I want to expand on something I mentioned briefly in my last VDARE.com article on Karl Rove and the mortgage disaster. Sorry if some of it already appeared in VDARE, but the full thing will help the residents of the two polar states understand each other's situation better.
In defense of Bush and Rove, it was natural for them to misunderestimate the financial scale of what they were propagating because they are from Texas, where land prices have been saner than in California ever since the bursting of the first oil bubble a quarter of a century ago. At present, Texas ranks only 15th out of 50 states in per capita foreclosure rate, far below most other highly Latino states. That's because land costs in Texas are dramatically lower than in most other states with heavy Hispanic concentrations, keeping recent homebuyers from getting in over their heads so badly. I visited San Antonio in April 2007, at the height of the housing bubble, and saw billboards advertising new 3000 square foot, five bedroom homes for $162,000.
In the flat, well-watered eastern half of Texas, there's an enormous supply of buildable land. Moreover, there aren't many environmental or other restrictions on home development. In contrast, California has a thin strip of exquisite coastal land, mostly locked down tight by strict environmental controls, backed by uninhabitable mountains. The level inland areas become increasingly miserable for year-round habitation the farther east you go (for example, the aptly named Death Valley). Likewise, Nevada and Arizona have significant water limitations, restricting growth to certain areas.
Texas Republicans are prone to blame the limited supply of housing in California on leftwing Not In My Back Yard politics used by greedy homeowners to raise their home values and keep out undesirables. Some of that is true, but there are topographical reasons for limiting development in mountainous California, such as smog and traffic, that aren't easily understood on the Texas prairie.
For instance, the northern exurbs of Los Angeles County, the Santa Clarita Valley, are connected to Los Angeles almost solely by Interstate 5 through the rugged Newhall Pass. The only proposed alternative to this chokepoint would require colossally expensive tunneling through 15 miles of the earthquake-prone San Gabriel Mountains. So, the current residents of the Santa Clarita Valley, who tend to be more Republican than Los Angelenos, raise a stink about exacerbating commute times to their jobs in LA whenever anybody asks for approval of a new development. Thus, the posh Valencia TPC golf and housing development was proposed in 1985 but construction didn't begin until 2000. Other planned developments have been vetoed after long years of hearings.
Therefore, in California, unlike in Texas, it takes many years for increases in housing supply to catch up to increases in demand. That's why the loose credit policies of the Bush years turned into higher home prices in California than in Texas. To be precise, a Los Angeles home averaged 2.6 times the price of a Dallas home in 2001 and 4.7 times in 2005. Even in 2005, the median Dallas home only cost a sane 2.8 times the local annual income, while the median Los Angeles home cost a ridiculous 12.7 times what the median Angeleno was making.
From Bush & Rove's Texas-centric point of view, if some guy named Juan with no assets besides a 1979 Datsun pickup truck gets a liar loan for a house in Texas, his mortgage is, what, $100,000? He might be able to scratch together enough money to meet his payments. If he can't, well, Juan is gone, but that's just $100,000 down the drain. No biggie, Bush and Rove would assume.
What they apparently didn't realize in 2001 was that when his cousin Jose, who is equally broke, gets a mortgage in California, that was, say, $200,000. And by Bush's second term, the Administration's easy money-easy credit "affordable housing" policies meant Jose had to worm his way into a $400,000 mortgage to get a crummy house in California. No way, Jose is going to be able make the monthly payment after his two-year teaser rate runs out. And when he defaults, that's $400,000 down the rathole.