What killed the housing supply? Government, no question

To find a time when the U.S. economy was as bad as it is today, one must time travel back to 1932 and the Great Depression. Last year gross domestic product grew a meager 2.9%, but disposal income plummeted by more than $1 trillion.

While food and utility prices harass everyone on a daily basis, it is important to take a big-picture look. What people will discover is the American dream of home ownership, the most important investment of time and money to low- and middle-income people, is dead. Without home ownership, the path to the middle class is obliterated.

What killed it? Government. How did government do that? The bureaucrats created an artificial supply shortage by wild claims of the dangers of climate and environmental change.

The climate change cult – from its infancy as an environmental movement, to the Sierra Club's Smart Growth demand that America rebuild its cities, abandon its suburbs and rural spaces to nature, walk to work and to shops, and exist in spaces as tiny as 250 square feet – has erected thousands of laws to prevent single family housing construction. At the same time, government environmental laws have driven up the cost of home construction and maintenance.

As government interference in the marketplace drives up wages, material, financing and taxation, it also disrupts the free-enterprise mechanism of supply and demand. At the close of 2022, the median cost of a home in Los Angeles County, according to Realtor.com, was $1,050,000. Keep in mind most L.A. City housing was built before World War II, and the vast San Gabriel Valley and San Fernando Valley went from agriculture to housing tracts in less than a decade after the close of the war.

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The traditional and financially responsible 20% down payment on a $1,050,000 home would be $210,000, leaving $840,000 to finance. Before Biden the interest rate on that $840,000 loan might be 2.9%. So the monthly payment, sans property taxes and insurance, would be $3,496. The standard measure of affordability would suggest the borrower's monthly income would have to be five times that amount, or $17,480.

Now that interest rates have reach the high side of 6.5%, the monthly payment goes up to $5,309 and the monthly income requirement to $26,545.

By comparison, any area octogenarian will tell you that when he was young the cost of a new home in the L.A. suburbs was about $4,000, in 1941. The average high school graduate in the 1940s and 1950s was able to marry, have children and purchase a family home in a nice, safe neighborhood.

Today the typical California married couple median income is about $78,000. It varies as you get closer to the coastal area and government centers where the masters of the universe set their own compensation.

So that median income means, in absolute numbers, home ownership has been denied to low-income and middle-income Americans, and is creeping up the financial scale to deny access to even many six-figure income families. Only 0.1% of families have incomes large enough to by a home in Los Angeles. Another way to view it is you must already own a home to buy a home in L.A., or it may come to you through some form of inheritance. But working hard will no longer cut it.

Congress just passed another trillion-dollar legislative package. In fact, it was closer to $2 trillion, not counting interest. Nothing was missing from the legislation except the tax increase legislation to finance the spending.

The absence of a way to pay for that bloated bill means the Biden administration will print dollars and send those dollars into the marketplace via a variety of financial transactions. The American public will pay that $1.8 trillion bill through inflation, which drives up the cost of goods and services people must have while lowering the value of their dollars and thus their ability to function. Worse, most of that bloated legislation and its predecessor, Build Back Better, go to finance NGOs to support their lobbying efforts to obtain even more federal money. Of course, a percentage of the take is funneled back to the politicians in the form of campaign donations.

When asked about it, the typical Democrat will voice concerns about helping an open-ended list of victims through some form of welfare. And the typical Republican will demand the government "reign in spending."

In other words, neither party will do a damn thing to stop the government juggernaut.

California imposes every imaginable constriction upon housing construction, yet maintains an open border sanctuary policy that has helped drive up the population from 19.6 million during the first reign of Gov. Jerry Brown to 40 million today. That does not include the illegals.

Three major subdivision companies spent more than a decade trying to get permission from local and state government to create entire cities with 30,000 homes each. Faced with an endless list of government demands and the typical deluge of environment lawsuits, all three firms closed up California operations. No homes were built.

When Proposition 13 restricted government's ability to increase evaluation and thus tax revenue from private property, the government substituted its constriction of the supply of housing, driving up prices by thousands of percentage points. Today government is swimming in property tax revenue, and people are living beneath freeway overpasses.

What changed? Government was not running everything in the 1950s. Now it is, evidenced by its manufacturing of a faux epidemic and using it to shut down business, religion and the basic rights contained in the Bill of Rights.

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