…but developers are still converting rental units to condos and most new construction is owner occupied. In my more conspiracy minded moments I wonder if they problem is caused by the fact that decision makers in regards to development are also usually property owners who benefit from high real estate costs.

In this article the creator of CraigStats proposes that reseting ARMs and interest only loans are causing landlords to seek much higher rents. Its hard to say based on the listing if actual rents are going up, but clearly asking rents are increasing. I would also suspect that the fact that people have almost completely stopped buying non-luxury housing in the city is putting a lot of pressure on the small rental supply.

I suspect (hope) that as houses and condos don’t sell a lot of those will end up on the rental market. Hopefully this is just an aberration.

What the hell is this guy talking about?:

Lawrence McQuillan, director of business and economic studies for the Pacific Research Institute, a libertarian think tank, said San Francisco’s high prices are a result of its desirability as a place to live.

San Francisco’s “public entitlement programs,” he said, discourage market competition that would boost wages, as well as encourage the lowest-income people to remain in a city where the cost of living will be a hardship.

“Not everybody can live there,” McQuillan said. “Why should people have their taxes used to subsidize working poor people who decide to have children and live in San Francisco?”

Thats right. San Francisco should be some sort of enclave where only rich people can live. I suspect that the high cost of housing in San Francisco is supply and demand plus bubble plus about 20% barriers to development of new housing.

People in San Francisco have a tendency to fight any change (like everyone I suppose). But in a city that has no more land and is growing at the pace this one is the only choices are building up or accepting that everyone will be priced out of the rental and housing market.

San Francisco has problems. Housing is pricing everyone out (including the celebrated “creative class”), crime is up dramatically and the transit system is total crap. The second two problems are caused, for the most part, by underfunded city services. I the first problem I see a solution.

We should start taxing the crap out the people buying $2million plus homes. We should raise property taxes (currently illegal in CA, but this is a fantasy anyway) a lot until people stop buying these homes, because it seems like demand is so high that the prices won’t keep people away. The city could take the money raised and invest it in Muni, SFPD and figuring out ways to get people to stop converting to condos and start building more rental property.

The fact is that for some bizarre reason everyone is convinced that taxing the rich will take away their incentive to generate all this wonderful value. Larry Ellison makes $50 million a year. That is six hundred times as much as a rank and file engineer at Oracle (1200 teacher salaries). Would Larry quit and Oracle fall apart if we taxed him 80%? I think $10 million a year would be plenty, and $40 million is money better used improving the bay area for everyone, rather than building more fake japanese villages.

The people that got us into this mess. These people were running a ponzi scheme and they knew it. Some major hedge funds are going bust do to their involvement in mortgage-backed securities. The people running these funds made a killing, and they don’t deserve our sympathy. The “ownership society” was a scam, a way to convince people that the only way to be part of the dream was to own a home. The message was that renting was “pissing your money away” but no one followed up with the truth that buying a house you can’t afford is much worse. Renting is not waste, you spend the money on a home to live in.

California cuts mass transit funding. WTF.

Hey, this Charles Barkely interview in The New Republic is pretty great. I think Chuck’s views might even have some purchase with Eli.

Why is raising taxes considered a third rail? Why does the idea of lower taxes sell so well in the US? Libertarian-backed tax cutting and budget restriction laws cripple many state governments and no one seems to touch them. Attempts to try often fail at the ballot box. People who pay little to no taxes consistently vote to cut taxes for wealthier people. In California Prop 13, the single biggest cause of California’s biggest problems: (transit, housing costs and poor eduction), is considered a third rail that no serious politician will even discuss repealing. Why are people voting against their own interest? What happened in this country that caused the marginal tax rate (federal) for someone make $30k to be 10%, and someone making 300k 35%?

I wonder about these things.