California

Beyond Feudalism: Addressing California's Inequality Crisis (Live Event)

Charlie Stephens — Wed, 29 Jul 2020 19:48:24 -0400

On July 14th, Joel & Marshall held a Virtual Town Hall on a research brief titled, Beyond Feudalism: A Strategy to Restore California's Middle Class discussing inequality in California and how a change in state policy could restore our state’s dream. This is a recording of the presentation and Q & A.

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Feudal Future Podcast — How California's Climate Policies Hurt the Middle Class, with Jennifer Hernandez

Charlie Stephens — Mon, 06 Jul 2020 08:29:01 -0400

In the fourth episode of the Feudal Future podcast, hosts Joel Kotkin and Marshall Toplansky interview Jennifer Hernandez, a partner with Holland & Knight Law Firm in its California offices. Her firm is one of the most prominent in the world of environmental regulations, and she herself is in the midst of lawsuits pertaining to California environmental law.

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More podcast episodes & show notes at JoelKotkin.com

Watch Episode on Youtube

Virtual Town Hall – California Feudalism: Addressing California's Inequality Crisis

Rhonda Howard — Sun, 05 Jul 2020 18:59:01 -0400

Join us for a presentation on Kotkin and Toplanksky's research brief titled California Feudalism: A Strategy to Restore California's Middle Class, discussing inequality in California and how a change in state policy could restore our state’s dream. Kotkin and Toplansky will be joined by distinguished panelists for commentary and Q & A. The event will be moderated by Lisa Sparks Dean of the School of Communication at Chapman University.

Sponsored by the Orange County Credit Union and hosted by Tom Piechota, Ph.D. PE, Vice President of Research, Chapman University

Moderator:

Lisa Sparks, Ph.D., Dean, School of Communication, Chapman University

Presenters:

Joel Kotkin, Presidential Fellow in Urban Futures, R. Hobbs Professorship in Urban Studies, School of Communication, Chapman University

Marshall Toplansky, MBA, Clinical Assistant Professor of Management Science at Chapman University’s Argyros School of Business and Economics, and Research Fellow at the C. Larry Hoag Center for Real Estate, Chapman University

When: July 14, 1:00 p.m. (PST)

Learn more, and register for this event at Chapman.edu

New Report: A Policy of Delusion and Misdirection

Joel Kotkin - Ali Modarres - Wendell Cox — Sat, 02 May 2020 20:29:01 -0400

A new report authored by Joel Kotkin, Ali Modarres, and Wendell Cox examines how California's planning policies are contributing to the affordable housing crisis. An excerpt follows and a link to read/download the entire report.

“California’s leaders speak much about housing affordability, but their policy agenda seems designed to prolong and worsen the crisis. As it has done for almost a generation, the state has placed ever increasing burdens on housing developers, and now seems determined to “solve” the crisis by adding more challenges to anyone seeking to expand housing.

The failure of this approach should be manifest. Governor Newsom has called for building 3.5 million new homes by 2025. Yet housing construction continues to be muted, with the 2019 building permit number of 119,000 below the last two years and far below the 315,000 permits issued in 1986, when California had one-third fewer residents. At the current rate it would require more than 30 years to build 3.5 million houses.

Much of the political leadership sees the housing crisis as the result of a shortage in housing supply. However, supply alone cannot resolve the housing affordability crisis. The supply of housing has to be affordable to middle and low income households.

Clearly, the state’s principal housing strategy, Regional Housing Needs Assessment (RHNA), has not restored housing affordability. RHNA requires metropolitan planning agencies, counties and cities to zone sufficient land for housing production targets. But land and regulatory costs in the state are so high that builders can earn a competitive return on investment only on houses that are too expensive for nearly all middle-income households to afford.”

Read or download the full report here.

McKesson Moves to DFW from San Francisco

Wendell Cox — Wed, 05 Dec 2018 15:32:02 -0500

The Dallas-Fort Worth metropolitan area (DFW) will be the new headquarters of McKesson, the nation’s largest pharmaceutical distributor, the company announced this week. DFW will now have three of the top 10 companies in the Fortune 500 (ranked by total revenue). No other metropolitan area has more than one of the top 10. Dallas-Fort Worth is also home to Exxon-Mobil, the second largest company and AT&T, ranked ninth.

This continues the high-profile exodus of companies from California, with its high cost of living and Chief Executive Magazine ranking as the worst state for business. Not surprisingly, McKesson chose the state ranked as best for business, Texas.

SACRAMENTO HOUSING 3Q17: Relative Affordability Keeps this Market Attractive Even as Production Shifts to Higher Price Points

Greg Gross — Mon, 06 Nov 2017 18:17:20 -0500

• Annual new home starts were up 14% compared to 3Q16 – and this is the first time since 1Q08 that annual starts were above 6,000.

• Start activity has shifted over last year into the price ranges above $400K; during the past year, only 5% of new homes started were priced under $300k.

• The lack of affordable lot supply and rapid price increases are all factors which may cause new homebuyers to rethink their home-buying decisions during the next year.

Metrostudy’s 3Q17 survey of the Sacramento housing market shows that annual new home starts were up 14% compared to 3Q16. This is the first time since 1Q08 that annual starts were above 6,000. Annual closings were up 25%. Quarterly new home starts are up 18% compared to 3Q16, and quarterly closings were UP 17%. In fact, 3Q17 marked ten consecutive quarters with more than 1,000 starts. Annual starts have been outpacing closings since 2Q12, which is indicative of increased demand. 2017 began a little weaker due to weather, but by second quarter, new home starts rebounded impressively. Builders are effectively managing their inventory levels thus far.

“The average “offer to build” base price for new homes is up 3% regionwide over a year ago to $520K as builders grapple with increased land, construction and labor costs,” said Greg Gross, Regional Director of Metrostudy’s Northern California region. “Start activity has shifted over last year into the price ranges above $400K as builders adjust pricing to offset increased construction costs. Affordability is a concern in most markets, and Sacramento is no exception. During the past year, only 5% of new homes started were priced under $300k.”

Finished inventory has steadily decreased over the past year, but increased during 3Q. With 559 Finished Vacant homes, the market now has only 1.2 months of supply. When the number of homes under construction is factored in, the market has about 8 months of supply. Well within equilibrium. The number of homes under construction in 3Q17 is 20% higher than in 3Q16, so we expect closings to increase. Overall, inventories are manageable.

There were 3,865 new lots completed over the past year, yet more than 5,700 were absorbed. This slowdown of lot development will make finished lots difficult to obtain in high demand areas. As 2017 ends, the overall Sacramento market has grown respectably.

Metrostudy expects demand to remain steady over the next year. However, interest rate increases and daunting fee and construction cost increases will add to worsening affordability which may point to lower production and closings in the broader Sacramento market. Fortunately, the market has the unique ability to attract buyers from the Bay Area.

While general economic conditions are favorable, there is some concern regarding the slowing of job growth. As mentioned earlier, this is most likely due to lack of qualified labor. The lack of affordable lot supply and rapid price increases, are all factors, which may cause new homebuyers to rethink their home-buying decisions during the next year.

Given the above, Metrostudy does not expect the housing market fall, but another steady year as the economy continues grow modestly. We expect 2017 to end with 6,000 new home starts for the year barring any substantial global economic crisis. Sacramento and the Stockton regions continue to benefit from the expanding Bay Area economy, as some homebuyers may seek more affordable homes outside of the Bay area, but stronger local job growth and in-migration will be needed to increase housing demand substantially.

California's Fading Promise: Millennial Prospects in the Golden State

Joel Kotkin — Thu, 11 May 2017 11:30:07 -0400

Homeownership continues to be the most important part of the American dream for millennials, but California's rising house prices continue to force them out of the state.

This video is part of the larger report "California's Fading Promise: Millennial Prospects in the Golden State", conducted by Joel Kotkin and Chapman University researchers, in partnership with the California Association of Realtors.

Fading Promise: Millennial Prospects in the Golden State

Joel Kotkin and Wendell Cox — Wed, 03 May 2017 23:04:10 -0400

This is the introduction to a new report published by the Chapman University Center for Demographics and Policy titled, “Fading Promise: Millennial Prospects in the Golden State.” Read the full report (pdf) here.

Along with the report, a new video from Chapman University and the California Association of Realtors talks about the housing crisis in California. Watch it here.

Throughout much of American history there was a common assumption that each generation would do better than the previous one. That assumption is now being undermined. The emerging millennial generation faces unprecedented economic challenges and, according to many predictions, diminished prospects.

These problems are magnified for California’s millennials. Their incomes are not higher than those in key competitive states, but the costs they must absorb, particularly for housing, are the highest in the country. Their prospects for homeownership are increasingly remote, given that the state’s housing prices have risen to 230 percent of the national average.

The long-term implications for California are profound. The lack of housing that can be afforded by middle-income households—particularly to buy—has driven substantial out-migration from the state. California has experienced a net loss in migrants for at least the last 15 years. This includes younger families—those in their late 30s and early 40s—which is the group most likely to leave the state. For every two home buyers who came to the state, five homeowners left, notes the research firm Core Logic.

Over the next decade, as the majority of millennials reach these ages, the long-term implications for employers and communities are profound. Rising house prices and rents are already impacting employers, including in Silicon Valley. High prices can also mean a rapidly aging population, something that is likely to sap the economic potential and innovation in our communities.

Many of California’s problems are self-inflicted, the result of misguided policies that have tended to inflate land prices and drive up the cost of all kinds of housing. Since housing is the largest household expenditure, this pushes up the cost of living.

California still has the landmass and the appeal to power opportunity for the next generation. It is up to us to reverse the course, and restore The California Dream for the next generation.

Read the full report here.

Uber! Regulations Mean San Francisco Loses While Phoenix and Pittsburgh Win

Joseph Vranich — Sat, 24 Dec 2016 12:49:24 -0500

Any business person who has dealt with California's frustrating laws, regulations and bureaucrats was nonetheless surprised to see the story headlined, "Uber Ships Self-Driving Cars to Arizona After California Ban."

Really? A state ban on Uber? The poster child of the billion-dollar-plus startup, tech-guru, market-disruptor club? Why would Sacramento give Uber, of all people, a bad time?

Reuters said Uber Technologies Inc. pulled its fleet of self-driving cars from the streets of San Francisco and sent them to Arizona's friendlier territory:

The California Department of Motor Vehicles banned Uber’s self-driving cars from San Francisco just days after they first deployed. In response, Uber picked up and moved out. "Our cars departed for Arizona this morning by truck, Uber said... . We’ll be expanding our self-driving pilot there in the next few weeks, and we’re excited to have the support of Governor Ducey."

Gov. Doug Ducey wooed Uber on social media the evening when the ride-hailing company pulled its self-driving test from San Francisco. “California may not want you; but AZ does!” he wrote on Twitter. The next morning, Uber’s fleet was headed his way.

California moved to revoke registrations for Uber's automobiles, but Uber said its vehicles require oversight by a human driver and shouldn’t qualify under California’s autonomous-driving rules. Nonetheless, the state Attorney General and soon-to-be Senator, Kamala Harris (loyal to unions and hostile to business interests), threatened legal action if the company continued operating automobiles without a permit.

Uber in Arizona

Anthony Levandowski, the head of Uber's Advanced Technologies Group, argued that because the company's self-driving system is an early prototype and requires test drivers to keep their hands on the steering wheel at all times. It's no different from driver-assist systems already on the market -- and those are exempt from the requirement for a California permit.

Levandowski said that it isn't clear why the DMV is requiring a permit now when they’ve known that Ubers have been on the streets of San Francisco over a month and have been operating safely for months in Pittsburgh, "where policymakers and regulators are supportive of our efforts."

Last year, Uber opened its Center for Excellence in Phoenix, where it serves U.S. customers and Uber users worldwide. Now, it seems that more development work will occur in Phoenix. That's what happens when a state is friendly to business interests.

Uber in Pittsburgh

Uber has been successfully testing autonomous-driving vehicles in Pittsburgh for some time. An extensive Wall Street Journal story in September -- Uber’s Self-Driving Cars Debut in Pittsburgh -- described how Uber is turning the city into an "experimental lab" where it will have as many as 100 specially equipped Volvo XC90s operating. Also, reported the WSJ, the city has its quirks – like the "Pittsburgh left turn" – which makes it a great location for testing autonomous vehicles:

It is customary for the first driver at a stoplight who is signaling a left turn to have priority over oncoming traffic when the light turns green. People in the oncoming lanes generally allow that leftward dash and are puzzled or even angry if it doesn’t occur. Uber has programmed its cars to allow other cars to make the 'Pittsburgh left' but not to make it themselves. The city is also notoriously difficult to drive through with steep hills and three rivers that make streets twist and turn unpredictably... . “If you can drive successfully in Pittsburgh, you’re pretty much done,” said Ragunathan Rajkumar, a professor at [Carnegie Mellon University] who specializes in autonomous vehicles.

Last year Uber opened an Advanced Technologies Center in Pittsburgh and this year is developing its second research facility there, which will be part of a massive brownfield redevelopment site. Uber says it likes Pittsburgh's “world-class research universities and engineers and a thriving technology community.”

Uber entered into a strategic partnership with Carnegie Mellon University to help create its new technology center and also to rely on the university's National Robotics Engineering Center to do R&D in mapping, vehicle safety and autonomy technology. Safety is one of Uber's major concerns.

Uber also selected Pittsburgh because of the clustering of robotics companies such as Carnegie Robotics and RedZone Robotics.

Although California prides itself on the pool of technical talent found in San Francisco and Silicon Valley, Uber has found justification to praise Phoenix and Pittsburgh for the talent available from local universities and the community support of technology and innovation.

Uber's experience in San Francisco shows that venture capitalists, Ph.Ds in robotics and software engineers are no match for an all-knowing California bureaucracy.

Joseph Vranich is the Principal of Spectrum Location Solutions, an Irvine-based Site Selection firm that helps companies identify optimum locations to accommodate growth or to improve competitiveness. On such projects he conducts an in-depth analysis of business taxes, the regulatory climate, labor rates, logistics options and lifestyle factors.

Caltrain and Blended High Speed Rail Promise Peninsula Traffic Paralysis

Wendell Cox — Tue, 06 Dec 2016 21:25:35 -0500

The following notice was issued by the Community Coalition on High Speed Rail in the San Francisco Bay Area.

A TRANSPORTATION EXPERT CONFIRMS OUR WARNINGS:
THE SO-CALLED "BLENDED" PROJECT WILL
PARALYZE TRAFFIC ON THE PENINSULA

Paul Jones, a mechanical and industrial engineer who was an Associate Professor of Industrial and Systems Engineering at the Georgia Institute of Technology, and who was the principal engineer in charge of the high-speed rail design study for the high-speed train from Madrid to Barcelona, Spain, has analyzed the traffic impacts that can be expected if the High-Speed Rail Authority (partnering with Caltrain) actually constructs its proposed "Blended System" project on the Peninsula.

What is Mr. Jones' bottom line conclusion? The following quotation is from the "Abstract" of his November 7, 2016 report, "Potential Traffic Paralysis Throughout the Peninsula: Blended Caltrain/High Speed Rail Impact on Street Traffic."

(End of notice)

The report is available at: http://www.cc-hsr.org/news-pdf/Paul-Jones-traffic-delays.pdf.

Note: The California High Speed Rail project, of which this work is a part, has been evaluated in reports by Joseph Vranich and Wendell Cox, who predicted substantial cost escalation (http://www.reason.org/files/1b544eba6f1d5f9e8012a8c36676ea7e.pdf). This prediction turned out to be low. This was shown in a subsequent report, with an analysis indicating that the system is likely to require substantial subsidies to operate (http://reason.org/studies/show/california-high-speed-rail-report). A later report by Wendell Cox and Adrian Moore found that the high speed rail line that the reductions in greenhouse gas emissions (CO2) from passengers transferring from planes and cars would cost up to nearly $19,000 per metric tonne (http://demographia.com/CalHSRGHGAnalysis.pdf). This is more than 1,000 times the market price.