Apple Commits $2.5 Billion to Fight California Housing Crisis

[Doc69]

"$1 billion in mortgage assistance for first-time homebuyers..."

This is exactly one of those stupid things that contribute to higher real estate prices. It sounds good but will only make the problem worse. Other similar bad policies include low interest rates, 30-year mortgages, mortgage interest deductions and giving out loans to people with low credit etc. Whenever you make it easier for people to pay the current expensive housing prices, demand goes up and prices go up even higher.

If you stop subsidizing home ownership, prices will definitely fall. But no politician is willing to do that, because that would piss off current home owners who bank on their home going up in value even more. But why should existing home owners have an advantage over new home buyers? The current system benefits older richer people, who was able to purchase their home at a time when prices were much lower, and disadvantages younger poorer people. This is not good for society.

The main remedy for this problem is to build more housing. And for that to happen, we need to get rid of many building codes, zoning laws and regulations that makes building homes a lot more expensive than it has to be. Rent control is also bad because it makes it less attractive to build new homes.

The sad part is that many people want the government to step in and fix this problem, when in fact the problem was actually created by the government in the first place, because of the policies above. If building new housing was completely deregulated, and zoning laws changed to allow for more larger and taller multi-family dwellings, and there was no rent control, you can be sure that entrepreneurs would quickly build affordable housing to meet the market demand. That's what entrepreneurs always do, unless bad government policies prevents their projects from being profitable or prohibits them altogether, like with bad zoning laws etc.

 

[yaxomoxay]

This is exactly one of those stupid things that contribute to higher real estate prices. It sounds good but will have the opposite effect. Other similar bad policies include low interest rates, 30-year mortgages, mortgage interest deductions and giving out loans to people with low credit etc. Whenever you make it easier for people to pay the current expansive housing prices, demand goes up and prices go up even higher.

Don't get me started. A few weeks ago there was an article (I believe on USA Today) celebrating subsidies for mortgages for people that could not afford even the down payment in normal situations.

 

[jca24]

This is good for the people, but the gov will mess it up along with the rest of the moronic elected.

 

[Eraserhead]

Don't get me started. A few weeks ago there was an article (I believe on USA Today) celebrating subsidies for mortgages for people that could not afford even the down payment in normal situations.

I don’t think the affordability of the down payment is an issue. Balloon mortgages are much more problematic.

 

[jeyf]

Cost of living, housing in California, NYC and other urban areas is expensive.
NYC: 45thSt & 7thAv dosnt have low cost housing for a reason.

 

[UnusedLoginID]

Apple, what took you so long…?
It took Google, Facebook, Stanford University to push you into doing something. Following the pack, as I see it.
Especially concerning as Apple is the only company here that has brick and mortar stores where employees are all under the poverty line and can’t afford anything in the Bay Area.
The money would be better spent increasing retail employees salaries or building housing for them.
$2.5b for 50k employees, that’s $50k each!

 

[ksnell]

You mean: here is a great example of capitalism applying a band-aid to a problem capitalism created in the first place.

You are missing one point. This is primarily a California problem where regulation (environmental or otherwise), has made housing development so unattractive that people would rather risk their money in other states or other ventures.
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Let us know when capitalism has eliminated this disgusting problem:

.

That is not a problem in the least regulated, most capitalistic states. Sure, there are homeless issues everywhere but can we at least start with the principle that giving more money for the government to waste is not the right solution? This should not be controversial and there is a lot of data to support it.

 

[PickUrPoison]

You are missing one point. This is primarily a California problem where regulation (environmental or otherwise), has made housing development so unattractive that people would rather risk their money in other states or other ventures.

The problem has very little to do with regulation, it has to do with the lack of available land to build (where people want to live). That makes the land expensive, and building a house on that expensive land makes for an expensive house.

There are plenty of cheap places to live in California; here’s the median home value and the cost of a one bedroom apartment in various cities.

Clovis (Fresno): $247,700; $867
Eureka: $238,100; $698
Chico: $263,500; $842

There are many areas where median home prices are in the $150k to 175k neighborhood. Most of the cities here are in that range; Blythe, near the Arizona border, is $134,000 (but you have to want to live in the desert):

10 Cheapest Places To Live In California [2024]

The most affordable places to live in California for 2024 are Calipatria, Holtville, and El Centro according to Saturday Night Science.

www.homesnacks.net

 

[hellopupy]

that means there isn’t enough supply for the demand .

Yes thank you, I'm glad somebody understands supply and demand.

If it was feasible for developers to fill all affordable housing demand, don't you guys think it would've been done already?

CA and other big gov, nanny states make it hard to build affordable housing. In every industry there are options for low, mid, and high end products. These governments force high minimum wages, discourage contract employment, discourage skilled trade careers, layer on the regulations, and then pretend to be clueless as they force companies to build what isn't profitable in order to appear to be solving problems when the act of forcing is just another bandaid on top of the gaping wound.

 

[DesertNomad]

It's also a great place to live.

If you like having 5 million neighbors, I suppose it is.

 

[Analog Kid]

I feel like in this article "California" means the bay area. Meanwhile, us people in Southern California still waiting for that affordable housing.

California Markets Ranked by Apartment Rent Per Square Foot

While each of the eight largest California apartment markets commands rents per square foot above the U.S. norm, prices vary between locations. In fact, the most expensive apartment market among California’s major metros has a per-square-foot price tag of more than twice its least expensive...

www.realpage.com

 

[DesertNomad]

The flaw there is the one-sided way mortgages work, allowing the banks to rake in interest while the householder bears most of the risk of a property price fall - which leaves them free to promote irresponsible house price inflation by lending more money (oh, and then making even more money by making loans to home owners based on their growing equity). That's bad even without the sort of insane money games that triggered the banking crisis. In that case, house prices crashed across the board mainly because the banks panicked and stopped lending money.

An Islamic (Sharia) mortgage shares the risk between the lender and borrower, but I don't think America is ready to accept anything with a basis in Sharia or Islam in general.

 

[AdonisSMU]

The problem with lowering housing prices is that it would screw over everyone that currently owns a house. We saw this in the last housing crash where prices dropped and people owed more than the house was worth. House prices should always go up, California just screen themselves early on by jumping too high too quick.
now if they want to cut property taxes and interest rates, I’m all for it.

They are living in it right? It shouldn't matter. Secondly, this will reinforce the idea that if you bought a home as an investment property, that it's a risk. Investments can go down. The bottom line is the homeowners let the homeless and all the other quality of life problems associated with artificial scarcity get out of hand. Now they have the pay the piper. Oh well. It's necessary for the long term.

 

[kazmac]

Oh boy... SIRI-209 would be terrifying.

“You have 20 seconds to comply.”

”Hey Siri, stand down!”

“I’m sorry, I didn’t find anything on the web for ‘standrown’. You have 10 seconds to comply.”

Thank you for the laugh.

Makes sure Siri settings are all turned off.

 

[AdonisSMU]

An Islamic (Sharia) mortgage shares the risk between the lender and borrower, but I don't think America is ready to accept anything with a basis in Sharia or Islam in general.

Don't base it on that. There are logical reasons to want this type of lending structure without involving religion.

 

[tylersdad]

This is a gross distortion, likely because this is something you've learned through ultra-right-wing media.

Up until a year ago, I was a California resident. Quite literally everything in his comment is true. A kid in Nevada will pay out of state tuition. An illegal immigrant will pay in-state tuition.

 

[Tech198]

Apple supports this ? They are doing doing it cos its close to home.

While their at it, we need the money too in Australia for first home buyers.

 

[Jack Neill]

Private business fixing problems created by the government. This won't get any media coverage.

 

[ksnell]

The problem has very little to do with regulation, it has to do with the lack of available land to build (where people want to live). That makes the land expensive, and building a house on that expensive land makes for an expensive house.

There are plenty of cheap places to live in California; here’s the median home value and the cost of a one bedroom apartment in various cities.

Clovis (Fresno): $247,700; $867
Eureka: $238,100; $698
Chico: $263,500; $842

There are many areas where median home prices are in the $150k to 175k neighborhood. Most of the cities here are in that range; Blythe, near the Arizona border, is $134,000 (but you have to want to live in the desert):

10 Cheapest Places To Live In California [2024]

The most affordable places to live in California for 2024 are Calipatria, Holtville, and El Centro according to Saturday Night Science.

www.homesnacks.net

While I think that is partially true, there is much more to it.

Here is an interesting read on how the building fees are 3x the national average in some places in CA.

One reason housing is so expensive in California? Cities, counties charge developers high fees

A new state-sponsored study says fees California cities and counties charge on new homebuilding are slowing growth.

www.latimes.com

Also interesting points. Essentially, it has been made unprofitable from a property tax standpoint for local governments to approve residential housing projects (which is another factor in such high fees to build). Some other good points too, like higher material cost in CA.

5 Reasons California's Housing Costs Are So High | KQED

There are lots of uniquely California factors -- from the shape of our coastline to Proposition 13 -- that have attached a painfully expensive price tag to the California dream.

www.kqed.org

 

[ChrisA]

Gotta get those housing prices down... Maybe Apple should move their HQ to a state other than California which has lower housing prices and taxes. I am sure many other states and communities would greatly desire Apple to move there and would give them all kinds of tax breaks and incentives to relocate.

I remember when another large California company decided to move to St. Louis. They offered to pay moving expenses for current employees and asked who was going. Just about everyone said "yes", knowing they would likely be fired if they said no. The move looked to be going well. But what really happened was just about everyone who said "yes" immediately started looking for a new job. Many people did actually moved but most found jobs back in California and quit. Eventually, they closed the facility. Later, the company was bought out by Northrup.

A car company, Nisan, I think moved to TX from So. Cal. but they were much smarter. They moved the technical support and salespeople but the design and marketing staff stayed in CA. Because obviously these people could quit because they could easily find new jobs. That is the only way it can work. Keep the key people in place and move the low-end to a cheaper place. But Apple has no low-end. They outsource all that work to China. So in effect, Apple has already moved to China

If Apple moved they would find out what others have: Your best employees will be the first to leave because they can find jobs. The ones who move are the ones who can't find jobs quickly. Always in these cases, the people with the most in-demand skills are the first to bail.

 

[PickUrPoison]

Up until a year ago, I was a California resident. Quite literally everything in his comment is true. A kid in Nevada will pay out of state tuition. An illegal immigrant will pay in-state tuition.

The distortion in OP’s comment arises from the selective presentation of facts.

1) Yes, California allows undocumented immigrants to pay in-state tuition rates. So does Arkansas, Colorado, Connecticut, Florida, Hawaii, Illinois, Kansas, Maryland, Minnesota, Nebraska, Oklahoma, New Jersey, New Mexico, New York, Oregon, Rhode Island, Texas, Utah and Washington.

Blue states as well as deep Red, notice.

2) Undocumented immigrants are eligible for certain state student financial aid in California, Colorado, Minnesota, New Mexico, Oregon, Texas and Washington. If you’re a resident of another state and you don’t like it, tough. Your state doesn’t get to make laws for other states to follow.

3) No undocumented students are eligible for federal financial aid. Also, there is no federal law against states offering in-state tuition or student financial aid to undocumented immigrants.

There’s little to be gained by turning this into a let’s bash California (but give other states who do the same a pass) thread.

 

[ChrisA]

While I think that is partially true, there is much more to it.

Here is an interesting read on how the building fees are 3x the national average in some places in CA.

One reason housing is so expensive in California? Cities, counties charge developers high fees

A new state-sponsored study says fees California cities and counties charge on new homebuilding are slowing growth.

www.latimes.com

That does not matter one bit. Where I live the many times bulldoze a house after it sells. The cost of the building is NOTHING compared to the land. Let's say the average price of a house here is $1M. That is low in some places and high in others but today for a single-family house $1M "close"

The house might have 2,000 square feet. The caot to build, fees and all is maybe $125 per square foot, for a builder. so the cost of the building is $250,000 and the cost of the bare dirt is $750,000. Even if you could somehow to reduce the construction cost by 50% the total cost is not reduced by much.

Housing in CA is not more expensive the other places. But the cost of the LAND is very high compared to some other places.

Another source of good data is the county assessor. On the tax bill is their estimate of the value of the land and the value of the "improvments". Usually, the land value goes up every year but the improvements (building) reduce in value. A typical 40-year-old home that sells for $1M has almost all the value in the land. To 40-year-old house has little remaining value, hence the reason so many are bulldozed after they sell.

 

[PickUrPoison]

While I think that is partially true, there is much more to it.

Here is an interesting read on how the building fees are 3x the national average in some places in CA.

One reason housing is so expensive in California? Cities, counties charge developers high fees

A new state-sponsored study says fees California cities and counties charge on new homebuilding are slowing growth.

www.latimes.com

Also interesting points. Essentially, it has been made unprofitable from a property tax standpoint for local governments to approve residential housing projects (which is another factor in such high fees to build). Some other good points too, like higher material cost in CA.

5 Reasons California's Housing Costs Are So High | KQED

There are lots of uniquely California factors -- from the shape of our coastline to Proposition 13 -- that have attached a painfully expensive price tag to the California dream.

www.kqed.org

It’s true there are a lot of factors that contribute to high prices in some (many) areas of California. But my point is that it’s not a “California has too many regulations (environmental or otherwise)” issue. For the most part, it’s driven by cities/counties, and factors other than being over-regulated. The cost of land often swamps out the rest.

 

[KPOM]

so what is the payback for shareholders with this? Its still a publicly traded company Tim

If it helps attract people to Apple as an employer it is good. Of course morons like Bernie Sanders think Apple, which already pays more in taxes than any other US corporation, is a piggy bank he can raid.
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It’s true there are a lot of factors that contribute to high prices in some (many) areas of California. But my point is that it’s not a “California has too many regulations (environmental or otherwise)” issue. For the most part, it’s driven by cities/counties, and factors other than being over-regulated. The cost of land often swamps out the rest.

California has very difficult zoning laws that restrict the availability of land.

 

[Doc69]

That does not matter one bit. Where I live the many times bulldoze a house after it sells. The cost of the building is NOTHING compared to the land.

When land is expensive you need to build high. This is the only way to really bring down housing costs in popular areas. Can you imagine what a home in Manhattan would cost if you were only allowed to build single family homes there?

Where regulations and zoning laws prevent people from building taller multi-family homes, of course housing becomes very expensive. I mean, if you were allowed, you could probably build a tall 100 unit building an a few lots that were originally zoned only for single family homes. Then if that land costs $5M, the land portion of the home would now be only $50K per unit instead of $1M per house. Big difference in affordability. If we could build really dense and really tall, the price of the land would almost not matter anymore. But people don't want a skyscraper in their single family home zoned neighborhood. So politicians don't allow it.