California Reparations

[dogmush]

As an example, a development went up across the street from me on the bluffs overlooking the ocean around fifteen years ago. Fancy homes starting at I think it was $900K and running to a couple of million. They had to set five aside for low income POCs (hispanics in this instance) at $250K a pop with a "You qualify with no money down!" bank loan to go with them. The developers aren't going to just eat several million in losses, they're going to pass the costs on.

Out of curiousity, does anyone track what happens to these homes 5 or 10 years down the road?  As someone that bought a bigger house during the crash I can testify that nice big houses have recurring costs down the road that mirror the normal, not specially reduced, selling price.  6 ton AC instead of 3 ton units, $40k roofs that will need replacement, extra electricity to keep that big HVAC running, Sod and water to keep the HOA off your back.  For that matter, do the subdivision's give the Low Income houses reduced HOA Fees?  WHat about taxes?  Even if they got a cheap selling price, the county is going to assess that thing at market value.

How many of these "low income housing" giveaways are bought at a steal in half a decade for HOA Lien costs or back taxes?

[zxcvbob]

Out of curiousity, does anyone track what happens to these homes 5 or 10 years down the road?  As someone that bought a bigger house during the crash I can testify that nice big houses have recurring costs down the road that mirror the normal, not specially reduced, selling price.  6 ton AC instead of 3 ton units, $40k roofs that will need replacement, extra electricity to keep that big HVAC running, Sod and water to keep the HOA off your back.  For that matter, do the subdivision's give the Low Income houses reduced HOA Fees?  WHat about taxes?  Even if they got a cheap selling price, the county is going to assess that thing at market value.

How many of these "low income housing" giveaways are bought at a steal in half a decade for HOA Lien costs or back taxes?

And bought by whom?

[Ben]

Out of curiousity, does anyone track what happens to these homes 5 or 10 years down the road?  As someone that bought a bigger house during the crash I can testify that nice big houses have recurring costs down the road that mirror the normal, not specially reduced, selling price.  6 ton AC instead of 3 ton units, $40k roofs that will need replacement, extra electricity to keep that big HVAC running, Sod and water to keep the HOA off your back.  For that matter, do the subdivision's give the Low Income houses reduced HOA Fees?  WHat about taxes?  Even if they got a cheap selling price, the county is going to assess that thing at market value.

How many of these "low income housing" giveaways are bought at a steal in half a decade for HOA Lien costs or back taxes?

It's a good question. It has been a decade and a half, so I'm going from memory, but as I recall, the way SB County did it was to first filter for the correct demographic, and then filter for income qualification. If you can call anything they did "right", I believe that while they had a maximum income, they also had a minimum income. So if nothing else, people doing drugs in the homeless encampments at the beach were not getting houses so they could do their drugs there.

I'm still not sure if that filtered out the "cars on jack stands on the front lawn" crowd or not. The development in my link definitely had an HOA but I wouldn't know how their rules applied to the "special homeowners". Certainly I don't think there's a Section 8 housing project you can go to in the entire country that's not a run down blight. I expect $1 houses would be the same, since the "owners" would have no real investment in them.

[HankB]

. . . I expect $1 houses would be the same, since the "owners" would have no real investment in them.

Pay $1 for the house . . . and how much scrap value for the copper pipe and wiring you can strip out of it and sell to the junkyard? PROFIT!

[dogmush]

And bought by whom?

I kinda assume the original developer, or someone like that.  It'd be a pretty solid scam:  Agree to x% of "low income housing" and milk that for PR, amortize the lost income across the rest of the houses in the development, watch the houses you know probably can't afford it, and at the first sign of a tax or HOA lien, or pre-forclosure swoop in with an cash offer that clears the debts and gets the folks out without any legal hassle, then quick reno and sell at market value.

[AZRedhawk44]

I kinda assume the original developer, or someone like that.  It'd be a pretty solid scam:  Agree to x% of "low income housing" and milk that for PR, amortize the lost income across the rest of the houses in the development, watch the houses you know probably can't afford it, and at the first sign of a tax or HOA lien, or pre-forclosure swoop in with an cash offer that clears the debts and gets the folks out without any legal hassle, then quick reno and sell at market value.

Isn't a property always "Section 8" once it is declared as such, and enburdened by the constraints that come with that?  Makes resale value more tepid, sort of like a salvage title vehicle.

No?

[dogmush]

Isn't a property always "Section 8" once it is declared as such, and enburdened by the constraints that come with that?  Makes resale value more tepid, sort of like a salvage title vehicle.

No?

These aren't Section 8 houses though. That's a whole different program.

And no. Section 8 is a rent program.  A landlord can decide to accept section 8 tenants, and that comes with certain stipulations on the property,  how it's kept up, and how you can get rid of the tenants, but there's no obligation to accept Section 8 tenants forever.

[K Frame]

Pay $1 for the house . . . and how much scrap value for the copper pipe and wiring you can strip out of it and sell to the junkyard? PROFIT!

Yep, because there's an INCREDIBLE sense of ownership attached to something you're essentially given and don't have to work for.

How long would it be before they're screaming that they need government assistance maintaining those free homes?

Goddamn, shades of Zimbabwe.

Step 1. Take all of the white-owned farms and give them to locals as reparations.

Step 2. PROFIT!

Reality -- Few of those "new farmers" had any clue what to do with a farm. They were given very successful farms so they just sat back and waited for the money to roll in. Zimbabwe, which had once been Africa's breadbasket and top food producer, quickly fell from a net food exporter to a net food importer. Worse, Zimbabwe didn't have money to import food because Mugabe's goons had so totally borked the economy that poverty and hunger skyrocketed.

Of course, liberals all over the world applauded these "land repatriation" moves because... evil white colonialism.

I see California moving in much the same direction in my lifetime.

"Our program to repatriate people of color to their ancestral lands will redress hundreds of years of inequity!"

But Governor McCommieface, you're giving most of the land to individuals who have no historical connection to that land.

"OH MY GOD YOU FASCIST TRUMPITE RACIST HATER! ARREST HIM ON THOUGHT CRIMES!"


I, for one, welcome the impending collapse of California's economy. They've toyed with it before in decades past, but this one? If they actually do it?

I don't see it as being recoverable. Ever. 

[K Frame]

The inflationary explosion due to reparations would not be limited to California.  Such thinking is naive.

No one said that it would be.

But the major effect would be centralized in California and would abate the farther you get from California. It would be a ripple effect, like dropping a hog-tied liberal into a pond. Big splash at the center, waves spread out, and the father they spread the less intense they are. But at least you've gotten rid of one liberal.

Giving that much money to that many people that quickly seems like a lot, but only if they remain concentrated in a relatively small area.

[Ben]

These aren't Section 8 houses though. That's a whole different program.

And no. Section 8 is a rent program.  A landlord can decide to accept section 8 tenants, and that comes with certain stipulations on the property,  how it's kept up, and how you can get rid of the tenants, but there's no obligation to accept Section 8 tenants forever.

I participated in the Section 8 program for a few years in CA until it got to be too much of a hassle. While I knew I would get paid, and the county did make sure, through inspections, that tenants didn't destroy their unit, as a landlord, I would get written up for stuff like a closet door squeaking when it opened. They were a lot more lax with the tenants. Also, Section 8 doesn't screen for personalities, and I too often had other tenants complaining about the behavior of the Section 8 tenants.

That's a generalization, as a couple of times, I had older single ladies as Section 8 tenants, and they were model tenants - just senior citizens on social security who needed financial assistance. Too often, I had younger couples who seemed to not be able to hold jobs and who were generally losers just taking advantage of "free stuff".

[K Frame]

Wow, I never knew that you had been a slumlord, Ben.

My God, with your white patrimony and privilege, your willingness to enrich yourself on the backs of your more deserving tenants, and just your general overall Trumpismo, you're a mess. You're bad and you should feel bad!

 

[Ben]

Wow, I never knew that you had been a slumlord, Ben.

My God, with your white patrimony and privilege, your willingness to enrich yourself on the backs of your more deserving tenants, and just your general overall Trumpismo, you're a mess. You're bad and you should feel bad!

 

It's why they kicked me out of California...

[WLJ]

It's why they kicked me out of California...

The government hates competition

[K Frame]

My question is how did you ever get into California in the first place...

[Ben]

My question is how did you ever get into California in the first place...

The stork took a wrong turn at Albuquerque.

[dogmush]

I participated in the Section 8 program for a few years in CA until it got to be too much of a hassle. While I knew I would get paid, and the county did make sure, through inspections, that tenants didn't destroy their unit, as a landlord, I would get written up for stuff like a closet door squeaking when it opened. They were a lot more lax with the tenants. Also, Section 8 doesn't screen for personalities, and I too often had other tenants complaining about the behavior of the Section 8 tenants.

That's a generalization, as a couple of times, I had older single ladies as Section 8 tenants, and they were model tenants - just senior citizens on social security who needed financial assistance. Too often, I had younger couples who seemed to not be able to hold jobs and who were generally losers just taking advantage of "free stuff".

I looked into taking Section 8 tenants in my rental.  The siren call of "guaranteed payments" seemed like a good idea.  Then I read up on the rules, inspections, and possible fines, plus I talked to some other landlords and decided against it.  I have not once regretted that decision.

I think I told the story on here back in the day, but I was over at my rental doing some yard work between tenants, and some lady rolled up and asked if I took Section 8.  I told her I did not, and she said that if it was a money issue, She would promise another $500 in cash every month if I took her Section 8 voucher, but she wanted a house vs. apartment.  Much like the SNAP folks that pay cash for cigs and booze in the same grocery trip, everyone around Tampa with Section 8 vouchers seems to have plenty of cash on hand for stuff.

[K Frame]

Friends of mine own a bunch of apartment builds and houses in Iowa and they have always avoided taking Section 8. Just didn't want to deal with the hassle, and didn't want to become known as Section 8 housing.

I always told him that he was missing a perfect opportunity to become a government abetted slumlord.

[WLJ]

Friend of mine worked in evictions for the Sheriff's dept and the stories he could tell, not only of totally trashed rental homes and apartments but of watching movers put out tens of thousands of dollars of electronics and other stuff on the lawn and yet the occupants had not a dime for rent. Sent me pictures of a 1.5 million dollar home with the contents set out on the lawn that was wild. Guy hadn't paid the mortgage for quite a while and never told the wife and they were spending all their money on stuff. Boy was she surprised when they showed up, she had idea until they knocked on the door. BTW: A 3 million home here is probably like a 3-5 million dollar one in many areas.

Edit: Little voice in my head went off saying 1.5mil not 3mil. Not sure where the 3 came from but it may have been, fuzzy memory. Edited

[RocketMan]

Ben was a slumlord?  Wow!  He's my new hero.

[cordex]

She would promise another $500 in cash every month if I took her Section 8 voucher, but she wanted a house vs. apartment. 

And when she failed to come up with the extra $500 the second month what could you do about it?

[Ben]

Ben was a slumlord?  Wow!  He's my new hero.

 

To what WLJ posted, they don't have to be Section 8 to be worthless. My dad insisted on still keeping one of his rentals (a nice house) even though he was really too old to deal with it, and he slacked off a bit on checking tenants. His last ones were ridiculous. They never had the rent on time, and the husband would come up with excuses like, "little league started and I had to buy my boy equipment". And it wasn't as if he was bullshitting - he really thought it was valid and that a baseball bat was more important than a roof over his head. California rental laws at the time didn't help. You had to give two months notice as a landlord, but tenants could bail any time with no repercussions (at least that wouldn't have been a hassle for the landlord in the courts).

It was one of the reasons I slowly sold off my rentals and went more into stocks.

[HankB]

The inflationary explosion due to reparations would not be limited to California.  Such thinking is naive.

If the economic disaster of reparations were limited to California, it would bankrupt the state in short order. But I don't think it would be inflationary, since California doesn't print its own money.

But the problem -  especially with a "D" in the White House - would come from a Federal bailout, because of course California is "too big to fail." The inevitable charges of "RACISM!!" against anyone who dared to object along with carefully managed, edited, and censored news coverage would make opposition difficult, especially if accompanied by "mostly peaceful protests" like we saw in 2020. And of course fed.gov would rev up the printing presses, which WOULD be inflationary. (Zimbabwe!!)

[K Frame]

My friends also had some winners over the years...

One resident kept flushing diapers and clogging the pipes, causing more than one disgusting flood. Claimed it wasn't her. Despite having the only kid in diapers in the building. They finally moved for eviction. Took awhile, but they got it. And kept her security deposit, which led to court. Which ended badly for the tenant.

Another one was a school teacher. Signed a lease. A week later (and without moving in) says she's not moving in and is breaking the lease because reasons. Demands first, last, and security deposit back. They tell her to pound sand. She sues. Also ends poorly for her.

No way in hell would I ever do residential real estate.

[WLJ]

My friends also had some winners over the years...

One resident kept flushing diapers and clogging the pipes, causing more than one disgusting flood. Claimed it wasn't her. Despite having the only kid in diapers in the building. They finally moved for eviction. Took awhile, but they got it. And kept her security deposit, which led to court. Which ended badly for the tenant.

Wasn't a low flow toilet I take it. I don't see how it would even start to go down in the newer eco toilets.
Boggles my mind she would keep at it even after being told.

[K Frame]

It would be inflationary.

Inflation isn't just limited to whole nations. It can be regional, as well. Introducing that much free cash in short order into a local economy would, as pointed out below, cause local prices for more than a few items to skyrocket as newly wealthy people are suddenly competing for consumer goods.

There are many such examples through the history of the United States.

California during the gold rush.

The towns around what became the Hoover Dam during the Great Depression.

Those are two that pop to mind immediately.

Little sideline related trivia...

During World War II the Federal Government pushed War Bonds hard. REALLY hard. Couched it in patriotic terms. Support the war effort, fight fascism, help arm your boys going overseas.

All true.

But the PRIMARY reason for War Bonds?

To control the potential for hyper inflation by absorbing the massive amounts of free cash in an economy where many consumer, and most luxury, goods had disappeared as the country ramped up for war production.

On the other points, yes, it can be argued that California is "too big to fail."

But I suspect that there would not be a wholesale openhanded bailout. California would be forced to dramatically alter its reparations structure.

But, as a last counterpoint, New York City in 1976 was also "too big to fail."

Didn't stop the Federal government to tell them to sod off when they came looking for a handout.