"What's the greatest transfer of wealth in history?" a friend of mine asked me. I assumed he meant recent history, so I quickly offered up a few possibilities.
The giant sucking sound as the elderly in America spend the earnings of the youth into future debt, the drug cartels and law enforcement gangs inhaling cash from drug users and taxpayers, multi-national corporations and international banks profiting off third-world poor, from fired workers into stockholders' values and dividends, from long-term debt to arms manufacturers.
He wasn't pleased with my snappy replies. It had been a rhetorical question to set up his answer. "The money going from renters to landlords," he pronounced.
The real numbers are hard to know, but in Marin and the Bay Area he might be right.
The rents around here are revolting. The landlords and ladies are doing us renters a favor, obviously, or why would we be so eager to pony up? They are merely asking market rates. If we can't afford it, then move to Arkansas. Or Sonoma.
Homeowners in Marin may believe that there's no need for affordable housing. That they got their house the old-fashioned way, by borrowing. Landlords and ladies have invested in a house with extra rooms, or inherited a second or third home, or bought an apartment complex, and believe they deserve to profit.
Who can argue with the American Way? The government should stay out of their business, unless it's to evict a tenant.
In a normal real estate market, they might not be such hypocrites. In this market, renters are subsidizing the owners sky-rocketing equity. The last 20 years have seen an unreal increase in home values in the Bay Area market and Marin in particular. Most houses in Marin simply aren't worth $420,000, which is the median sales price here. Yet their value continues to rise as do the rents.
The astronomical increase in value has been accomplished with the collusion of local, state and federal government regulation and subsidies. Taxpayers in the state and nation as a whole are boosting the values of Bay Area real estate.
Governments give wealth to the landowners by spending more on adding value to the real estate than property taxes raise. Sales taxes come disproportionately out of the pockets of the poor, but they get fewer coins in return.
Roads, sewers, emergency response, police, schools, parks, hospitals, residential and business zoning are all value-adding. They are good for the commons paid for by the commoner as well as the landowner with sales taxes, property taxes-often paid for from rents, income taxes, social security taxes and debt bonds to be paid back with interest by our children's future earnings.
The value of California real estate began to increase geometrically in the mid-70s, along with property taxes. Homeowners felt burdened and passed Proposition 13, although two-thirds of the benefits were gained by business property owners. More recent buyers pay more for the same benefits received by longer-held property owners.
The increases in value of California property mushroomed in the '80s with Reagan and Bush funneling indebted money into the military and highways. California has always received more of those monies than other states.
After an economic hit in the early '80s when military bases were closed, prices have been sizzling since. Environmental zoning regulations and permitting have reduced the number or houses built, and increased their basic cost. Banks have always preferred lending for larger, more expensive houses, and Realtors love selling them-bigger profits.
The Federal government has flooded California and the Bay Area with money, building highways, maintaining military bases and increasing armaments spending, emergency funds, disaster insurance, university grants and payments, as well as the start-up money and continued cash for the computer industry and the internet.
This loot has helped raise the value of homes and property in the Bay Area and in all of California. West Marin homeowners have benefited even more, because the highways to drive here, parks and policing are paid for mostly by those who live elsewhere.
Homeowners and second homeowners gain from tax shelters and increasing value of their investment at the expense of others. When renters pay some or all of the mortgages and local taxes for the owner as well as upkeep and a profit, they don't reap any of the gain of increased property values. The owner has gained wealth with the renter's and the government's help, but kept the bulk. The feds even cut capital gains taxes.
Affordable housing is the governmental attempt to provide some balance to their policies driving the price of housing out of the reach of the average wage earner.
Affordable housing is a difficult sell in most neighborhoods, because these homeowners don't recognize that they are sucking on the common tit, too. No one calls it welfare for the rich, only spending for the general welfare, or welfare for the generals, corporations, and those able to afford houses.
Affordable housing, the simple creation of well-built, practical shelter at reasonable prices, seems beyond our capabilities, but zoning laws and lending regulations actively prevent this. They are protecting the values of the status quo.
Now that rental rates are beyond the ability of most workers to maintain shelter and save any money, the status quo is locked into place. The transfer of wealth slides deeper.
Affordable housing allows teachers, firefighters, police officers, burger flippers and working families to live in the area they work. Keeps them from adding to the congestion on the highways, reduces pollution from traffic, maintains school enrollment, and provides for more dependable employees who add value to businesses, increasing sales taxes.
Affordable homes and rental units are a blessing, not a curse. Public monies and government legislation have actively decreased the availability, while at the same time creating quotas and providing funding for Affordable Housing.
My friend had a solution: "No one should own two homes before everyone has one," which sounds simplistic. At the very least, tax shelters on second homes should be eliminated. This would increase the number of homes for sale which would lower or stall prices.
There are no easy answers, but a careful explanation of the reasons why we need more affordable housing must start the discussion. Homeowners must realize that affordable housing benefits them, because the workers they depend on are able to live in the community.
It is also imperative to detail the hidden benefits for improving property values they are slurping up, to insert a thumb between their moral authority and the government tit.