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Sunday, February 12, 2017

Is There a Housing Crisis?

Housing Crisis?


A look at the Demand side of the Supply-Demand equation.  We find that the current high demand that is driving up prices might subside if proper measures for transit and tax policies are implemented.  Without those measures, the higher cost of housing in the SF Bay area and California will persist.

Choose your crisis

2008 Housing Crisis
2017 Housing Crisis

Link to this post (for sharing):

In previous posts we looked at the Supply side of Housing's Demand-Supply equation and found increased supply would not lower costs, or even keep costs from rising.  Cf.,

Another exploration of this topic:

An update including the ups and downs of housing prices as of January, 2018:

A lighter look:

Job retraining, additional local public/private transit, and tax incentives for corporations to expand where skilled people and affordable housing already exist (i.e., not the SF Bay Area) are progressive policies that will alleviate the 'housing shortage'.  (click image to enlarge)

SF Housing Bubble #2
Housing 6X US Avg.

Housing Price Increases 
% Each Year 1988 - 2016


In The San Francisco Bay area there has been a tremendous increase in housing prices.

Nationwide, rents have gone up faster than incomes.  This is a temporary economic shock.  It will be resolved by a stabilization in rents/prices once the housing construction started several years ago comes online.

Foreign direct investment is increasing price pressure but that also may be at a peak.

Long term, better transit is needed in the metro SF Area as population increases are likely to continue.  BART connections to job centers like Sunnyvale, Cupertino, Mountain View would relieve a lot of the traffic jams.

The South Bay cities should cooperate to locate future business expansion nearer to where people commute from, like San Jose and the East Bay.

Companies could do much to alleviate the costs and stress of long commutes by expanding outside the SF Bay Area in places like the Mid-West and South East US.

There is a thought that over-building housing will reduce rents and that this is desirable.  It. Will. Not. Work.  (Unless you want a 2007-2008 housing-wage-employment crash.  You don't.)  Riccardo established this in the early 1800's.  C.f. "Nominal Wage/Price Rigidity" see more in


Everyone says there's a "housing crisis" but is there?  What if there were some Star Trek "transporter" which enabled anyone to go from one place to another essentially instantly.
Solution to "Housing Crisis"?
In that case, the "housing crisis" would disappear.  People could live in the far suburbs of Metro San Francisco, like Gilroy, Antioch, or wherever housing is cheap, and work in Silicon Valley where the jobs are.  This suggests it isn't a housing crisis but a transportation crisis in Silicon Valley.  People are spending a lot of time on clogged roads.  Housing is expensive in desirable areas because housing costs are determined by a bidding process - the highest bidder gets to commute less (and the better schools, and closer shopping).  A long term plan to extend BART to job centers would alleviate a lot of the commute stress.  Self-driving Lyft/Uber services may come about in 5-10 years.  Commutes aren't so bad if you can sit and read the paper - or play games.

Who cares about commuting when you can play Scrabble?!

Urban Economics:

The "standard model" in urban economics fairly accurately predicts that density and therefore rents are highest at the center of economic activity.  This graph is worth showing again:(click graphic to enlarge)

Housing Costs Go Down as Distance 
from City Center Goes Up (Theory)
The Economics Theoretical Model

Housing Costs Go Down as Distance 
from City Center Goes Up (Actual)
The Economics Model matches Reality very well.
New York Residents Pay More to be 
Close to Public Transit.  

In the SF Bay Area we see the same thing.  The further from SF you are, the lower the rents.  Here are the rents for a 2 bedroom apt. in these cities (as of 1/7/2017):
San Francisco   - $4,487
Palo Alto           - $3,816
Mountain View  - $3,549
Cupertino          - $3,222
Sunnyvale         - $3,173
Fremont            - $2,500
Livermore         - $2,093

Previously, I established that building higher and denser increased housing costs, including rents, because there are no real economies of scale in construction.  It costs twice as much to build two houses as one house.  C.f.,

Increased density makes land more valuable which in turn raises rents further.  Individuals who challenge this essentially are arguing increased density lowers rents.  When I ask how do they explain lower Manhattan (i.e., high prices and high density)?  This invariably results in a pause.  They often stare out the window for a minute or two.  Then they usually say something like "oh yeah - huh" and change the subject.  Increased density will not decrease rents.

Low Rent Housing?

1940-2013 NYC Rents - Up 28X
Nationwide Rents - Up 10X

Adding housing, even low-income housing, reduces the amount of land for development making the remaining land more valuable thereby raising housing costs.

We can see this in the current building boom in major urban cores around the country:

"Two, three years ago, vacancies were super low, and rent growth was super high," said Hans Nordby, managing director at CoStar to Fortune. That led to a boom in luxury real estate—but "it's so expensive to build in a lot of the markets, that builders can't build affordable housing."

The standard urban economic model implies that people live where they live because they want shorter commutes.  But this is less true for the South Bay.  Looking at Sunnyvale, CA over 2002 to 2014 shows this clearly.  Over time, the number and percentage of those living AND working in Sunnyvale decreased!

As competition for housing near job centers in Cupertino (Apple) and Mountain View (Google) increased, young single people sharing houses and senior executives out-bid middle and lower income families who wanted single family homes.  The result was that more people commuted to Sunnyvale from places like Livermore and Morgan Hill because they could afford a Single Family House (SFH) there which they couldn't afford closer to work. People prefer a SFH and will do what it takes to get it, despite difficult commutes (detail here:

The relevant graphics (from the US Census Bureau) are worth showing again - first 2014, then 2002:

(click graphic to enlarge)
2014: 75,000 Commute In, 
8,700 Live/Work In, 
57,000 Commute Out
Above graphic from
2002: 68,000 Commute In, 
9,500 Live/Work In, 
49,000 Commute Out
About 8,000 more jobs and about 9,000 more workers were added in Sunnyvale during the 12 years from 2002 to 2014 yet
  1. the number who lived AND worked in Sunnyvale went DOWN.
  2. Every job added in Sunnyvale = another worker commuting IN.  
  3. Every additional worker living in Sunnyvale = another worker commuting OUT.  
People may move to what economists call the "Central Business District" (CBD) to be close to work in a "monocentric" city like NYC but in a "polycentric" metro area like the South Bay or LA they have a variety of criteria.  They select a home for the schools, or because it is half way between the husband's work and the wife's job, or because it is the biggest SFH they can afford and they are willing to commute as far as necessary to have that house.

So everyone is commuting from everywhere to everywhere.  The main increase in commute-IN locations TO Sunnyvale were from Morgan Hill, Livermore, and other more remote places where a single family detached house is affordable.
(cf. .).

I still read people saying more housing near workplaces are needed so people can walk and bike to work.  This despite the census data showing that nationwide almost no one walks (2.8%) or bikes to work (0.6%) and the numbers have been going down for many years!  For more on this see:

ADUs ("Granny Houses"):
Hip Granny!
Adding housing to a fixed amount of land increases the rental income from that land making it more valuable.  Accessory Dwelling Units (ADUs) have recently become a popular topic with the idea that a little "granny house" in the back yard of single family detached homes will somehow lower housing costs.

What actually happens is that the income from the ADU raises the value of the main house making it more expensive.  For example, a potential seller sees the $2,000/month income from an ADU and calculates that whereas before buyers could afford a $6,000/month mortgage, with the ADU rental income they can afford a $8,000 mortgage.  This raises the mortgage a buyer can afford from $1.2M to $1.6M.  So the seller raises the price of the house to capture that extra value.  Even houses without ADUs rise in price because the potential for the rental income from an ADU raises the perceived value.

Despite the best efforts by government to make it easy to put in an ADU, they have not caught on in the SF Bay area.  People like having the privacy of a back yard for barbecues and a place for kids to run around in without some stranger watching.  Back yards in this area aren't very big and having a tenant hearing you discuss matters with your spouse does not appeal.  In addition, the additional parking fills up the streets and annoys the neighbors.  The extra money just isn't worth it.

Tech Growth:

The huge and fast growth in tech has sent several trillion dollars to Silicon Valley from around the world in the last few years.  Just the top seven SF Bay Area cos. made over 1/2 a trillion dollars in revenue in just 2016 alone.

Apple    -  $233B
Google  -    $75B
Intel      -    $56B
HP        -    $48B
Cisco    -    $49B
Oracle  -     $37B
Facebook - $28B
Total  =  $526 Billion = over 1/2 $Trillion

Add to that lots of smaller companies scattered around the area and we are looking at enormous amounts of money coming into local company accounts.  Much of that has to be paid to suppliers overseas and in other parts of the US, but still an enormous amount went into hiring engineers, marketers, and various other support staff locally.  Nearly 500,000 jobs were added to the region in five years from 2009 to 2014.  This is the main cause of the housing price increase.  It is NOT a problem of not enough housing, since we are not talking about housing the homeless.  It IS the upward pressure of bidding on housing that has raised the price of near in properties more than some people can afford so they commute longer distances.

But "trees don't grow to the sky" and the SF Bay Area job market seems to be cooling down.   (click image to enlarge)

Highly paid workers engage in bidding wars for housing.  As a result, housing prices go up and it gets increasingly hard to bring staff to the SF Bay Area.  Thus many of the larger cos. are starting to expand in cities like Portland and Seattle.

From an article on Seattle's growth:
"There are also now more than 80 engineering centers in the Seattle area operated by big tech corporations, like Facebook, Alibaba, eBay and others. These companies have set up shop in the Northwest to mine the region’s pool of tech talent. This kind of employment growth is a key factor in driving up home prices.

Portland Mortgage = Half Sunnyvale Rent
$1,437 to BUY 4BR in Portland vs $4,500 to RENT in Sunnyvale?

“Cities that have stable or better yet growing employment tend to do well and, for most of this year, the Pacific Northwest region is consistently very popular,” said David Blitzer, Managing Director and Chairman of the Index Committee. “One month Seattle is ahead of Portland and the next month it reverses.”

The following table shows very high growth in housing prices in Portland and Seattle while the San Francisco Metro Area grows slightly below the national average (click on table to enlarge):

Housing Cost 1-Year Increase by Metro Area (Oct. 2016)
SF Up 5.5%, 
US Avg. Up 5.6%, 
Seattle/Portland Up 10%
As a result, housing prices in Seattle and Portland are rising faster.  San Francisco and New York, where rent increases hit first, have pretty much stabilized.  Because of nominal price rigidity, rents and prices will not decrease significantly, unless there is a severe economic downturn.

Chinese Investment:

The main cause of the rapid increase in housing prices is the rapid increase in well-paid tech workers, but another cause is foreign investment.  This is a compliment to the US's relatively sound legal system, environmental safeguards, individual freedom, and lack of corruption.  But the investment is overly concentrated in NYC, LA, SF, and Silicon Valley.

Chinese Foreign Direct Investment (FDI)
$21B to $139B - 600% - in 10 years
"Chinese money is cascading like a waterfall into the US real estate market. Chinese institutional money, individual money, state-owned companies and private sector ones... This year, the amount of Chinese money invested in US real estate assets is almost certain to break new records, surpassing last year’s total of over $40 billion, and continue to provide upward momentum to prices in the markets where Chinese most like to buy, the golden trio of major cities New York, Los Angeles and San Francisco, plus residential housing on both coasts.

"...The common view in the US now — the Chinese are, like the Japanese before, buying at the top of the cycle. Prices have reached a point where some deals no longer make fundamental economic sense. At current prices, many buildings being marketed to Chinese have negative leverage."

Driving demand is a sudden influx from China's massive foreign currency reserves.  $4 trillion went to China from around the world over many years.  In the two+ years 2014 - 2017 about $1 Trillion left China seeking stable secure investments in property.  This went to the US, Canada, Australia, etc. to find a safe place to invest.  China's foreign exchange reserves have stabilized at around $3 Trillion as a necessary amount to have on hand to engage in foreign trade.  (click image to enlarge)

China's Foreign Exchange Reserves
2014 = $4 Trillion, 2018 = $3 Trillion
While this means a lessening of Chinese money seeking dollar investments, as long as more dollars flow to China for goods, those dollars will keep coming back to the US to buy something.

We saw this before when Japanese investors bought up a lot of property and companies for investment purposes then lost their shirts when the bubble (that they created) burst.

Dollars can't be spent in China or Japan.  Chinese companies pay suppliers and workers in their own currency, Yuan, so excess dollars going to China must go back to the US to buy something.  They buy real estate.  Americans who sent so many dollars overseas should not be surprised to see it coming back.  (click image to enlarge)

Where the Real Estate Money Goes

(Don't confuse this influx of big investment money from gigantic banks and investment cos. with Chinese immigrants who are by and large just average middle class people trying to live a decent life in a free country and struggling just as much as anyone to afford it.)

Many of those big investments are in property in desirable places in the San Francisco area.    (click image to enlarge)

Chinese Investors Pay 60% More
Than Other International Buyers

Seattle has also attracted a lot of Chinese investors:  "Matthew Moore, Juwai’s president of the Americas, said the site’s data showed two-thirds of Chinese buyers cited education (typically for their children) as their primary motivator for choosing Seattle. That was followed by lifestyle and travel opportunities (favored by 24 percent of buyers) and investment potential (16 percent)."    (click image below to enlarge)

Real Estate Sales to non-US Clients
Roughly half of Chinese millionaires intend to leave China.  Hong Kong is the favored destination closely followed by Canada and the US.

The rise in Chinese foreign investment overseas is partly a reaction to the decline in the value of the Yuan compared to the dollar.  Until 2013 the dollar was getting cheaper relative to the Yuan so it made more sense for big investment agencies to hold Yuan.  In 2013 that reversed and the Yuan started losing value relative to the dollar.  This made holding American dollar-denominated real estate a better investment than Chinese real estate, if only for exchange rate purposes. (click image to enlarge)

2013 Yuan-Dollar Reversal in Red Circle

Chinese investments are also bidding up their own property - as much as doubling the price in just 4 years. (click image to enlarge)
Chinese Property Rising

Not surprising since average wages in China have more than doubled since 2008 (click image to enlarge)

Chinese Wages  2008 - 2017
254% Growth in 10 Years
London also has seen an influx of Chinese investors:  "Investors from China and Hong Kong bought more than £3 billion ($3.75 billion) of central London real estate in 2016, less than U.K. investors but more than those from the U.S. or Europe, according to real-estate broker JLL. (click on graphic to enlarge).
Chinese Investment in UK $29Bn
"While the yuan has lost value against the dollar in recent months, it has appreciated by 12% versus the British pound since last June’s referendum vote ["Brexit"], making assets there a bargain for Chinese investors. At the same time, the hunt for yield, as well as economic and political pressures at home, are helping to drive the acquisition spree, analysts said."  Return on real estate investment is 2% in Hong Kong, but 4% in London so in the "search for yield" London prices look good to Chinese investment cos., though too high for many others.

London Housing Market Soars
Overall UK Market Flat

The American rich and near-rich are doing the same in Europe as the Euro has become a lot cheaper in dollar terms. (click on image to enlarge)

Italy - Tuscany Villa

(click on image to enlarge) 
2,700 Sq. Ft., 650,000 Euros = $688,000

Foreign investors from Monaco to Australia are using places like NY City as a place to stash spare cash:  "And so New Yorkers with garden-variety affluence—the kind of buyers who require mortgages—are facing disheartening price wars as they compete for scarce inventory with investors who may seldom even turn on a light switch. The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year."

Supply and demand working as predicted; more money = more demand = higher prices.

This flood of foreign exchange won't last forever.  The Chinese govt. has been trying for months to stop it with some success.  Even if the govt. can't stop it, there is a finite amount of money in China's Foreign Exchange Reserves so the flow will end in another year or two, if not earlier.

In a sense, this is not Chinese money, but American dollars returning home - just too rapidly to be absorbed well and concentrated in too few cities.  Any boom, bubble or not, creates winners and losers.  About 57% of the SF Bay Area housing is owned by individuals (Sunnyvale is the same) and they benefit a lot.  So do real estate agents and brokers.  Obviously renters and wannabe home owners don't.

Tokyo Housing Prices:

Tokyo has been mentioned in a Financial Times blog as an example of where increased building does not drive up prices.  This is simply wrong as a simple Google search on "Tokyo housing prices" shows.  Tokyo has also seen an influx of Chinese money looking for a secure investment in a non-corrupt country. (click graphic to enlarge)

Tokyo Condo Sale Prices Rise Sharply

Note that in the above graph, prices start accelerating in 2013 when the Yuan stopped appreciating in value.

“There are so many Chinese buyers recently,” said Song Zhiyan, a broker at BestOne in Ikebukuro, ... “I only work with clients who can pay cash. Why waste everyone’s time?”

"She tells them to hurry: Properties are gone so fast that those who try to negotiate the price find them already sold. Her transaction volume exclusively for mainlanders buying in Tokyo has tripled over the past six months..."

Not all the Tokyo housing price increase has been due to foreign investors.  Much (most?) is due to a rising Tokyo stock market creating new millionaires who then look for a safe place to put their earnings.(click graphic to enlarge)

Average Tokyo Condo Price
At 24-Year High
This stock market rise started in late 2012 - about the time housing prices started accelerating.
Japan's Stock Market Rise Starting Late 2012
"The average price for apartments in Tokyo and commuter regions has climbed 22 percent during the past three years, according to the Real Estate Economic Institute. The increase is coming even as average Japanese base wages in November fell 1.4 percent from three years earlier to about ¥239,250, data from the Labor Ministry show." (January 2016)  

The following graphic shows a 40% increase in housing costs in the central 6 wards of Tokyo since 2012.  In central Osaka, it was 45% over the last 4 years.  Increased demand raises prices. (click graphic to enlarge)

40%-45% Increase in Condo Price in Main Japanese Cities

Several articles have cited Tokyo housing prices as an example of an area that hasn't increased in value while growing.  The likely error on the journalist's part was not understanding the data.  Tokyo city was merged with Tokyo prefecture in 1943.  The data for Tokyo since then has always referred to the entire prefecture which is 845 sq. miles (larger than San Mateo County) and stretches into forests and mountains in the west.  It is better to refer to the 23 ku ("wards") of old Tokyo city which are shown in the above graph.  

Population peaked in the 23 ku of old Tokyo at 9M in 1965 and then decreased by 10% until recently.  Many shoddy old houses from the late 1940s were torn down.  Recently the population of the 23 ku have grown again, density is increasing, lots of higher quality housing is being built and prices are rising.  The inner 6 wards increased most rapidly, followed by the next ring of wards, followed by the outermost wards.  As always happens when you increase density.

More on Tokyo:

One Housing Crisis Causes Another:

Since the end of the 2007 mortgage crisis, a lot of people have had to leave their houses - which they may not have been able to afford to begin with.  This has put pressure on rentals.  (click graphic to enlarge)

US Home Ownership Rate at 63%
50 Year Low: 1965 - 2016

As seen in the next graphic, housing prices have deviated from affordability enough that it looks a lot like the last real estate bubble.  This suggests income and housing prices will converge again.  (click graphic to enlarge)

Home Price Increase
Far Above Consumer Price Index
1950 - 2017

The cost of owning is way out of line with rents suggesting a convergence is coming.  Either prices come down (or go sideways for a while) or rents go up.  Since there are limits to what people can pay it is more likely prices will come down.  This is especially true as interest rates rise.  If people pay more in interest they have less money to pay for the house.

House Price vs Rental Equivalent
At 24% divergence vs. 40% at height of housing bubble

The anemic recovery has put people to work but wages have not kept up.  Factory workers becoming Uber drivers.  Sociology majors becoming barristas.  This is not sustainable and will eventually self-correct as housing keeps being built and job markets improve.

House Price Increase Far Exceed Wage Increase
1996-2018 Federal Reserve Data

Bubbles burst when potential buyers decide prices will no longer keep rising.  Then they stop buying.  Sellers must lower the price - the bubble bursts.  Commercial properties would be hit hardest, housing less so.  That day could be coming in a year or two - very hard to predict.

The flip side of people losing their homes because of sub-prime mortgage defaults after 2007 is a decrease in rental vacancies as people are forced out of homes into rentals - see below. This forces up rents.  (click graphic to enlarge)

US Rental Vacancies Lowest in 30 Years

Construction Not Keeping Pace:

There has been a tremendous amount of building but it takes years to respond to market pressures.  It takes about 1 or 2 years for builders to feel confident that there is sufficient demand, another year to make plans and get funding, and then another year or two to finish the construction.  So 4 years from the time housing is needed to the time it is built.  Sunnyvale has very rapid approval processes and has never turned down any builder but there is a minimum time to build measured in years.(click graphic to enlarge)

Existing Home Sales Almost At 2007 Level
Housing sales highest in 10 years

So many builders and construction workers were battered by the sub-prime crash there has been a shortage of workers.  Many workers went into other fields or retired.  This has caused increases in wages which means increases in prices and not as much housing being built. (click graphic to enlarge)
Effects of Labor Shortage:
75% Builders Paying More for Labor
68% Raising Home Prices

"When work was scarce, some workers retired early and others switched careers, compounding concerns about an aging construction workforce. The median age of construction workers climbed to 40.4 in 2010 from 37.9 in 2000, according to The Center for Construction Research and Training."
"The biggest problem I face every day is where are we going to find the people to do the work," he said, adding that it's becoming increasingly common for his company and others to turn down projects."

Click on graphic below to enlarge:

2/3 Builders Report Labor Shortages

"Eight years after the housing bust drove an estimated 30 percent of construction workers into new fields, home-builders across the country are struggling to find workers at all levels of experience, according to the National Association of Homebuilders. The association estimates that there are approximately 200,000 unfilled construction jobs in the U.S. - a jump of 81 percent in the last two years."
(click graphic to enlarge)

Houses/Person Far Below 1990 Rate

Housing is Cheap (Elsewhere)

Raleigh is the state capital of North Carolina.  It is part of the Research-Triangle area near North Carolina State University. (click image to enlarge)
North Carolina State Univ.
 A number of tech companies are located there - IBM, Lenovo, Cisco, SAS, Glaxo-Smith-Cline and many more listed here

Housing is not expensive by SF Bay Area standards.  The average price for a house in the US is $230,000 so this house below ($986/month mortgage) is pretty close to average in the US as a whole. (click image to enlarge)

Raleigh, NC
Rush hour?  (click image to enlarge)
It has a mild climate: Winter low in the 30's at night, 50's during the day - mid to upper 80's are highs for the Summer.  3-5 inches of rain every month.  (click image to enlarge)

Politically, North Carolina is a swing state having voted narrowly for Obama in 2008, and narrowly against him in 2012.

Of course there are many other nice areas in the US.  I moved from Ann Arbor where the Univ. of Michigan is located. (click image to enlarge)
Univ. of Michigan Law Quad
"The trends seem to have changed significantly from your typical professional offices, attorneys and accountants to now the majority of folks that we're seeing coming through and looking for space is tech companies." (speaking of office rental space in Ann Arbor)

Housing is not expensive either, compared to the SF Bay Area.  (click image to enlarge)

 Lots of coffee shops, street fairs, and cultural life.  (click image to enlarge)

Many are quite happy working and living there (they like having four seasons) but many tech jobs are in Silicon Valley so graduates of U. of Mich. often have to move.  As do graduates of other universities such as U of Chicago, Northwestern, U. of Ill, Purdue, Wisc., Ohio, Minn., etc., etc.

Of course, other parts of CA aren't too expensive, either.  $1,288/month mortgage for the 4-BR house below.

Maybe all the tech companies could get over the idea that the only engineers in the world are in Silicon Valley.  We have the Santa Cruz Mountains on one side and SF Bay on the other.  Land is at a premium.  All the job growth and investment in Silicon Valley means this modest little home below costs 6 times the price of the house in Raleigh, NC, or Sacramento.

There is another dimension to the housing costs here.  Foreclosures.  The following are from Zillow for Raleigh and Silicon valley.  The red dots show "For Sale", the blue dots mean "Foreclosure".  This is Sunnyvale-Santa Clara.
Foreclosure (Blue) and For Sale (Red
About Equal in Silicon Valley
Sunnyvale-Santa Clara-Cupertino - Blue dots are foreclosures.  Sad.
Almost as many "foreclosure" as "for sale" (roughly 1-to-1).  It doesn't take much to go from hero to zero here - from four bedrooms to sleeping in the back seat.  Each blue dot means a family that was once so excited to move in to their own house is now out.  Years of mortgage payments and property taxes and nothing left.

This is Raleigh.  Ratio of sales to foreclosures is about 4 to 1.  Salaries are a bit lower but "the living is easy."
Four Houses "For Sale" (Red
for Each "Foreclosure" (Blue
in Raleigh
Raleigh-Durham & Research Triangle Park,  North Carolina  Blue dots are foreclosures.

So what to do?
The problem is too many people here and too many houses elsewhere.  A liberal-progressive policy would be to induce companies to open work centers where there already is plenty of housing at reasonable prices - either in the less expensive parts of CA (and add transit, please) or elsewhere in the country.  Other things a liberal-progressive policy would try to do:

1.  Increase recruitment and training for the building trades.
2.  Continue construction in less dense (and therefore cheaper) areas and be patient while existing construction comes online.
3.  Improve transit systems to open up lower-cost lower-density areas for housing to relieve congestion.  BART is a very good investment though it takes years to come online.

Prices will correct soon on their own if the Fed and govt. keep the current backings for low interest rates, with help for those at the bottom of the economic ladder.  (click image to enlarge)

P.S.  If you are unclear on some of the above please check some of my other blog posts referenced at eh beginning of this blog post.

For now, this is ....