70% renters… so exactly what slice of the population are you talking about for these new condos and townhomes?
Are you talking about condos that someone will buy and then rent out?
I guess it doesn’t matter either way… its just more of the same
Centralized control at the state level will be ham-handed and lead to even worse shortages as they are unable to react to local conditions in a nuanced way. As IR has pointed out many times, CEQA is the state law that effectively capped development in many areas starting in the 70’s.
I can’t help thinking that the problems in Huntington Beach would be resolved differently if a State agency was telling the locals “you solve the problem or we will solve it for you.” Politicians would find the least-worst alternative and push it through out of fear a Sacramento bureaucrat would put it were people really, really don’t want it.
“In the real world, there is always room for two more houses. If all the land were developed, it could be redeveloped at higher densities. In other words, if cities can’t build out, they can always build up.”
From an engineering perspective this is true. However, increased density comes with a host of social ills, like traffic, crowding, noise and pollution. Until and unless these are addressed, voters will vote down development, either at the local level or at the state level. Both are subject to the democratic process, eventually.
“Unless lawmakers approve many more dwelling units, the shortage will worsen.”
Or prices will rise and things will equilibrate. Or some of each.
“In whatever form, some State or regional body must be given power to stop NIMBYs from lobbying local government officials to stop development”
I’ll argue this course of action won’t be tolerated. The people will elect different politicians at the state level. Or the initiative process will be used. For example in San Diego, there is Prop D, which limits the height of developments West of I-5 to 30 feet. I could easily see something like this going state wide.
Coastal Southern California is built out. Developers have made fortunes filling it up. And a lot of Developers did so by manipulating the political process. Drive to you qualify is another term for build out further East where no one is around to complain. I’ll argue that building is going to be a shrinking part of SoCal GDP going forward. What happened over the last 75 years of so was a one-off exploitation of empty land and the cheap water provided by diverting the Colorado river. Going forward, the democratic process is going to kick in and force some hard conversations.
Love your blog, keep up the good work.
We had a similar proposition to Prop D last year here in San Francisco, trying to block a dense high-rise housing development on a derelict wharf near the Giant’s stadium. Even in ultra-Progressive SF, land of the atomic NIMBY, the measure was defeated and the units are going up. When prices get high enough and space tight enough, even liberals see the light.
The funny thing is the argument was “It should be open space” and “It will block views for all San Franciscans”. For years the property was covered in barbed-wire, gang graffiti, and homeless camps. Funny how many people never care about something until it is about to be changed, then all of the sudden it is the most important thing for the community ever.
and the impact on affordable housing is absolutely ZERO
The atomic NIMBY…….Perfect. That’s one to remember.
I think there is a little bit of BS in this article you cited, Larry. San Francisco has a very pro-developer mayor in Ed Lee and massive building is occurring all over the city. If you’ve been here recently you know that the South of Market neighborhood (and to a lesser extent Civic Center) look like China with all the cranes. In my own neighborhood I can count six different five story apartment or condo buildings that are being built of have been finished in the last year.
According to the SF Examiner, 36,000 units are currently approved, including large developments in Hunter’s Point and Lake Merced. That doesn’t include the 20,000 units proposed for Treasure Island, currently in CEQA hell. This is the most construction SF has seen since the 1960s. I’m a Bay Area native and I’ve never seen this much construction in my life. There are large apartment blocks going up all over, from San Jose to Oakland and Berkeley.
I think the crunch in the Bay Area is it was caught with its pants down. Rents were falling here 10 or 12 years ago and all of the sudden Web 2.0 / Social happened and the place exploded.
Here’s a link to the Examiner article:
http://www.sfexaminer.com/san-franciscos-most-massive-housing-construction-era-since-urban-renewal/
I think the crunch in the Bay Area is it was caught with its pants down. Rents were falling here 10 or 12 years ago and all of the sudden Web 2.0 / Social happened and the place exploded.
That’s a great summary of what’s happening, and to a lesser extent that describes the entire country as development ground to a halt for 5-6 years during the housing bust. Now all of the sudden, people want houses again and the developers are scrambling to keep up. This is being exacerbated by the Millennial generation hitting prime home buying age too.
Eventually, this new push for development will lead to oversupply and another housing downturn. It happens like clockwork every 10-12 years, although I think this cycle may last longer due to the extreme conditions of the prior bust, and how long it took to climb out.
I would like to see the building data as well. From observation it apears builders are taking advantage if maximizing household per acre in urban areas in California.
Trump calling Clinton the punchline? Classic. Trump is the punchline that’s delivered daily. The joke is on us.
https://www.instagram.com/p/BDBS8bYGhWr/
Let the games begin!
Now that the Dow is at it’s 2016 high, at least Lee 6 Pack in Irvine will have something to eat his popcorn to and be entertained
Lee 6 Pack In Irvine haha. where is he? Paging Lee!
Well, technically speaking the prior Clinton presidency was considered the golden age for late night talkshow monologues.
Why can’t technology be used more creatively to address our housing problems? Employers should consider a set up where lower/moderate wage employees go to work in areas that have housing they can afford. Executive (C-Suite people, CEO, CFO, CTO, etc.) could work in small suites in high-income areas where they like to live (West LA, Coastal OC, etc.). California may have a housing shortage area in high income neighborhoods, but it most definitely does not have a land shortage. Drive out the 10 Freeway from West LA and once you hit the LA County line going east you’ll see a lot of land that could be developed with housing. Why must everyone schlep into the same small crowded urban core of the vast metropolis to work? Makes no sense at all.
because the lower wage employees will commute and there is no shortage of them
that’s the simple truth
If the goal is for more housing, forcing NIMBY’s to accept affordable housing is the wrong strategy. It will never work. You have to sell them something they do want. Otherwise, you are just backing them into a corner, and surprise, desperate ground is fought for desperately.
Some are militantly opposed, and will never be convinced to add any more housing, affordable or not. Other NIMBYs want to get something out of the deal. They are part of the community and want to also see some benefit to offset the burden. They are your target.
If you can convince local communities that tax revenues will rise by building higher-end high-density occupied by empty-nesters that won’t burden the school system with “instruction intensive” students, then higher density ‘might’ be acceptable; especially if they see their tax bills fall.
More homes will be built, and the rising stock will ease the supply constraint on prices. This will create more affordable options at the low end.
The idea isn’t to force them to accept affordable housing, it’s to force them to accept housing — period. The local communities can approve the type and location of the housing, but it must approve something. Right now communities can just say no to all types of housing and pass the problems on to everyone else, which means nobody deals with it, and we have a huge shortage of housing units.
Enough of Trump’s hypocrisy, how about Obama’s? You can’t give that high-minded speech on the Senate’s Constitutional duties to consider your SCOTUS nominee, when you voted to filibuster a Republican’s SCOTUS nominee (Alito).
Okay, that’s enough of that. Back to our regular bigot bashing schedule:
Five North Carolina Sheriff’s deputies disciplined over Trump rally
https://www.yahoo.com/news/five-north-carolina-sheriffs-deputies-disciplined-over-trump-000337279.html?nhp=1
So you believe the sheriff’s deputies were white supremacists?
They appeared to be escorting a man out. That man was sucker-punched. They tackled the victim to the ground and did nothing, apparently, to the puncher. Bigotry in action.
There could have been bias on their part, as in they thought the black man instigated the attack by hitting the old guy first, but I don’t think it was an act of bigotry.
Look at the photo in this article:
http://www.wral.com/5-cumberland-county-deputies-disciplined-in-connection-with-trump-rally/15554135/
I count six total deputies, only one of which was sort of looking in the direction of the attack, on the top left. He may not have seen the attack clearly or known who started it, because he doesn’t look tensed up as if he recognizes what is going on.
The two deputies near the bottom are clearly looking down. The one in the upper middle is looking in the opposite direction. The two deputies on the upper right are black men themselves and were looking in the opposite direction also.
Then there is this photo when the protester is on the ground:
https://www.washingtonpost.com/news/post-nation/wp/2016/03/16/deputies-suspended-following-failures-to-act-at-trump-rally-in-north-carolina/
The two black deputies had moved over and one was helping restrain the protester. They very likely had no clear idea of what had happened, and in my mind the white officers didn’t either. It had to have been chaotic and loud in the moment.
Supposing it was an act of bigotry on the part of the white officers, it would be an awfully brazen act, given that their black co-workers were only a few steps away, and knowing that hundreds of people were likely watching, many with camera phones rolling.
My take is they were not paying attention, acted on a bias that the black protester probably started something, and didn’t follow up when he claimed to have been hit in the face until after the video came out. It was a poor job on their part, but not an overt act of racial bigotry.
Full disclosure, I was born and raised in south Los Angeles. I do not hold police officers in high regard, accordingly.
That’s understandable. The 80’s/90’s were not good years for the LAPD, especially in south central.
Tupac is posting on OC Housing News as “Perspective”
Posting from the grave… that’s quite an accomplishment! That explains his unique perspective!
To be fair, filibustering a SCOTUS nominee is part of the process (like it or not). Refusing to even CONSIDER any nominee at all, regardless of who he or she is… well that is obstruction.
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