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Affordability solution: Tax housing speculators
P.O. Box 232550 Encinitas, CA 92023-2550 315 S. Coast Hwy. 101 Encinitas, Ste. W
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JUNE 24, 2022
Blakespear’s prospects
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By Garvin Walsh
ollowing the June 7 California primary election, Encinitas Mayor Catherine Blakespear (D) is now in a head-to-head contest with political newcomer Matt Gunderson (R). That race, the November election to replace termed-out State Senator Pat Bates (R), pits her, a sitting office holder and winner in four previous elections in Encinitas, against former businessman Gunderson, a resident of Orange County. As a result of the decennial redistricting, the Senate district straddling Orange and San Diego Counties has been substantially reconfigured and re-numbered (formerly District 36, now 38). What was a balanced district geographically is now 70% situated in San Diego, giving Blakespear a sizable home-turf advantage. The partisan mix has also tilted. In 2020 Republicans held a 2-point registration advantage. Now, Democrats are ahead by 5.5 points. That swing, coupled with the geographic shift away from Orange County, might make Blakespear the favorite. However, the registration advantage favoring Democrats is fully offset by right-leaning Libertarian and American Independent voters. On the left, the Green and Peace and Freedom parties add up to only 0.7%. It’s fair to say, if voter registrations are a guide, it’s going to be a close race, likely the closest of Blakespear’s political career. As the campaign unfolds, Gunderson may have a tactical advantage. His record as a successful entrepreneur could be difficult to criticize. But the mayor’s record provides a target-rich opportunity. Her tenure in Encinitas and as Chair of
SANDAG has been marked by controversy and scandal. More meaningfully, as mayor and state Senate candidate, Blakespear has positioned herself as an ally of the progressives who dominate Democrat Party politics in San Diego and Sacramento. Blakespear has enthusiastically embraced the progressive menu: coastal density, opposition to local control of development, mass transit, renewable energy, anti-gun, pro-DEI, big-spending, coercive governance. Under her leadership, SANDAG has attempted to reverse-engineer San Diego County into an immobile, net-zero utopia,
nostrums of the left. School board races, primary and special elections, public polling — the evidence has been mounting. Worries about inflation, the economy, and national security loom large. In California, homelessness, crime, and housing affordability are top of mind. Typically, dissatisfied voters blame incumbents, an instinct that benefits newcomers. We may see national politics having an effect in California. Polls show that 70% believe the country is on the wrong track. Generic ballot polling on congressional elections shows a 5-point preference
Blakespear has enthusiastically embraced the progressive menu . . . but it may turn out her timing is wrong. hijacking highway taxes for mass transit subsidies, reinforced by a proposed vehicle miles tax. In Encinitas, her critics have accused her of lacking transparency, pursuing an ideological agenda, and exercising the whip hand to squelch dissent and get what she wants. As a political practitioner, Blakespear appeared to be both skilled and somewhat ruthless. Over the past two years, she has been building her alliances on the left, establishing her progressive bona fides in preparation for her state Senate run. But it may turn out that her timing is wrong. By placing her chips on a progressive coalition, she may be presenting a version of herself that is losing its appeal. Across the country, even in California, voters have begun to show that they reject the extreme
for Republicans versus Democrats, a reversal since four years ago. There is much talk of a Red Wave in November. It’s hard to project how down-ballot races will play out, but to paraphrase a vulgar expression, stuff rolls downhill. Even a Red Ripple in California could prove decisive in a close election. Eventually, the Blakespear-Gunderson race will shift into mano a mano combat, so we’ll begin to see more direct attacks on each other. Since she has a record to defend, Blakespear will be more vulnerable and may not hold up well under pressure. It may come to pass that voters in Encinitas, who know her best, will determine the outcome for the entire district. Garvin Walsh is a resident of Encinitas.
he TV commercials and online ads are fast becoming ubiquitous: “We’ll buy your house as is,” they trumpet. “No need to spend any money fixing it up.” That’s commonly the message from housing speculators, often institutional investors including real estate investment trusts less interested in preserving or maintaining housing than cashing in as land values rise. It’s the land, not the houses, that interests them most. Says a Northern California citizens group called United Neighbors, “Nonwage capital, especially institutional and private equity, is entering the single-family market in unprecedented amounts.” That’s a big reason why, the group contends, “California housing costs have inflated at such a rate that housing costs have completely decoupled from their historical wage-based income basis.” That, they say, is the root cause of the affordability crisis. It is furthered by the fact that institutional investors, including pension funds like CalSTERS (the California State Teachers’ Retirement System) and CalPERS (the California Public Employees Retirement System) keep many purchases vacant while they await land value increases. This frees them from dealing with tenants and evictions when they decide to sell or to demolish existing homes and turn them into multi-unit properties. United Neighbors claims institutional buyers, including Wall Street investment banks, spent a record $77 billion on single-family California homes over the last six months of 2021. That makes them the ultimate house flippers, people or companies buying homes to hold for a while before they resell at a hefty profit. It creates large vacancy rates in some places at a time when California supposedly has a housing shortage. The actual shortage is in affordable housing, as 73% of houses permitted in 2020, for just one recent year, were affordable only to households with incomes well over $100,000. All this has also seen vacancy rates rise among housing units built since 1970 — more than 50 years’ worth. Statewide, the vacancy rate on these “newer” units was 12.4% in late spring. In Los Angeles County, it was 16.3%, while San Francisco had an overall vacancy rate of 8.7% and more than 40,000 vacant units. All of which suggests none of the controversial housing bills passed with
california focus
tom elias
alacrity by the Legislature in recent years can be effective, including last year’s Senate Bills 9 and 10, which essentially did away with R-1 single-family zoning statewide and allow subdividing of almost all lots in those areas. The problem, it appears, is less a lack of housing — especially while California’s population is relatively stable and not growing fast, if at all — than the fact that wages and home prices have gotten out of the usual synch, partly because of institutional investments. This year, Democratic state Assemblyman Chris Ward of San Diego, which recently “won” the ranking as America’s least affordable city, proposed a bill to tax the profits of house flipping, especially by corporations and pension funds. It died in committee, but deserves resurrection. His bill, known as AB 1771, aimed to place a 25% levy on after-capital-gains-tax profits from reselling any house within three years after it’s bought. After that, the rate would have dropped to 20% and then declined steadily before disappearing after seven years. Taxes collected would have gone to cities, counties and affordable housing funds, said Ward, whose purpose, he told a press conference, was to create a disincentive for equity investors, thus opening more opportunities for people who plan to live in homes they buy. This would especially help mid-priced housing availability, because institutional buyers are more likely to buy that type of housing than high-end homes, whose appreciation rates are far less steady and predictable, often selling for millions less than their asking prices. The bill was opposed by building trades unions, whose workers don’t much care whether or when the places they build are occupied, so long as paychecks arrive on schedule. Those unions and the developers with whom they work have been the main drivers behind the Legislature’s recent spate of unwise, unneeded new housing laws. The bottom line: Yes, there is a housing crisis, but it’s at least as much a matter of hoarding and waiting for profit as it is of supply. Email Thomas Elias at tdelias@aol.com.
