The San Joaquin Valley is in the news this weekend. Two of the great treasuries of American intellect were on display: the University of California and the New York Times.
Kenneth Rosen, chairman of the UC Berkeley Fisher Center for Real Estate and Urban Economics, lectured 500 business people on the Valley real estate market this weekend. Rosen, a real public/private, win-win partnership kind of guy, "also heads a real estate market research firm and an investment trust with $81 million in assets." (1)
His idea is that:
"A significant number of homes — 20 to 40 percent of those sold (from Merced to Bakersfield) — are being purchased by investors," Rosen said. "We're worried too many people are buying houses for investment, not occupancy."
Local Merced realtors say 60 percent but who's really counting?
Rosen imagines a situation in which interest rates would rise, valley home prices would fall, and investors would "dump their investment homes."
Perish the thought! Is it possible that stupid, anti-social investments could yield their just rewards? But, not to worry, Rosen said, there is only a 35-percent chance of a serious recession and the US economy should stay strong (despite record deficits and imbalance of trade). It's just that a lot of people buying homes on interest-only adjustable-rate mortgages could lose them. But those people would be mostly Valley citizens actually trying live in their homes, not speculators, so who really cares?
Next, the 500 business people heard from Anthony Downs, a senior fellow at hte Brookings Institution and former chairman of the Real Estate Research Corp. Downs said high home prices were driving middle-class people out of California while many poor immigrants continue to pour in.
"The state is trading mostly middle-class residents who are leaving for many more poor immigrants from abroad," Downs said. "So California's net population and poverty are both rising."
Those middle-class people left a lot richer than they came, one figures, having sold their homes in this market.
But Downs is a anti-government man at heart and so begins a fable about how local land-use authorities "discourage new homebuilding and construction of affordable multifamily complexes."
Right! " ... since homeowners politically dominate almost all suburban governments, he said, too few developments are approved."
Downs is an anti-NIMBY man, too, a real critic for our time. And if the local land-use authority policies he fantasizes are allowed to continue:
"There will be a permanent shortage of housing in California."
It could be that the invisible hand of the market is also the blind invisible hand of the market. It sure can't see the resource destruction it is causing, in case it has the brains to think resource destruction cannot go on forever without increasingly serious political, economic and social consequences.
This seminar makes about as much sense as UC studies on Valley air pollution: it is simply make-work for academics.
The Los Angeles Times produced a feature on how Valley kids go away to college and don't come back. (2)
The nicely crafted, patented LA Times nut-graph says:
When the area's most educated residents leave, "it takes away from the culture and intellectual life of the valley," said Raney, 67.
It also hamstrings the economy, strains the social fabric and puts a damper on the quality of life here in California's agricultural heartland.
Lamentations from Fresno culture-vultures follow. It might be too simplistic to note that what we lack in urban, sophisticated "cultural life" we make up for in agri-cultural life, which -- if only uttered with the utmost hypocrisy by Valley leaders in the pockets of developers -- is still the top productive agricultural region in the nation.
The reason the Valley is attracting all this high-powered urban attention is that its agricultural economy has concentrated into fewer and fewer hands as the generations have gone by. Today, there are many farming parcels of a size very attractive to developers for subdivisions. Hence, LA and the Bay Area are frustrated because the Valley, still dominantly agricultural economy cannot support all the people developers want to build houses for. And there is all this speculative money just looking for a home, any home, anywhere, even if the speculator cannot get enough rent for it to cover the mortgage.
To reply to the LA Times piece about brain drain and the terrible "Third World" economy we have here, let us say: the problem in the Valley is the people WITH college degrees, not those without them because the people with degrees are so busy separating themselves from those without them, they do nothing but obfuscate and establish obfuscating organizations like the Great Valley Center, to study how to beautify Highway 99 rest stops and co-opt potential grassroots leaders with a little grant money, some wine and cheese, and a guaranteed career in community betrayal.
Throughout these articles and a spate of others in recent days like them, never the E-word is heard. There is no thought of balance between urban and rural, town and country, the developed and the open spaces. It might take an old Californian with an ear smashed to the ground to hear it, but our intellectual and media leaders are doing their usual number: ignoring and burying a problem that stands in the way of the quick development buck. California is so besotted on developer wealth it can no longer imagine anything more creative, intelligent and sane than building subdivisions (complete with low-income components) on flood plains. That is the extent of the remaining economic imagination -- pathetic and empty.
The Valley looks ripe. Its communities have been rendered deaf and dumb by political corruption and immigration. Its land is now arranged into neatly vendible parcels. Willing sellers and willing buyers seek each other’s company. The speculators are too dumb to know. So, let a win-win, public/private partnership, by all means, fleece them. By the way, forget the people in the Valley because, obviously, they are uneducated. Actually, don’t quite forget them, declare culture war on them for not supporting the arts in Fresno or for not buying all these houses or for not making more money. Above all things, get their land, such as they still have it.
All that stands in the way of creating a slurb from Bakersfield to Redding is a few environmental laws, regulations and resource agencies. UC Merced set the new standards for coping with these obstructions: build it anyway and dare the resource agencies to enforce the law with politicians climbing up their backs in track shoes.
Oh, and one other thing: an economy to support this slurb, because man cannot live by strip-mall alone. Even in Sacramento, very rich in strip-malls, there is that ever-expanding state government to keep pumping money into the smoggy slurb.
Bill Hatch
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(1) 11-20-05
Modesto Bee
Investors like valley housing...J.N. Sbranti
http://www.modbee.com/business/story/11504268p-12241760c.html
Here's a new name for the San Joaquin Valley: "Affordable California." "A significant number of homes — 20 to 40 percent of those sold (from Merced to Bakersfield) — are being purchased by investors... if interest rates rise, the valley's house prices may decline and investors could dump their investment homes. Because of the housing crunch, Downs said there is a large-scale domestic migration out of California. "The state is trading mostly middle-class residents who are leaving for many more poor immigrants from abroad," Downs said. "So California's net population and poverty are both rising."
(2) http://www.latimes.com/news/local/la-me-braindrain20nov20,0,7804653.story?page=2&coll=la-home-headlines