No, California Isn't Doomed

[Zorro]

California has been struggling. It has stumbled through the Covid-19 pandemic and recession, afflicted by wildfires, an epidemic of homelessness and stratospheric housing prices. Last year it experienced its first population decline in records going back to 1900. Its latest mess was a costly and unsuccessful campaign to recall Gov. Gavin Newsom.

The state’s problems are real. Nevertheless, there are positive signs. The first step toward fixing problems is recognizing them, and on that score, Californians have grown increasingly aware of what’s wrong. California is also blessed with abundant resources that enable it to fix problems that would be daunting for less endowed states.

Housing is a good example. Prices are crazy: On Sept. 16, the California Association of Realtors announced that the median sale price in the state in August was $827,940, up 17 percent from a year earlier. Only 23 percent of California households could afford to buy a median-priced home in the second quarter, down from one-third a year earlier, the association announced in August.

To make ends meet, many Californians scrimp and save and commute long distances from exurbs; others give up and move to cheaper states. Employers struggle to lure out-of-state recruits. Homeowners can swap one high-priced house for another, but renters can’t buy starter homes because they have no housing equity to use for a down payment. And California’s epidemic of homelessness can be traced in part to a lack of affordable housing.

https://www.nytimes.com/2021/09/24/opinion/california-budget-housing.html

[Metaphorical]

1. California is a country within a country

I expect that the delta variant will spike by November in CA, and by March it will be in the rearview window. The Newsom recall election has turned into a debacle for the Republicans, showing their lack of numbers while pissing off a lot of people as a waste of time and money. The population decline is likely a trend for the foreseeable future, partially due to housing, and partially due to demographics, but that's not necessarily a bad thing.

Fiscally, the state is in better shape than it was a decade ago, and longer-term, California's economy is on par with Germany and India, and it will likely exceed Germany within the next decade. The biggest challenges it faces are largely environmental, and while drought (and wildfires) are going to continue being a problem, they rather pale against the increasingly common Cat 5 hurricanes now hitting most of the Southeast and Gulf of Mexico states, or Florida's inexorable slide into the sea.

Republicans hate California because it shows that the Democratic agenda works. High housing prices and the corresponding homelessness, while painful in and of themselves, are usually an artifact of a successful economy. The solution to the high housing prices is simple enough - improve remote working and untie the cord between proximity to the office and employment. It will take a few years, but I suspect that this will go a long way towards easing the tight housing situation that exists now. San Francisco, in particular, has the same problem that Seattle has - the city is located on an isthmus with little room for growth except into the north, which puts it at odds with agricultural interests in the state. Provide in a pressure valve by increasing remote working, and I suspect the area's prices will begin to normalize.