Jan142016
California will always have a problem with homelessness
Good climate, good services, and a chronic shortage of housing combine to create an intractable problem with homelessness in California.
What is the minimum level of housing quality people are entitled to? If you pose that question to Coastal California residents, many will cite their needs for a large single-family detached house with granite counter tops — and they believe they are entitled to it. For me, I’m just thankful I am not homeless.
If I were facing homelessness, I wouldn’t want to freeze, and I wouldn’t want to starve, so I would seek out a location with good climate and ample social services. The want for a good climate rules out the Northern US, the rain and humidity rules out the Southeast, and the good social services rules out Arizona, Nevada, and Texas. That leaves California as the first choice for homeless living.
Because of the good climate and strong social services, California will always be a magnet for homelessness, and the more services we provide to deal with this problem, the stronger the magnet attracts homeless people from around the country.
California has a second problem that creates homelessness: we don’t build enough housing units to accommodate our growing population. Without enough housing to go around, some people have to do without housing. Most of those people leave the state, but many of them end up homeless.
California lawmakers propose $2 billion plan to aid homeless
Don Thompson, Jan. 4, 2016
SACRAMENTO – California would spend more than $2 billion on permanent housing to help the nation’s largest homeless population, under a proposal outlined by state senators on Monday.
The housing bond would be enough to construct more than 10,000 housing units when it’s combined with other federal and local money, estimated Senate President Pro Tem Kevin de Leon, D-Los Angeles.
The bond would be repaid with money from Proposition 63, the 2004 ballot measure that added a 1 percent tax on incomes over $1 million to pay for mental health treatment.
Homelessness has become a growing issue across the state.
Backers say about 114,000 people are homeless in California, more than a fifth of the nation’s homeless population.
This solution seems like pissing on a forest fire. Spending $2 billion to house less than 10% of our homeless solves nothing. Plus, providing this housing will likely attract more than 10,000 additional homeless to California leaving us no better off than before. I applaud his desire to help, but surely there is a more effective way to spend $2 billion.
Los Angeles’ homeless population increased more than 10 percent in the last two years, to more than 40,000.
If 4,000 homeless came to LA over the last two years, this isn’t a problem caused by economic upheaval. Homeless must be drawn to the area.
“It is despicable that in the richest state, that is the state of California, that just last night thousands of Californians laid their tired bodies on a sidewalk or on a cardboard,” Sen. Ricardo Lara, D-Bell Gardens, said during a news conference broadcast from Los Angeles’ Skid Row.
Yes, it is despicable, but what is the answer?
If $2 billion solves 10% of the problem, would $20 billion make the problem go away? If we built enough housing to accommodate the needs of those who are currently homeless, wouldn’t we get another 114,000 homeless to take their place?
We have a problem with a chronic shortage of real estate in California. We need many, many more housing units to meet our needs. When supplies are limited, the substitution effect forces everyone to accept a lower quality house than they otherwise would. At the very bottom of the housing ladder, those buyers who can only afford the least expensive properties get priced out by higher wage earners substituting downward.
Once all the available housing units are taken, like a game of musical chairs, someone ends up without a place to live. This is one reason many of the poorest neighborhoods have two or three families living together in the same house.
And it’s also why many end up homeless.
The solution to California’s housing problems requires ignoring the NIMBYs. We need to allow more market-rate housing to be built-in locations where it’s needed. This would make housing affordable, both rental and resale, alleviating the pressures that forces multiple families to live together and forcing others onto the streets.
Proposition 63 was designed to aid the mentally ill, and the Senate proposal would target the housing money to chronically homeless persons with mental illness. … De Leon also called for increasing the Supplemental Security Income/State Supplementary Payment program that aids about 1.3 million poor elderly, blind, and disabled people who can’t work.
It’s hard to say no to such a request. We should provide services to those with a real need, but we must be mindful not to provide too much to those who don’t need because they end up becoming a non-productive underclass dependent upon the State.
The fear of homelessness is the basis of our economic system. American’s allow homelessness largely because as a society, we have been unwilling to provide individually controlled private shelter as an entitlement because the fear of homelessness is the essential motivation to get people to work to produce goods and services in our society. Take away this fear, and you create an underclass of dependency: the Welfare State.
If everyone in California who didn’t have a job were provided shelter, some percentage of that population would choose not to look for work and live off the assistance payments of the State. Most desire to improve their circumstances and seek employment to get out of the shelter system, but many do not. The more comfortable the State makes them, the greater the percentage that chooses the easy life.
The non-productive and able-bodied worker ensnared by the California entitlement system robs some other state a productive worker. If Nevada has paying jobs for casino workers, what benefit does California obtain by keeping them here on public assistance?
The proposal in the California Legislature to spend more money on permanent housing for homeless is laudable if it targets the aid to those demonstrating a real need. To the degree that it enables lazy entitlement, it should be opposed.
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The street homeless problem (as opposed to motel families) is primarily a mental illness and substance abuse problem. Putting these people in state funded housing will do nothing because they won’t follow the rules and will be kicked out constantly.
Mentally ill homeless people need more than just housing
To the editor: I applaud the efforts of our state lawmakers to aid our city’s listless approach to our homelessness problem. (“California legislators propose spending $2 billion to build housing for homeless,” Jan. 4)
However, I disagree that the “housing first” model has been very successful. Few homeless on our streets are served by plans for building low-cost housing; in fact, I have found poor citizens dying just as easily living alone in small housing units as they do on the streets.
The infirm and mentally ill need constant hands-on support. A better approach would be to direct all infirm and mentally ill homeless citizens into our already existing and successful skilled nursing home care programs. Such group housing units are being used now and are less expensive to develop than individual units.
Encourage local health entrepreneurs to develop large homes and housing complexes for such use, and aid them with low-interest loans.
A few years ago my high school son has a away football game.We spent the night in a ok motel.Next morning a motel family had spent the night and was packing up.No car,just strollers with all their stuff.VERY VERY SAD!
Since the party is ending @ near zero-bound, the path of least resistance is DOWN going forward, so it’s only a matter of time before this type of headline prints in OC papers…
Calgary rent prices drop by almost 20%
http://www.cbc.ca/news/canada/calgary/calgary-rental-prices-drop-website-1.3394638
Cheers!
Calgary is likely suffering from the sharp decline in oil prices. Rents were pushed up due to the influx of fracking employment, but with the collapse of oil prices, the employment is drying up, and rent prices are dropping.
This is probably an early indicator of what’s going to happen in other oil-dependent areas.
Indeed. As was mentioned above… the party is ending @ near zero-bound.
Dont worry,they will start a war in the middle east to firm up the oil price.Might even blow up one of their own tankers.That there is how the game is played.
We had $20 / barrel oil throughout the Clinton presidency, but Bush II managed to push it up to $80+ by starting a war.
[my anecdotal evidence to support another opinion]
Cheers back at ya!
Housing is a proven boom/bust asset class
Cadit quaestio 😉
Astute!
Today’s one day move clearly proves your wrong! [sarcasm on].
you’re
Housing costs a threat to O.C. economy
“Hello, I must be going,” sang Groucho Marx in “Animal Crackers.” That witticism is also the title of two recent films – and could be the slogan for a lot of young people living in Orange County.
“Rents, home prices and home sales all are projected to rise even more in 2016, albeit perhaps at a slower pace than in 2015,” reported the Register. Economic forecasts by Chapman University and Cal State Fullerton “could put Orange County’s year-end median price for an existing single-family home in the $729,000 to $754,000 range.”
Rents are no bargain, either. After climbing almost 5 percent in 2015, Orange County apartment rents will increase 4.5 percent more this year to an average “effective” rent of $1,895 per month, according to commercial real estate brokerage Marcus & Millichap’s 2016 apartment report.
It’s especially difficult for young people starting families, leading two local familes of our acquaintance to exit for Oregon and Idaho. As opinon columnist Joel Kotkin recently wrote, “Although older homeowners benefit greatly from rising prices, housing inflation means that many companies will not be able to accommodate younger workers, particularly those with families.”
We checked prices on Zillow: A median-priced home in Dallas is $133,000. Of course, the weather is muggy in summer, and there’s no ocean. On the other hand, Texas also doesn’t have a state income tax.
The 2015 edition of “Rich States, Poor States,” written by economist Arthur Laffer and Register staff columnist Stephen Moore, looked at what’s called “absolute domestic migration” by citizens, which does not including immigrants from other countries. It found 1.4 million Californians left for other states from 2004-13, behind only New York. By contrast, Texas attracted a net increase of 1.2 million people.
Of course, companies still launch here, and the figures above represent averages and trends. But, increasingly, for young people, especially, the pressure to relocate may be too much to resist – even with the return of the NFL to this area.
A new answer for the homeless? Homes
This is not the answer
Last winter, Kelly Breitenbach and her three kids, homeless for nearly a decade, sought refuge at a cold-weather shelter in Fullerton.
That night, they got four beds. Soon after, they got something else: acceptance into a program that would get them into a full-time, permanent home.
Now, with a year of finance and life management sessions under her belt, Breitenbach, 36, and her now four children have a two-bedroom apartment in Buena Park. Breitenbach said rent is covered for three months and, after that, she’ll pay a below-market $1,230 a month with the help of federal funding. She’s looking for work.
“It helps me with the deposit, Edison, gas,” she said. “There’s not too much to complain about.”
Breitenbach’s story is an increasingly common solution for homeless people in Orange County, as some local and federal homeless agencies shift their focus and their money from temporary shelters to subsidizing full-time, below-market-rate housing.
It’s not yet clear if the policy shift will work. The relatively new idea hasn’t yet generated long-term data to show whether permanent housing keeps people off the streets forever. And many homeless agencies continue to emphasize temporary shelter, not housing, because that’s still where some federal money is available.
Experts also point out that a shift away from temporary shelters can add to the housing shortage, making it harder for some people to get off the streets.
“Now, with a year of finance and life management sessions under her belt…”
This is absolutely necessary for most of these programs trying to help folk. The most annoying part though, is that the Left fights education in many areas because they see it as cultural modification. I’m fine with telling you your culture is holding you back, and you need to change it if you want to move forward.
Mostly, it’s the culture of instant gratification that holds many back. Budgetary restraint requires denying pleasures of the moment for some greater purpose. Unfortunately, many people aren’t raised with this understanding, and instant gratification becomes deeply ingrained.
In San Francisco, at least, the vast majority of homeless people on the street either have serious mental health or drug abuse issues. A percentage of them could be housed and helped by this type of program, particularly if they could get drug and mental treatment.
We have things called SROs (single resident occupancy) hotels here that provide below market housing for homeless and at-risk people. If you see a bunch of people hanging out on the street, smoking weed and playing dice, they are most likely in front of their SRO. Works great.
Well, the smoking weed part is everywhere you go in San Francisco.
There are no easy answers, but perhaps you are not seeing the forest through the trees on this one.
“In July, HUD released data showing that among 2,282 homeless families surveyed over 18 months, the people who’d been helped with permanent housing were less likely to wind up back on the streets than those who were offered other interventions, including transitional housing.”
Affordability = more housing
Less Homelessness = effective social services
Lake Forest approves new 52-home development
LAKE FOREST – The City Council has given the green light to a new 52-home gated community near the Irvine border, with some residents applauding the project as a solution to the housing shortage, while others questioned whether the developer influenced council members with money.
The City Council on Dec. 15 voted, 3-2, in favor of approving the Encanto project, with Councilmen Jim Gardner and Adam Nick opposed.
The council also approved rezoning the undeveloped 5.75-acre property at the southwest corner of Alton Parkway and Commercentre Drive from high technology business and commercial to residential to make way for the project.
The decision was finalized on Jan. 5 after the council approved the second reading.
The Encanto project is adjacent to the Shea/Baker Ranch community, which features 2,379 homes and a 7.25-acre public park. Meritage Homes plans to build three-bedroom detached homes with two-car garages and yards in the gated Encanto community.
The site was graded in 1989 as a temporary storm drain detention basin for surrounding industrial development. In 2012, the city received an application from a developer to build an office and manufacturing facility on the site, according to a city staff report. But the developer withdrew the application before the public hearing because of development and land costs, the report says.
More than a dozen people spoke during the December council meeting, with a majority of them supporting the Encanto project.
Supporters said the project will help alleviate the housing shortage in Orange County, especially for first-time home buyers and young families.
Baker Ranch = no mello roos!
But I like Mellow Ruse.
LOL! +1
Will the stock market impact housing values? Taking a look at stock trends and current home values.
It is very telling to see how people are reacting to what has been a minor correction in the stock market. People have a hard time figuring out what they will do when things move down. We’ve had a great run in both stock values and real estate prices thanks to investors and hot money. This doesn’t do much for the cash strapped household that is now largely opting to rent. People do realize that renting is an option right? The crap shack peddlers seem to think that everyone is just itching to buy a $700,000 crap shack. Surveys of Millennials, the next group in line to buy houses in mass is largely reflecting a cooler attitude towards real estate. In most cases this attitude stems from the inability to afford a home. Keep in mind the homeownership rate has been trending lower for some time now and this is on the back of a raging bull market.
… what isn’t hard to spot is paying $700,000 for a piece of crap is going to give pause to many. Or if you are in San Francisco, paying $1 million for junk just so you can get some of that tasty tech induced action. The market is definitely hitting a snag. A large portion of people have fully forgotten the last housing contraction. The options aren’t only to buy or leave the state. You can rent. Some younger folks are living at home. And of course in expensive areas the option has been to rent – in some cases by choice and in many other cases by economic necessity. And then of course you get the “well the all powerful Fed, government, fill in entity here will never let home values fall.” Okay. So buy that crap shack. The reason there is still debate about this is that housing has turned into a speculative investment thanks to mega debt and large swaths of investors flooding the market. And when you have speculation you have booms and busts.
Are FICO scores becoming a thing of the past?
While most people can agree that the current credit score system needs work, not everyone can agree on the proper solution.
Take a look at San Francisco-based SoFi as an example. The company operates like a young tech garage in Silicon Valley except it’s a a disrupter in the mortgage industry, pushing the limits by doing things like choosing to not use FICO scores when evaluating applicants.
Here’s a clip from the lender’s blog explaining the reason behind that decision:
The idea of assigning a score based on your dealings with debt makes sense in theory, but in practice there are a few flaws.
The FICO score calculation doesn’t consider things like your savings, your cash flow, your ability to pay non-credit bills like water and electric or your future earnings (for example, if you just landed a job with excellent pay). Plus there’s the fact that a growing number of millennials are forgoing credit cards entirely, which is reflected negatively in their credit scores – even though they may be perfectly able to pay off a loan. All of these factors can have a major impact on your creditworthiness, but your FICO score doesn’t take them into account.
Because of these gaps, SoFi has chosen to not use FICO scores when evaluating the financial wherewithal of applicants. We still consider your track record of meeting financial obligations, but we also look at a more complete picture of your financial situation than what your credit score can provide.
Whether you agree or disagree with this method, SoFi seems to be doing well in its endeavors.
The lender only recently ventured into the mortgage industry, expanding past the world of student loans where it got its start.
Toward the end of 2015, SoFi announced that it had not only officially surpassed $4 billion in funded loans across mortgages, personal loans and student loan refinancing, but it also announced $1 billion in Series E funding shortly after.
“SoFi continues to redefine consumer expectations in financial services. This funding will dramatically advance expansion of our disruptive products and experiences, and in turn, meaningfully benefit financially responsible individuals. Our trajectory is clear: we are well on our way to becoming the most trusted financial services partner in the U.S.,” Mike Cagney, SoFi CEO and co-founder, said at the time.
It’s not just mortgage lenders questioning the credit scoring model — the government isn’t too fond of the current credit system either.
In December, a bill was introduced in the House of Representatives that would allow Fannie Mae and Freddie Mac to consider alternative credit-scoring models beyond the FICO credit score the government-sponsored enterprises currently use when determining what loans to purchase.
FICO will remain the lending standard for some time to come, but large financial institutions have been building their own credit models for many years now. This is nothing new, it’s just that SoFi is using it as a marketing angle (Yay, I don’t need a FICO to get a loan!).
In reality, everybody has access to the same set of data to evaluate borrowers. Many lenders just use the credit report, but some choose to use other 3rd party sources of data. Credit card companies will ask if you are a home owner and if you have a savings account. (They obviously believe home owners and savers to be more stable individuals.) Once you have the data, you decide how much weight to assign to the individual score on each data point, then merge that into a single score that you can evaluate borrowers against.
In the post, I asked if spending $20 billion was the answer. New York seems to think so.
Cuomo, in State of State Speech, Unveils $20 Billion Housing Plan
ALBANY — Proposing to address the challenges of homelessness and a lack of affordable housing, Gov. Andrew M. Cuomo of New York delivered a State of the State speech on Wednesday that called for a financial and spiritual commitment to rebuild the state’s social and physical infrastructure.
Mr. Cuomo, in a broad and at times emotional vision of his 2016 agenda, put forth a $20 billion plan to add 100,000 permanent housing units over five years, and thousands more units of housing that would offer shelter and social services across the state. In doing so, he vowed to exert his influence over problems that have bedeviled New York City.
While the housing plan would benefit the city, elements of Mr. Cuomo’s proposed budget, also released on Wednesday, would have an opposite effect. He called on the city to increase its contribution to the City University of New York system and to Medicaid costs — further complicating a strained relationship with Mayor Bill de Blasio, a fellow Democrat.
This is actually a great thing. By putting his money where his mouth is we can see that impact this has on NY’s homeless population and see, quantitatively, if it positively impacts many of the related metrics such as emergency room visits, police contacts, and crime rates.
If it works well, it could end up saving a lot of public money. If it doesn’t, it is still good to know so we can look for other solutions.
We all have opinions on what would work and what won’t. Now we’ll have some data on a big initiative.
Yes, this will be a good test case. It seems like a lot to spend on a pet idea that they don’t know will work. By comparison, it makes the California initiative look quite reasonable.
Investors Snub Money Managers for Market Clones
More investors are losing faith in old-school money managers as financial markets sputter.
Clients yanked $207.3 billion in 2015 from U.S.-based mutual funds that hand pick their positions while pouring $413.8 billion into funds that mimic broad indexes for a fraction of the cost, according to new data from research firm Morningstar Inc.
Most of the withdrawals, roughly $169 billion, were from funds that research individual U.S. stocks.
The shifts are the latest evidence of a sea change in the asset-management business in which investors are increasingly opting for products that track the market rather than relying on managers to pick winners.
The moves have boosted companies such as indexing pioneer Vanguard Group, while hurting firms that have long been synonymous with their star stock pickers. Vanguard launched the first index fund for individual investors in 1975 and last year attracted an industry record inflow of $236 billion.
The $413.8 billion collected by all index funds in 2015 was the second-highest haul ever, after 2014.
http://si.wsj.net/public/resources/images/MI-CN744_PASSIV_16U_20160113132706.jpg
A Towering Chinese Debt Mountain Looms Behind Market Gyrations
Lost in all the Chinese stock and currency market gyrations, policy missteps and mixed data is this economic reality: The government is constrained by a credit bubble that has ballooned to $28 trillion in an economy growing at its slowest pace in 25 years.
Policy zig-zags have left investors divided over how wedded President Xi Jinping and Premier Li Keqiang are to financial sector reform and shifting their $10 trillion-plus economy from one powered by investment and exports to one more focused on consumption and services.
China has appeared to backtrack on pledges to make its management of the yuan more market driven and there’s uncertainty over the government’s willingness to remove stock price supports imposed during a $5 trillion sell-off last summer. Amid the confusion, the benchmark CSI 300 Index, down 14 percent in 2016, has revisited the lows of last year’s rout and pressure on the currency continues.
Against that backdrop, Chinese officialdom faces the high-wire act of trying to keep the economy growing rapidly enough to repay past obligations, without resorting to a fresh pick-up in debt to fund more stimulus. It was China’s reliance on credit-fueled growth in the wake of the 2008 global financial crisis that resulted in one of the biggest debt expansions in recent history, and today’s hangover.
“China is nowhere close to reining in its debt problems,” said Charlene Chu, the former Fitch Ratings Ltd. analyst known for her warnings over China’s debt risks and now a partner of Autonomous Research Asia Ltd. “It is one of the key factors weighing on GDP growth and one of the reasons why foreign investors are so concerned about China’s trajectory.”
Scientists move one step closer to turning water into hydrogen fuel, affordably
A team of scientists have come up with a different mechanism to produce hydrogen fuel from water. These researchers have created a biomaterial that catalyzes the splitting of the water elements.
The biomaterial, called P22-Hyd, is made up of a modified enzyme, hydrogenase, protected within the protein shell of a bacterial virus. Taken together, the material forms a nano-reactor that catalyzes hydrogen formation 150 times more efficiently than the enzyme would in its original form.
The mechanism goes both ways. P22-Hyd breaks the chemical bonds in H2 O to produce hydrogen and oxygen, but it can also combine the two gases to generate power.
That reversal is how hydrogen fuel cell cars work. Hydrogen gas is mixed with atmospheric oxygen, generating electricity that powers the car’s motor or motors. The only byproduct is water vapor, unlike standard gasoline fueled cars which produce toxic fumes in addition to multiple greenhouse gases.
“The reaction runs both ways — it can be used either as a hydrogen production catalyst or as a fuel cell catalyst,” study lead author Trevor Douglas.
P22-Hyd could make hydrogen fuel production more affordable and environmentally friendly than other catalysts used.
Platinum is one such material. The rare metal is expensive and is often used in high-end hydrogen-fueled cars.
“This material is comparable to platinum, except it’s truly renewable,” Dr. Douglas said. “You don’t need to mine it; you can create it at room temperature on a massive scale using fermentation technology; it’s biodegradable. It’s a very green process to make a very high-end sustainable material.”
No matter how wrong you are, never admit defeat
2016 Forecast: An About-Face for the Fed & Gold
Peter Schiff believes the Federal Reserve’s December interest rate hike was actually the end of the Fed’s tightening cycle that began with the first talk of tapering quantitative easing (QE) several years ago. Economic data will continue to be weak, and the US will likely be in an official recession in 2016 if it isn’t already. The Fed will be forced to restart QE and lower interest rates again, maybe even into negative territory. When that happens, investors who have been selling gold on expectations of economic health will have to reverse their bets and begin buying as gold rallies.
https://www.youtube.com/watch?v=Jdf5zsko4Wo
With Peter Schiff giving gold a buy at this point,he is just a salesmen.Gold will have its day,but first will drop somwhere around 800.00 a oz and no one will be long.There is a difference between a trader and a salemen!
Nice post!
el O is clearly a salesman. 😉
Peter Schiff doesn’t bill himself as a salesman. His sales technique is to convince people he is a market Oracle (no offense el O). He has been so wrong for so long, it becomes harder and harder to cover it over with arrogant resolve.
Worst drop in the “net outlook bias” since the Financial Crisis.
The end of the credit cycle has set in. The ratings agency downgrade tango has started. Defaults are rising. Credit is tightening up. Investors are getting a little more skittish…. S&P Capital IQ Global Credit put it this way in its new report titled,
“Global Corporate Rating Trends 2016: Largest Negative Swing Since 2009”
Corporate issuer ratings globally are at their highest negative level since 2009.
Standard & Poor’s Ratings Services has the most number of ratings on negative outlooks relative to positive ones at Dec. 31, 2015, since June 2010.
The net outlook bias deteriorated to a negative 11% at Dec. 31, 2015, four percentage points down from six months previously. This constitutes the worst half-year change in the net outlook bias since the 2008-2009 global financial crisis.
http://wolfstreet.com/2016/01/13/standard-poors-lowers-boom-on-corporate-credit-worst-since-financial-crisis/
Irvine parents lobby for new schools
Thought you might find this interesting. The IUSD are going down a path of overloading neighborhood schools, creating larger commuter schools, rather than building new schools to host the children in the new high density builds at Los Olivos and Spectrum areas. This will result in the surrounding village schools (already overloaded by some 300 children a piece) see overloaded common areas, increased temporary classrooms and added neighborhood traffic and safety issues. The Irvine Company has allocated land to build a new elementary school at Los Olivos and I’m sure they see this move on the IUSD part as threating to one of their key home marketing points.
http://www.latimes.com/socal/daily-pilot/news/tn-dpt-me-0115-irvine-schools-20160114-story.html
When Irvine was first planned and built, they put in too many schools. They have since closed some of them because as these neighborhood gentrify, there are fewer and fewer students.
Once they finally learned this lesson, they started building new schools intentionally undersized, then they add temporary classrooms to them. When the neighborhood gentrifies, they just remove the temporary classrooms, and the schools fit the neighborhood.
These new neighborhoods will fit the same mold. They will build fewer schools with temporary classroom space anticipating the gentrification 20 years later.