People live in poorly maintained warehouses in the Bay Area because they're one of the few remaining sources of affordable housing.
And I would argue that the root cause of high housing costs is a regulatory/political regime that has resulted in the housing supply severely lagging the demand.
And that regulatory regime is caused by:
* "smart growth" regulations
* rent control regulations
* building code/zoning regulations driven by rent-seeking from the hotel/construction industry
* existing property owners not wanting to see their multi-million dollar investment driven down in value by a drastically increased supply of housing
The combined effect of the above regulations drives the cost of housing to 30-50% more than it would otherwise be:
"[O]ur estimate of the Regulatory Tax as a percentage of average house value...amounts to from one-third to one half of home value...[in Los Angeles, Oakland, San Francisco, and San Jose metropolitan areas]. In Boston, Newport News, and Washington, DC, the gap constitutes about one-fifth of total property value.
Thus, the evidence for single-family housing markets across a diverse set of metropolitan areas recently tracked by the American Housing Survey suggests a big role for regulatory restrictions in accounting for high house prices in a select set of primarily coastal markets."
http://www.nber.org/papers/w10124.pdf
And I would argue that the root cause of high housing costs is a regulatory/political regime that has resulted in the housing supply severely lagging the demand.
And that regulatory regime is caused by:
* "smart growth" regulations
* rent control regulations
* building code/zoning regulations driven by rent-seeking from the hotel/construction industry
* existing property owners not wanting to see their multi-million dollar investment driven down in value by a drastically increased supply of housing
The combined effect of the above regulations drives the cost of housing to 30-50% more than it would otherwise be:
"[O]ur estimate of the Regulatory Tax as a percentage of average house value...amounts to from one-third to one half of home value...[in Los Angeles, Oakland, San Francisco, and San Jose metropolitan areas]. In Boston, Newport News, and Washington, DC, the gap constitutes about one-fifth of total property value.
Thus, the evidence for single-family housing markets across a diverse set of metropolitan areas recently tracked by the American Housing Survey suggests a big role for regulatory restrictions in accounting for high house prices in a select set of primarily coastal markets."
http://www.nber.org/papers/w10124.pdf