Thursday, November 5, 2015

Housing, A Series: Part 79 - Some color on migration

I just noticed this article from the LA Times, via IW reader ChargerCarl.  I will have to find this data and dig into it later in more detail.  It confirms what I have been inferring from the other data.

From the article:
The large flow of middle- and lower-income workers out of California is a trend that dates to at least the late 1980s, according to demographic expert William Frey, a senior fellow at the Brookings Institution in Washington.

During the last decade, out-migration from California peaked during the housing boom. The trend continued during and after the Great Recession, though at a slower pace.

...But the influx of higher-income, college-educated migrants from other states to California has been on the upswing since the recession, according to Census data.
 As I suspected, the pattern intensified during the housing boom.  Economic growth intensifies demand for housing in highly productive cities, and given the local lids on supply, the housing boom was largely a facilitation of migration away from these productive cities.  Families were replacing 1,000 sf apartments in Silicon Valley with 4,000 sf tract homes in Dallas.  That made it look like overinvestment was the cause of the boom, but really under-investment was the cause.  If Silicon Valley had approved a million high rise condos and apartments, rent inflation would have dropped, incomes would have risen (because families wouldn't have moved away from Silicon Valley to lower paying jobs in lower cost cities), and inflation would have declined (because rent inflation in California is a significant part of core inflation).  We would have had more economic growth with less residential investment.  This is the core story behind the supposed "bubble" economy.

And, wouldn't you know, according to the article, this has been happening since at least the 1980s.  Here, coincidentally, is a graph (in log scale, so a straight line represents stable growth rates) of the combined population of the Los Angeles and San Francisco MSAs.

People in California aren't making things up.  They really are living in a world where the middle class is squeezed out of existence, the upper class is doing well, and the lower class can only survive with extensive public support.

Soak the rich policies in California could alleviate this problem.  This dynamic really is worsened by economic growth.  So, again, the difference between blue state and red state opinions really could be a matter of experience.  In open access red states, economic growth really does benefit everyone.  But, in closed access blue states, economic growth leads to in-migration of high income workers, rising cost of living, and stress on low income workers.  A voter in California could reasonably feel that economic growth is all going to the top 1% and that the system is rigged.  But the system isn't rigged in Houston.

Is there a way we can move Silicon Valley to Austin?  Austin's not a bad place.  They have a great music scene.  California clearly doesn't want Silicon Valley.  We really should talk about this.  Practically anyone else would be happy to have it.  Maybe we can elect Donald Trump president. He could probably figure out a way to get someone to pay for the move.

Maybe then, Californians would stop trying to fix their problem by expanding their closed access policies to the rest of the country.


  1. Maybe now Austin could take a fraction of the Silicon Valley.

    But, you know, when you read the New York Times, and the LA Times, and then you read the Austin American-Statesman, you think "I don't want to live in this diddly-dink town".

    California should build millions of condos.

  2. Bernie and Donald told me that the middle class vitality is in the $60 rearview camera business and the $14 printer cartridge business. didn't you sissies know that real men sew laptop satchels and weld axles? what's all this fuss about a $400,000 per unit commodity that every human seems to need? where's the money in that?

    r there other hard-currency Western countries with growing populations who ya'll think more likely to correct housing prohibition? Berlin seems cool. how much control does the UK parliament have over London land-use policy? I am glad that the world's largest economy has shown a willingness to overbuild early. Tokyo, too, seems more and more affordable

    Cancun - Playa del Carmen metro!

    it's hard for me to see how there could b a more obvious, plausible utopian politics in this country than "let's all move to Los Angeles", even if density were not crucial to atmospheric co2, Russian/Saudi/Iranian current accounts, employment, tech progress, GDP, supply of safe financial assets, liquidity preference, public safety. a glorious place

    1. Yep. It's shocking the extent to which the factionalism that seems endemic to human nature leads people to avoid obvious solutions or even to create problems in the service of punitive or even misanthropic policies.

      The election in Seattle looks like it went punitive.
      Here is Kshama Sawant's Affordable Housing platform page.

      That platform is many things. A path to affordable housing, it is not. I don't know how to explain the popularity of something like that.

    2. Of course, correct me if I'm wrong, but didn't they ALSO just pass a "And let's build and upzone all over the place" proposition?

      I mean, I'm not a fan of Seattle's rent inflation, but I'd much rather try to pay $2500/month on 30% taxes than $4000/month on 45% taxes.

      1 of those is doable and trivially on a six-figure income, the other isn't.

    3. That probably is good news. Maybe Seattle will get some relief.

    4. Kevin M please link!

      I know there was discussion of various measures to improve affordability, and that upzoning and decriminalization of multifamily housing in large parts of the city were among the proposals, but I was sure that they had not proceeded

      Seattle is a progressive town, and contemporary progressivism favors little over big. developers r big, neighborhoods r small. if something is bad and small, it must have been "astroturfed", because nothing bad could truly b small. therefore the Tea Party is really Koch bros, therefore ISIS is really CIA, KSA, anything but sincere and misguided, therefore the Marielos were bourgeois landowners, cast into the Carribean like Pharoah in pursuit of the Israelites. even a tiny minority like the 1% must b Big Banks, Big Oil, Big Ag, Big Pharma. structurally and morally, Seattle single-family homeowners have a robust position

  3. Ok, so looking at it, they passed a transportation initiative (Good. What matters isn't housing within N miles, but housing within N minutes), and elected an urbanist council.,_Washington_municipal_elections,_2015#Ballot_measures

    Sadly, they had to withdraw their proposal to upzone single-family home zones to do it, but still, it's a small start.

    1. That's disappointing. I saw the up zoning thing and thought it was a done deal. They took out the one thing that would have helped. The rest look like typical mandate and tax stuff that will have the same destructive effect it has had everywhere else it has been tried.

  4. Oof. and this in the few areas that are available for multi-family housing. it's a good thing hi marginal-product workers make reliable bunkmates

    1. I don't know. Did you see this?

  5. I keep coming back to these posts. This is a very compelling sociology of political moods