Overpriced, Overwhelmed, Over It! Ep. 4 'Billions Wasted?'

A New Streaming Series on the Golden State's Housing Crisis.

The Bay Area’s and California’s housing crisis is crazy. Shacks are selling for millions. Investors are paying all cash for homes that could go to family buyers. And generations of communities are getting priced out. Through a series of steaming reports, NBC Bay Area’s Investigative Unit reveals its year-long investigation into The Golden State’s overpriced housing market that is leaving so many Californians overwhelmed and over it.

Episode 4 'Billions Wasted': Affordable Housing Lost
Renters are shocked they are paying market rate for apartments built with taxpayer-backed loans meant for affordable rentals. The Investigative Unit goes back in time to explain how this all went down and the solutions the federal government is working on to prevent it from happening again.

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[timcisneros]

I'll try to keep this short. My wife and I have rented in the San Francisco Bay Area for 38 years. My dream was always to build my own home. I am a Wood Craftsman and a Blacksmith. The most difficult part was the Regulations, restrictions to building and permit fees. We finally had to start looking outside California. Permit fees alone would have been over $100, 000 in California but where we bought an acre and a half of land in the mountains of a neighboring state the permit fee for the house was $400. That along with property taxes that were $350 last YEAR. So long California!

[RISQUE]

Loving this series. The reporter does a great job explaining the issues and going into the streets to highlight the various facets of this issue. I'm saving up to buy a piece of property because after seeing documentaries like this one as well as having to deal with landlords and rising rents myself, I'm "over it"!

[heyaisdabomb]

The one thing I would also recommend looking into is below market housing for first time buyers and some irregularities I saw. When I was surveying the field of buying a few years ago, I came across a subsidized apartment that was $5000 per month in mortgage, but to qualify, you can't make more than 75k per year as a single person, or 85k per year as a couple. That's 6k in income per month pre taxes, which is 4500ish after taxes. So how is one suppose to make payments on a place that's more expensive than the max income to qualify for the program? I saw many places like this where the math doesn't add up.

[bipolarjosh]

I moved here from Alaska, working 70 hours a week in the military I just needed a bed. First rv park I moved to In pacific 2014 was bought bye investors and they pushed everyone out with regulations and price. I had to move to sanleandro to another rv park mom and pop owned. Also bought bye investors, started getting trash, sewage water and power fees and rent increased. I was lucky to get a 24 year lease at 4% yearly rate. I'm amazed the same lot I had in 2016 goes for over 3 times the price now. As soon as my service dog passes I'm moving to Brazil. There is no difference in safety now, I just pay way to much for what I get in return. Literally pay more while the property takes away features like a clean public bathroom. How is it legal to pay more and get less?

[JCC]

I do know people in SF who abused the rent control and took advantage of their landlords. Here's how it went down: mom and pop occupied a rent control unit for decades and bought homes under their kids' names. Even though they became rich and could pay market rent, they kept staying at the rent control unit until their landlord decided to sell so that they could get rid of the rich mom and pop renters. Rent control does the opposite of helping renters in the long term when people ended up abusing the system and unchecked.

[yvonnefarrell]

What that lady said at the beginning was right in tune - I love CA and still have hope but it is a heartbreaking situation. We pray for you and thank you for this series. Where does the money go but the mortgage-interest deduction is a housing subsidy, folks. How come buyers are not considered subsidized housing and treated as badly as are renters?
I'm writing in December 2022 having just found this series on here, and now CA is suffering heavy rains.

[heyaisdabomb]

I think the problem is high costs lead to high taxes. They say you need no less than 250k to think about buying a starter home in SF. At that point, you are taxed 35% by the fed alone. After all of the taxes are add up, it's over 45%. So your left with $112, 500. That's $9333 left per month. Now your mortgage on a 1 mil places is around 6k, plus taxes. And there's barely anything left for rising water and electricity bills, food, and transportation. A big part of the problem is taxes in general affect us in the Bay Area more. 80k in South Carolina means you have spending money left over, 80k in San Francisco means your borderline poor. But the Fed taxes both of us the same. And then when someone wants to rent that place out, they now need to charge even more to make up for the high taxes. Housing prices increase every, thus taxes on a new home go up every year, and the dream becomes more unattainable.

[greenearthblueskies]

Please do a story the Mom & Pop side of the housing coin. How some are vilified as greedy. How some lost rental homes during the pandemic. How no one wants to evict, but literally NEEDS the rent to pay bills.
How the domino affect of not renting at market rate, affects
1. Affects their ability to pay mortgage & insurance
2. Rising Property taxes
3. Maintenance
4. Etc.

[karld]

Permitting and building more apartment supply should make market rate more reasonable. People’s, usually homeowners, resistance to new apartment construction is the traffic from the apartments. Traffic can be moderated by mixed use zoning that allows small shops and offices in residential neighborhoods so people can walk to errands reducing traffic overall.

[kadentstructuraldesign]

Candice, thanks for your excellent reporting. One aspect that you have yet to fully address in this series is the zoning tax. The idea is that by artificially restricting supply, you drive up the cost.

Thanks to litigation, we know that the cost to build the millennium tower was 350M and has 419 residential units. So that gives us a cap on how much it should cost to build the fanciest residence in the most expensive location of the most expensive city for a luxury condo, roughly a million per condo.

Typically, housing should get less valuable as it gets older. As those units age, they should go down in value as they become older and less desirable.

However, that's not what has happened for the last 50 years. Instead, the value of houses has gone up and up. We all know someone who has made more money by paying their mortgage than by working at their jobs.

When those millennium tower units sold for 3M-4M (as they did before coronavirus) the difference between their value (4M) and their construction cost (1M) is the "zoning tax".

If zoning restrictions were lifted to allow local builders to build housing until the value of houses was close to its replacement costs, those luxury condos would have never been worth such exorbitant prices.

Economics is confusing which is why we have gotten ourselves to this crisis. For the last 50 years, we saw rising home prices as an unalloyed good. Only now are we seeing that young adults can't afford to have children.

This is part of why SF is the most childless city. If you are a single adult, paying 2k for a studio is bad enough, but if you want to have a wife and two children, you now need at least 2 rooms, and preferably 3. One partner has to not work to take care of the children before the age of 5 or you have to pay SF preschool tuition costs of 2.6k/month/child. It is economically impossible to have children here unless you are in price controlled housing or one partner works for google.

The saddest part is that preschool costs so much because the people who work there, and the school itself, must pay the local rent (AKA the zoning tax). The people who work at the preschool buy food at grocery stores staffed by people who pay the zoning tax.

The astounding thing is that if we removed density restricting zoning laws, living in SF would only cost marginally more than living in Bakersfield.

This is all a long way of saying a simple thing. If you artificially restrict supply via zoning, you drive up prices.

As an aside, the further this crisis goes, the more infeasible subsidizing your way into low-income housing becomes. If you are trying to make a space the market values at 4M available to someone at 250K, you have to provide a 3.75M subsidy per space. It sounds ridiculous because it is, and it's literally the economics behind building low income housing in downtown SF.

The solution is annoyingly simple. Build more houses.

Fortunately, we live in a democracy. Unfortunately, democracies occasionally leave economic policy up to NIMBYs. You need only read these comment to see the amount of disinformation and genuine confusion there exists on this topic. I could write all day refuting each of the misguided comments that abound in this comment section, but I have a job to do.

Have to pay my Bernal Heights rent.

[scallaghan]

This is interesting and informative regarding the Bay Area's housing crisis. I'm surprised there are so few comments.

[todddanforth]

I love the way Candice Nguyen covers these issues!!! She is great!!! 💖💖💖

[MrTaco]

Leave California then??? I don’t understand why people struggle so hard here and deal with mental health when they can just leave to an affordable state.

[lokijordan]

Problem? "It's housing being viewed as a commodity, not homes." Nailed it.

[Vmglf]

I did everything I was supposed to despite growing up very poor: Graduated with a super high GPA, got into a good college, graduated and paid it off 100% by myself, built a career in tech and moved to California, have been working, responsibly saving, investing for years; I got married and had a baby, etc. and still, we are NO WHERE near being able to afford a modest home for our family. Childcare is outrageous, our rent is outrageous (we've been renting for 10 years at this point). We are so passionate about our careers and love SF, but it's hard to feel like you can't make progress in life. We're going to move, even though we don't want to. Btw, my spouse and I work in advanced technology research and engineering roles, and we still feel like failures.

[zane]

Paying 3k/month for an apartment?? That's 36k a year!!! I bought my house for 40k in February of this year lmao. Over 10 years it's $600/month which includes taxes!!

[cable]

All this chaos is basically causing some or many just to leave cali anytime cause too much hassles to live here now days.

[carmentorres]

Adult sons live with elderly grandmother in her home. Husband, child, self at a home purchased 8 years ago far from work, difficult commute, longer time at work for the extra $, questionable neighborhood. Managed to re-fi and cash out last year.. keep expenses at minimal. Invest cash out for the future. Here I am 50 and blessed to have my job and home. Working on my health. That's how I'm surviving in the Bay Area.

[keikei]

This series is excellent. Give Candice an award! This is journalism we need/want

[veev]

This veteran woman is far from the only veteran struggling, facing those circumstances. The median income in ca is $95k for those fortunate enough. Still rents are $3-4k in ca on average and places like tn, fl, TN, , are pretty close to that, so nationwide, as the greedy corporations buying up properties are putting people out on the street