Nothing would please tax-hiking liberals more than an economic boom in California after Gov. Jerry Brown helped pass a $6 billion income and sales tax hike at the ballot box this November. The Washington Post’s Jim Tankersley has a typically fact-free cheer-leading piece at The Washington Post today that can’t even keep its story straight. Here is Tankersley on why California’s economy is set to boom:
The state’s recovery has two drivers, economists say. The innovative engines of growth along the Pacific Coast have roared back to life. Also, the state’s housing market is no longer the anchor on growth that it was for several years: Prices bottomed out in 2012 and began to rise, construction permits are up, and contractor hiring is accelerating.
Rising home prices don’t just help the economy by driving new construction. They also free up more consumer spending and seed small-business growth, as entrepreneurs borrow against the value of their homes.
Got that? Rising home prices are a big reason why California has such a bright economic future. But wait. Here is Tankersley again nine paragraphs later:
The bigger threat, other economists say, might be another run-up of housing prices, especially where the innovators live.
Housing prices are a much bigger factor in most people’s budgets than state tax rates, said Jed Kolko, chief economist for the online real estate site Trulia. If home prices rise quickly, he said, they constrain growth more than taxes do: “The skilled workforce that California presents as an advantage,” Kolko said, “is also threatened by higher housing prices.”
Data suggest the threat is growing. Trulia reports homes sold for 10 percent more in California in January than they did the year before, with San Jose and Oakland the two hottest markets. That was double the rate of increase for the nation as a whole.
So which is it? Are rising home prices a driving force behind California’s economic revival or are they the biggest threat to California’s economy? Or is real estate to California as Homer Simpson is to alcohol: