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One of the main reasons of the housing crisis in the Bay Area is Prop 13 (https://en.wikipedia.org/wiki/California_Proposition_13_(1978) https://en.wikipedia.or

One of the main reasons of the housing crisis in the Bay Area is Prop 13 (https://en.wikipedia.org/wiki/California_Proposition_13_(1978) https://en.wikipedia.org/wiki/California_Proposition_13_(197...) Prop 13 basically keeps the property taxes constant (or 1% increase) as the value of your house increases (doubles or triples). Your tax gets re-calculated only if you sell your house and the new owner starts paying potentially multiples of what the previous owner has been paying in taxes. This works great for older people who own property they can basically stay at their home forever, but it creates an unfair situation for new comers in the area and the newer generations. How are property taxes calculated in other places in the world? Vancouver? London? Tokyo? This is such a hard problem to solve, no one wants to force elderly people to move because of a bull real estate market, but you also need young hard working people in your city for economic growth. My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing.

fiatmoney 11y ago
Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices. Shifting that burden evenly across the population would tend to cause more churn as long-time homeowners get pushed out, but would do nothing to increase aggregate housing or lower aggregate prices. Although, you can get pretty far into the weeds trying to evaluate the effect of housing stability on political economy - NIMBYism would be expected to be stronger in longer-tenure populations, for instance. Stability of tax policy is a fantastic thing for encouraging long-term investment.
- curveship 11y ago
  Wouldn't it discourage long-time owners from selling, thereby limiting supply and raising prices?
  - sterl 11y ago
    It would, and it does.
  - DannyBee 11y ago
    In theory, yes. In practice, if you own a currently 4+ million dollar home built in the 50's, you are paying at least 15-20k on it anyway. Here's an example currently for sale:https://www.redfin.com/CA/Los-Altos-Hills/27446-Black-Mountain-Rd-94022/home/1772683 https://www.redfin.com/CA/Los-Altos-Hills/27446-Black-Mounta... They are paying 18.2k. If it was reassessed today, they'd be paying 40-45k. If they do what most people who have lived in a home forever do, and are downsizing to something smaller (IE kids grew up, whatever), they will likely end up with either the same or less in taxes they pay now. So it's not like right now they pay nothing, and they'd pay a ton, it's "they pay a lot, they'd pay more".
    - gorkemyurt 11y ago
      well that house was sold again 1990 so the taxable value was reassessed.
      - DannyBee 11y ago
        Yes, i did miss this. But most of the value was added since then :)
    - sureshv 11y ago
      This house changed hands in 1990 for $1M where it got reassessed - otherwise they would be paying 2-3k max if purchased and held since 1978.
      - DannyBee 11y ago
        Whoops, missed that, sorry. It's still ... 25 years?
    - pc86 11y ago
      Even the current taxes are over 1.5x what my mortgage is (including not only escrow payments for taxes but also PMI). Nuts
    - vadym909 11y ago
      wow- the price on this house was dropped $500K in the last 6 months. Looks like the bay area prices are finally crashing /s
  - fiatmoney 11y ago
    In this discussion there are a lot of terminology considerations around "supply" (ie, housing stock) vs. "liquid supply" (ie, houses on the market) and "average prices" (ie, total RE value) vs. "marginal prices" (ie, expected home sales price).
- svachalek 11y ago
  A 4-bedroom house bought in the 70s is far more affordable than a 1-bedroom condo bought today, which creates a situation where no one can afford to move out of their homes. It's a massive tax benefit for themselves, their children, and grandchildren, that instantly and irrevocably goes away when they sell the house. No matter how high the market drives prices there is little incentive to sell. I don't know how much this has to do with the shortage of supply in the bay area but I'd be very surprised if it has "nothing to do" with it.
  - fiatmoney 11y ago
    Those houses are lived in though (ignoring the whole issue of unoccupied investment properties). You can have an illiquid market with a ton of housing stock. The Bay Area has a problem with insufficient total housing stock, not with tax policy. You can see this via rental market prices, which are not locked-in like property taxes are. Imagine a Soviet grey-concrete apartment block. You get on the list when you're 18, and get your "free" apartment five years later, in which you are effectively stuck for the next 50 years. It's illiquid, there is high supply, there are low prices. Now imagine you can swap apartments by paying a huge bribe. It's still illiquid, there is high supply, there are low average prices, there are high marginal prices.
    - Retric 11y ago
      The problem is staying becomes increasing attractive over time. Retired people save money by staying put, young workers can't afford to move in. This breaks the housing market. SF is not a housing market it's effectively a planned communist community with a few bribes on the open market.
      - thaumasiotes 11y ago
        > Retired people save money by staying put, young workers can't afford to move in. This is a problem of housing stock. If you build more housing, it's not going to be occupied by people who've been sitting on it for the last 50 years. That's impossible, because it's new.
- deleted 11y ago
  [deleted]
- yellowbeard 11y ago
  Prop 13 has been argued (I'd say convincingly) to reduce liquidity: http://www.nber.org/papers/w11108 http://www.nber.org/papers/w11108 (Less churn - opposite of what you hypothesize)
  - fiatmoney 11y ago
    No doubt it reduces liquidity. Probably increases marginal prices as well. But I doubt it makes real estate more valuable in the aggregate except for maybe via second-order effects like policy stability or population composition.
    - nwah1 11y ago
      Real estate has value because of the potential flows of rent that can be obtained. Property taxes fall on both land and improvements. While the taxes on improvements are passed on to the tenant, the taxes on land cannot be, as Adam Smith showed. The rent of land, being a case of a locational monopoly, is always as high as it can be. Thus, taxing land simply reduces the flows of rent that can be kept from controlling a location, and thus reduces the purchase price. This makes it easier for entrepreneurs to acquire land, since the up front costs are lower.
      - MichaelBurge 11y ago
        I hadn't heard of this principle that it's impossible to pass tax increases on to tenants. I can't really believe Adam Smith has shown this to be impossible, when I know people who have said (paraphrasing), "The previous landlord has raised rents to match increases in taxes, water, garbage bills(the utilities are effectively costs of land), and we consider this reasonable". I feel like you could even make a bet on it: There's a nearby trailer park with some mobile homes on it. This should have value solely in the land, since the homes can be removed from the property. I'm counting the availability of utilities in the land. The county tax assessment on both land and improvements is public information. Suppose the tax assessment as a whole goes up 1.7%. If the trailer park owner is able to secure a 1.7% increase over the next year from his tenants, you pay him $10,000. Otherwise, he pays you $10,000. Do you trust Adam Smith enough to take that bet? It should be impossible, since that 1.7% includes an increase of taxes on the land which you're saying cannot be passed onto the tenant.
- kansface 11y ago
  > Prop 13 has nothing to do with real estate price inflation. Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. In other words, home owners would at least see some value in new construction. As it stands now, there is only downside.
  - gozur88 11y ago
    >Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. Prop 13 exists in California because that's exactly what was happening. Prior to its passage you paid on the assessed value of you house, and it didn't stop prices from double digit percentage increases every year. People who'd owned their homes for decades were being forced to sell because the assessed value of the house had gone up so much they could no longer afford to pay the taxes.
    - shostack 11y ago
      While that sucks, that sort of self-correcting market pressure is in fact required for a healthy real estate market. Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work. It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller). People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.
      - gozur88 11y ago
        >Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county. So retired people living in the Peninsula can afford to move to other areas.
- dragonwriter 11y ago
  > Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices. As I see it, the long-term expected costs for a purchaser with an average expected time to hold are neutral compared to an equal-revenue scheme that didn't favor long-term property owners over newer property owners. (Given the same assessed value.) OTOH, the future costs of holding property are lower compared to the same alternative for current property holders (since, even with a short holding period, some of the early, highest-relative-tax-burden years are sunk costs under Prop 13) under the same comparison. So, rationally, people are just as likely to want to buy property, and less likely to want to sell it once they've already bought it. This reduces supply and increases market clearing price.
- ScottBurson 11y ago
  > Prop 13 has nothing to do with real estate price inflation. Yes, it does, because it incentivizes municipalities to encourage commercial development (which tends to change hands more often) over residential. It's a classic unintended consequence.
  - shostack 11y ago
    Corporations have been dodging taxes via Prop 13 for some time to the tune of potentially a $9 BILLION dollar windfall should they close some of those loopholes. I've heard of things like companies buying businesses outright so they can get the property, without buying the property as a transaction with the other entity. [1] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...
    - DrScump 11y ago
      Yes, and corporate inversions are another example (and another effect of tax law enforcement). The answer would be a Constitutional Amendment changing Jarvis-Gann protections to residences only, or even primary owner-occupied residences only. But the corrupt Legislature refuses to consider putting an LCA on the ballot to change this.
capkutay 11y ago
> My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing. In Silicon Valley product management there's the saying 'for every yes, there's a thousand no's." In housing politics for every good idea, there's 100k people who will complain and sue. The only policies implemented usually fall under the following categories 1) Irrational populism. 2) A backroom deal pushed by lobbyists and their political allies. Sensible ideas usually don't fall into those categories.
rb808 11y ago
Most countries dont have such high property taxes that the USA does. In London I paid $2500 a year in council tax and thought that was a lot of money, even though that was about 0.25%. Meanwhile NYC suburbs I'm now paying that every two months.
- gorkemyurt 11y ago
  But I am sure you paid more in income taxes in London. Which policy do you prefer? In my opinion taxing wealth is always a better idea than taxing income..
  - rb808 11y ago
    Maybe sales tax (VAT) is higher, but overall its about the same - except in the UK I get free healthcare.
  - pc86 11y ago
    I am generally inclined to agree with your last point, however it is possibly to be wealthy but to have very little liquidity. It has been the case that folks in the US who are on a fixed income (e.g. Social Security or disability) end up losing their home simply because they can't pay their property taxes and eat at the same time. It's rare but it has happened and will continue to happen as long as property taxes remain the large source of revenue that they are for state and local governments.
    - sandworm101 11y ago
      Many jurisdictions have worked around this by allowing elderly homeowners to defer property taxes on their residence until they move/sell/die. It's a great concept, but can cause a liquidity issue should a large percentage of total property taxes be deferred for years or decades. Where I live, you have to be 65+ and own 60+% equity in the home. The problem is that some old rich people are moving in, paying cash for property, and then deferring. They aren't exactly the intended beneficiaries of the scheme.
  - jernfrost 11y ago
talmand 11y ago
One of the reasons I had heard for some people wanting it is that some local politicians had figured out that they could manipulate housing valuations to increase their tax revenue. It's not in the list on Wikipedia and I'm not sure of the validity of it all as I'm not aware of what the practices actually are in California; but I recall reading about it back when Arnold first ran for governor.
michaelt 11y ago
How are property taxes calculated in [...] London? Properties are assigned to a tax band based on the tax office's assessment of the house's value were it to have been sold in April 1991. Bands vary from A (less than £40,000) to H (more than £320,000). The council tax ratios between the bands are fixed - so a band A property always pays one third the price of a band H property. The band a house is assigned to is essentially permanent, although you can appeal if it's not in line with equivalent properties in the same area. This provides certain desirable properties - more expensive properties pay more, but your bill doesn't go up just because house prices in your area go up. Disadvantages are your tax bill can still go up - just it goes up for everyone by the same percentage; if an area has become much nicer (or less nice) since 1991, the council doesn't make any more (or less) money; and valuations based on a government employee's estimate of a hypothetical sale don't have the idealogical purity needed to really get the support of voters.
- pjc50 11y ago
  Another disadvantage is that it's regressive because the bands are quite limited: "The poorest lose 8% of their income to the Council Tax system whilst the richest only lose 2%." ( https://www.equalitytrust.org.uk/how-regressive-our-tax-system https://www.equalitytrust.org.uk/how-regressive-our-tax-syst... ) "Europe tells UK to reform ‘regressive’ council tax system": http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressive-council-tax-system/36432 http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressi...
  - 1stop 11y ago
    Curious why you are getting down votes... Your post is good. Seems HN group think favours regressive tax?
    - oldmanjay 11y ago
      There is a very enjoyable irony to the notion that you would accuse a community of groupthink for a perceived lack of accepting your opinion as the one true way.
btbuildem 11y ago
And this has exactly nothing to do with Vancouver..
biot 11y ago
In Vancouver, property tax is based on calculating the cost of the provided services, then dividing the cost over all the homes based on home price and adjusted for and a few factors such as location. Every home is assessed annually, which becomes the basis for how much tax you pay. Theoretically, if the cost of providing the services were constant and all home values increased at the same rate, your property tax would never change.
louprado 11y ago
A Canadian who invests in single-family homes recently told me that the U.S. state of Indiana charges double real-estate taxes if the home is not owner-occupied. As a Californian who owns rental property in Arizona, I am all in favor of this, provided that means my primary residence would be taxed less. Real-estate taxes on your primary residence is the equivalent of paying rent. It has become so high in some states (e.g. Oregon) that it discourages home ownership.
- matthewmcg 11y ago
  Most jurisdictions have a "homestead exemption" that reduces property taxes on owner-occupied property (though not to half, as this policy does).
- toast0 11y ago
  California does give a homeowners exemption on property tax; but it's in the constitution at $7000 of value, so it's only a $70/year discount, and there's a lot of rules to follow if the legislature wants to change it, it looks like they have to also increase the renters credit, and be revenue neutral for local governments; I don't expect it's likely to be increased by legislative action.
- FuriouslyAdrift 11y ago
  Indiana also put a 2% cap on property tax into the constitution. Indy has some really nice Gilded Age mansions under $2 mil.
- vkou 11y ago
  Renters pay property taxes, too - indirectly through their landlord.
  - ArkyBeagle 11y ago
    This may actually not be true, if rent prices must be competitive. Georgist taxes have the interesting feature that land rents taxation ( not rack rent, which is what you pay the landlord ) cannot be passed on.
- 11y ago
anigbrowl 11y ago
Another thing to keep in mind regarding prop 13 is that it also affects commercial real estate - commercial landlords tend to set up a company to own/insure/maintain a building, and then rather than selling the building they just change the beneficial ownership of the company, preserving the low property tax rates. As a homeowner myself I'm being a bit hypocritical here because we bought at a low point in the market and now pay a fairly low rate of tax relative to the change in the property value, but on the other hand that outcome was the result of years of waiting for an opportunity to time the market.
- shostack 11y ago
  Yeah, something to the tune of $9B in avoided commercial taxes from stuff like that [1]. [1] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...
surfmike 11y ago
It would make the law more complicated, but I think the property tax should be recalculated annually based on your property value but it should also be capped to a percentage of income. You could set a floor of the existing prop-13 tax rate. And ideally only the land value is taxed, not the structure on top of it.
brc 11y ago
It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % of the sale price. This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). Furthermore, the state government has unpredictable revenue streams based on the ups and downs of the property market (you can have high prices but low volume) and the labor market is more calcified because people are unlikely to sell and move to access a new job. The result is tightly held real estate, variable state government revenue and ever-higher prices. Adding fuel to the mess is a universal belief by local governments that housing development is evil and must be curtailed, so they concentrate on high density and infill development, which drives the prices of stand alone property ever higher. Unsurprisingly, Australia just about outpaces Canada for the most severely unaffordable housing market. And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.
- fleitz 11y ago
  Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing) It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.
  - CountSessine 11y ago
    Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. This is new - has the owner said that multiple families will live in that house? It's stupid to expect to be able to live in detached housing in a world class city Since when did Vancouver become a world class city? I don't mean that to be cruel; I live here myself. But Vancouver has neither the culture nor the power nor the money to be considered world class. The people are poor, the economy has a paucity of opportunities, and now the housing really is only marginally affordable, even if you go out somewhere crazy far like White Rock.
rdlecler1 11y ago
Those house owning elderly you're feeling sorry benefitted from the biggest bull market it history. They may have saw 100x gains on their house while many youth will are spending 30-50% of their income on housing if they're lucky to get a good job. If they do, they can look forward to paying entitlements to these elderly people while they themselves may never see the same turn done to them because the system will be bankrupt by then. I don't see why the elderly should be any more immune to economic realities than everyone else. If you can't afford to live in your house or city any more, at least you had an opportunity to roll the dice and make the best of your life there. Others won't even get that. What about the people who will never afford to, people who might have made a positive net improvement to the economy if we weren't so concerned with protecting people. If it gets too expensive, let them sell their house and go live out their lives very comfortably in a low cost city and open the room for people who are going to contribute to the economy that has to pay for their entitlements.
- rayiner 11y ago
  It's insane. The people who don't work live close to the business districts collecting social security paid for by the people who do work who have to commute in from afar for the privilege. Then the people who don't work vote themselves favorable property tax rules so they don't have to pay their fair share of keeping up the city.
  - hvmonk 11y ago
    oligarchy at micro level, creating obstacle in path of hard working common people. Prop 13 was created by these very elderly people only, and they are now reaping its benefits while the new generation suffers. Not saying all old people are like that, but this is what it is.
    - thinkdoge 11y ago
      Don't worry, old people eventually die and we will be old.
      - 11y ago
jpollock 11y ago
How are property taxes calculated in... New Zealand. 1 The local government sets their budget. 2 Then a valuing company sets property values once every 3 years based on permits and local sales. 3 Then the mill rate (property tax percentage) is set at a rate to clear the budget. Tax rates are stable as property prices increase. The only thing that wouldn't be under your democratic control would be if your neighborhood suddenly became very desirable, changing your house price substantially while leaving other areas unchanged. If you cannot afford the tax bill, there are programs for low-income or retired persons to get debt forgiveness.
pmorici 11y ago
"This is such a hard problem to solve, no one wants to force elderly people to move" Not really, in Maryland property taxes are reduced for house holds making under 60k and are zero for people who make under 10k. There are limits on the value of the home so you can't buy a mansion and then live in it retired and tax free but it protects poor people and old people.
ScottBurson 11y ago
> This is such a hard problem to solve Actually, it's an easy problem to solve technically; the hard part is selling the solution politically. All you have to do is, instead of capping the growth of the tax rate, you cap the growth of the required payment against the tax. If the tax is greater than the required payment in a given year, the locality gets a lien on the property for the difference; but, critically, that lien does not become due until the property is sold. This system would let localities collect, in the steady state, as much property tax as they would have before; it's just that they wouldn't actually receive part of the tax on a given property until it was sold, so the money coming in would be a little lumpy. But that doesn't seem like a serious problem. Anyway, the point is, if localities could still collect the amount of property tax on residential properties that they need, they would be more inclined to encourage residential construction. It's been done in places, and it should have been done in California. Prop. 13 is destroying the state.
jernfrost 11y ago
Oslo, Norway where I live is a pretty expensive city, but we don't have property taxes so that is not an issue. But like Vancouver we have serious issues with the housing market. We have a green area around Oslo were you can't build on (that is where everybody goes skiing and hiking). And we have the extra problem that due to being so far north we can't build high rises otherwise we wouldn't get any sun in the city in winter time. But they have started turning a lot of old villa areas in to 4-5 story buildings. So densification is definitely a strategy being followed in Oslo.
DrScump 11y ago
<Prop 13 basically keeps the property taxes constant (or 1% increase) as the value of your house increases (doubles or triples)> No, it sets your base tax value at purchase to 1% of the purchase/FMV price, and its increases from there are annual and limited to 2% of the previous tax. e.g. assuming a purchase price in 2015 of $1 million: Year Tax 1: $102,000 max 2: $104,040 max etc. (initial * (1.02 ^ year#)) <Your tax gets re-calculated only if you sell your house> Or any other change in majority ownership. It can also be triggered by improvements. Note that local governments heap many additional taxes in the form of "parcel taxes" that are fixed amounts -- a regressive tax effect (a $20M estate and a $300K condo pay the same amount).
nosuchthing 11y ago
Incentive the use of land to facilitate more people. Encourage / incentivize mixed use developments with affordable housing units. Tax unused empty lots, empty apartments, low volume office buildings, etc.. Build affordable compact mobile homes.
verylongname 11y ago
Moreover, in most of California, the supply of housing has been artificially restricted using overly stringent zoning rules and laws. I'm in favor of reasonable zoning rules, but in my city the only justification for limiting new constructing seems to be existing homeowners who "want to live in a small town" and enrich themselves at the expense of newcomers who have little choice but to settle in the area for economic reasons.
marincounty 11y ago
Do you really think the housing problem in the Bay Area is the result of prop. 13? The housing problem is multifaceted. "Let's just get rid of prop. 13 today." Do you really think the price of realestate, or rentals will go down? In my county, the county workers are already paid over $100k/yr. for picking up trash on our supposedly filthy trails. Our county workers are paid very well. Where I reside we have cops everywhere. You could remove 75 percent of them, and I don't think anyone would notice, except for the fees they bring in. Howard Jarvis knew what government did with more money; they spent it on themselves. O.k.--I'm not in the mood for this, but the housing crisis in the Bay Area is due to a lot of factors. It's a nice place to live. Your boss wants the best. I don't know why they picked the Bay Area. There's other nice places, with temperate climates? He wants only the best for himself, and his spawn. The best house. The best schools. The best car. And by golly, he only deserves the best? San Francisco, and Marin county are not designed to scale. San Francisco has a better shot at growth than Marin, but I leave that alone. They can go up in S.F.? But I don't think that city will ever see real subways, and not because of money. Some Bay Area residents are NIMBY'S. Some have good reason--look at 101 at 3:30 p.m. The sewers are old, and small. The streets are narrow. It's surrounded by oceans, federal parks, etc. It's not a vast area. Local governments almost never approve variances. Sure they take the money, but never approve. It's very difficult to build in the Bay Area. It's almost like they go out of their way to curtail growth. I would love to build a small cabin. Twenty years ago my dreams were shattered when I tried. The kind lady at the planning department, said I'll take your money for the variance, but honestly-- they never approve. When I was a kid Howard Jarvis wrote a book, called I'm Mad as Hell. My father was a new journeyman electrician, and when my father would look at that property tax bill yearly. My father was beyond disgusted looking at those rising numbers. Every year they took money, and spent it on Themselfs. My father was a conservative Rebublican, but was all for prop. 13, along with millions of Californians. Even though I was a kid, I could feel the anger among adults. The politicians had a little game back then; raise the assessed value one year, raise the tax rate the next. There was always the same loser in this games, and it was the guy who paid the taxes. If you honestly think the housing crisis is due to prop. 13, read ISBN: 0-8129-0858-9 I'm Mad As Hell. By the way, I'm disgusted with the housing situation along with everyone else. I don't blame prop. 13 though. A few weeks ago I heard a lady on the radio say, "I lowered my tenants rent $500 a month." Announcer, "Why?" Moral lady, "I was having a hard time looking at myself in the mirror."
specialist 11y ago
While Prop 13 is terrible, it's the not cause of the housing shortage (or bubble). Land use policy is the cause, preventing supply to meet demand. California’s High Housing Costs: Causes and Consequences http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou... "Building Less Housing Than People Demand Drives High Housing Costs. California is a desirable place to live. Yet not enough housing exists in the state’s major coastal communities to accommodate all of the households that want to live there. In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. A shortage of housing along California’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well. In addition to a shortage of housing, high land and construction costs also play some role in high housing prices."
Spooky23 11y ago
Prop 13 is certainly unfair policy, but is almost certainly not a causal factor. New York is a great example of a place with runaway train property taxes and perennial housing shortages in the NYC Metro area. Property tax escalation creates vicious cycles, vaporizing buying power and creating disincentives for property maintenance, especially in older houses and poor neighborhoods. In those areas, government aid programs create a housing price floor, so property owners maintain the minimum requirements for habitability, run the property down to zero value, and walk away.
nibs 11y ago
In Toronto it is based on assessed value. You get a letter each year with a fairly conservative estimate of the value of your home, and your tax is a flat percentage based on the line item in the budget (city, education and transit). Calculator: http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform

fiatmoney 11y ago

Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices. Shifting that burden evenly across the population would tend to cause more churn as long-time homeowners get pushed out, but would do nothing to increase aggregate housing or lower aggregate prices. Although, you can get pretty far into the weeds trying to evaluate the effect of housing stability on political economy - NIMBYism would be expected to be stronger in longer-tenure populations, for instance. Stability of tax policy is a fantastic thing for encouraging long-term investment.

curveship 11y ago
Wouldn't it discourage long-time owners from selling, thereby limiting supply and raising prices?
- sterl 11y ago
  It would, and it does.
- DannyBee 11y ago
  In theory, yes. In practice, if you own a currently 4+ million dollar home built in the 50's, you are paying at least 15-20k on it anyway. Here's an example currently for sale:https://www.redfin.com/CA/Los-Altos-Hills/27446-Black-Mountain-Rd-94022/home/1772683 https://www.redfin.com/CA/Los-Altos-Hills/27446-Black-Mounta... They are paying 18.2k. If it was reassessed today, they'd be paying 40-45k. If they do what most people who have lived in a home forever do, and are downsizing to something smaller (IE kids grew up, whatever), they will likely end up with either the same or less in taxes they pay now. So it's not like right now they pay nothing, and they'd pay a ton, it's "they pay a lot, they'd pay more".
  - gorkemyurt 11y ago
    well that house was sold again 1990 so the taxable value was reassessed.
    - DannyBee 11y ago
      Yes, i did miss this. But most of the value was added since then :)
  - sureshv 11y ago
    This house changed hands in 1990 for $1M where it got reassessed - otherwise they would be paying 2-3k max if purchased and held since 1978.
    - DannyBee 11y ago
      Whoops, missed that, sorry. It's still ... 25 years?
  - pc86 11y ago
    Even the current taxes are over 1.5x what my mortgage is (including not only escrow payments for taxes but also PMI). Nuts
  - vadym909 11y ago
    wow- the price on this house was dropped $500K in the last 6 months. Looks like the bay area prices are finally crashing /s
- fiatmoney 11y ago
  In this discussion there are a lot of terminology considerations around "supply" (ie, housing stock) vs. "liquid supply" (ie, houses on the market) and "average prices" (ie, total RE value) vs. "marginal prices" (ie, expected home sales price).
svachalek 11y ago
A 4-bedroom house bought in the 70s is far more affordable than a 1-bedroom condo bought today, which creates a situation where no one can afford to move out of their homes. It's a massive tax benefit for themselves, their children, and grandchildren, that instantly and irrevocably goes away when they sell the house. No matter how high the market drives prices there is little incentive to sell. I don't know how much this has to do with the shortage of supply in the bay area but I'd be very surprised if it has "nothing to do" with it.
- fiatmoney 11y ago
  Those houses are lived in though (ignoring the whole issue of unoccupied investment properties). You can have an illiquid market with a ton of housing stock. The Bay Area has a problem with insufficient total housing stock, not with tax policy. You can see this via rental market prices, which are not locked-in like property taxes are. Imagine a Soviet grey-concrete apartment block. You get on the list when you're 18, and get your "free" apartment five years later, in which you are effectively stuck for the next 50 years. It's illiquid, there is high supply, there are low prices. Now imagine you can swap apartments by paying a huge bribe. It's still illiquid, there is high supply, there are low average prices, there are high marginal prices.
  - Retric 11y ago
    The problem is staying becomes increasing attractive over time. Retired people save money by staying put, young workers can't afford to move in. This breaks the housing market. SF is not a housing market it's effectively a planned communist community with a few bribes on the open market.
    - thaumasiotes 11y ago
      > Retired people save money by staying put, young workers can't afford to move in. This is a problem of housing stock. If you build more housing, it's not going to be occupied by people who've been sitting on it for the last 50 years. That's impossible, because it's new.
deleted 11y ago
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yellowbeard 11y ago
Prop 13 has been argued (I'd say convincingly) to reduce liquidity: http://www.nber.org/papers/w11108 http://www.nber.org/papers/w11108 (Less churn - opposite of what you hypothesize)
- fiatmoney 11y ago
  No doubt it reduces liquidity. Probably increases marginal prices as well. But I doubt it makes real estate more valuable in the aggregate except for maybe via second-order effects like policy stability or population composition.
  - nwah1 11y ago
    Real estate has value because of the potential flows of rent that can be obtained. Property taxes fall on both land and improvements. While the taxes on improvements are passed on to the tenant, the taxes on land cannot be, as Adam Smith showed. The rent of land, being a case of a locational monopoly, is always as high as it can be. Thus, taxing land simply reduces the flows of rent that can be kept from controlling a location, and thus reduces the purchase price. This makes it easier for entrepreneurs to acquire land, since the up front costs are lower.
    - MichaelBurge 11y ago
      I hadn't heard of this principle that it's impossible to pass tax increases on to tenants. I can't really believe Adam Smith has shown this to be impossible, when I know people who have said (paraphrasing), "The previous landlord has raised rents to match increases in taxes, water, garbage bills(the utilities are effectively costs of land), and we consider this reasonable". I feel like you could even make a bet on it: There's a nearby trailer park with some mobile homes on it. This should have value solely in the land, since the homes can be removed from the property. I'm counting the availability of utilities in the land. The county tax assessment on both land and improvements is public information. Suppose the tax assessment as a whole goes up 1.7%. If the trailer park owner is able to secure a 1.7% increase over the next year from his tenants, you pay him $10,000. Otherwise, he pays you $10,000. Do you trust Adam Smith enough to take that bet? It should be impossible, since that 1.7% includes an increase of taxes on the land which you're saying cannot be passed onto the tenant.
kansface 11y ago
> Prop 13 has nothing to do with real estate price inflation. Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. In other words, home owners would at least see some value in new construction. As it stands now, there is only downside.
- gozur88 11y ago
  >Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. Prop 13 exists in California because that's exactly what was happening. Prior to its passage you paid on the assessed value of you house, and it didn't stop prices from double digit percentage increases every year. People who'd owned their homes for decades were being forced to sell because the assessed value of the house had gone up so much they could no longer afford to pay the taxes.
  - shostack 11y ago
    While that sucks, that sort of self-correcting market pressure is in fact required for a healthy real estate market. Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work. It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller). People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.
    - gozur88 11y ago
      >Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county. So retired people living in the Peninsula can afford to move to other areas.
dragonwriter 11y ago
> Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices. As I see it, the long-term expected costs for a purchaser with an average expected time to hold are neutral compared to an equal-revenue scheme that didn't favor long-term property owners over newer property owners. (Given the same assessed value.) OTOH, the future costs of holding property are lower compared to the same alternative for current property holders (since, even with a short holding period, some of the early, highest-relative-tax-burden years are sunk costs under Prop 13) under the same comparison. So, rationally, people are just as likely to want to buy property, and less likely to want to sell it once they've already bought it. This reduces supply and increases market clearing price.
ScottBurson 11y ago
> Prop 13 has nothing to do with real estate price inflation. Yes, it does, because it incentivizes municipalities to encourage commercial development (which tends to change hands more often) over residential. It's a classic unintended consequence.
- shostack 11y ago
  Corporations have been dodging taxes via Prop 13 for some time to the tune of potentially a $9 BILLION dollar windfall should they close some of those loopholes. I've heard of things like companies buying businesses outright so they can get the property, without buying the property as a transaction with the other entity. [1] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...
  - DrScump 11y ago
    Yes, and corporate inversions are another example (and another effect of tax law enforcement). The answer would be a Constitutional Amendment changing Jarvis-Gann protections to residences only, or even primary owner-occupied residences only. But the corrupt Legislature refuses to consider putting an LCA on the ballot to change this.

capkutay 11y ago

> My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing. In Silicon Valley product management there's the saying 'for every yes, there's a thousand no's." In housing politics for every good idea, there's 100k people who will complain and sue. The only policies implemented usually fall under the following categories 1) Irrational populism. 2) A backroom deal pushed by lobbyists and their political allies. Sensible ideas usually don't fall into those categories.

rb808 11y ago

Most countries dont have such high property taxes that the USA does. In London I paid $2500 a year in council tax and thought that was a lot of money, even though that was about 0.25%. Meanwhile NYC suburbs I'm now paying that every two months.

gorkemyurt 11y ago
But I am sure you paid more in income taxes in London. Which policy do you prefer? In my opinion taxing wealth is always a better idea than taxing income..
- rb808 11y ago
  Maybe sales tax (VAT) is higher, but overall its about the same - except in the UK I get free healthcare.
- pc86 11y ago
  I am generally inclined to agree with your last point, however it is possibly to be wealthy but to have very little liquidity. It has been the case that folks in the US who are on a fixed income (e.g. Social Security or disability) end up losing their home simply because they can't pay their property taxes and eat at the same time. It's rare but it has happened and will continue to happen as long as property taxes remain the large source of revenue that they are for state and local governments.
  - sandworm101 11y ago
    Many jurisdictions have worked around this by allowing elderly homeowners to defer property taxes on their residence until they move/sell/die. It's a great concept, but can cause a liquidity issue should a large percentage of total property taxes be deferred for years or decades. Where I live, you have to be 65+ and own 60+% equity in the home. The problem is that some old rich people are moving in, paying cash for property, and then deferring. They aren't exactly the intended beneficiaries of the scheme.
- jernfrost 11y ago

talmand 11y ago

One of the reasons I had heard for some people wanting it is that some local politicians had figured out that they could manipulate housing valuations to increase their tax revenue. It's not in the list on Wikipedia and I'm not sure of the validity of it all as I'm not aware of what the practices actually are in California; but I recall reading about it back when Arnold first ran for governor.

michaelt 11y ago

How are property taxes calculated in [...] London? Properties are assigned to a tax band based on the tax office's assessment of the house's value were it to have been sold in April 1991. Bands vary from A (less than £40,000) to H (more than £320,000). The council tax ratios between the bands are fixed - so a band A property always pays one third the price of a band H property. The band a house is assigned to is essentially permanent, although you can appeal if it's not in line with equivalent properties in the same area. This provides certain desirable properties - more expensive properties pay more, but your bill doesn't go up just because house prices in your area go up. Disadvantages are your tax bill can still go up - just it goes up for everyone by the same percentage; if an area has become much nicer (or less nice) since 1991, the council doesn't make any more (or less) money; and valuations based on a government employee's estimate of a hypothetical sale don't have the idealogical purity needed to really get the support of voters.

pjc50 11y ago
Another disadvantage is that it's regressive because the bands are quite limited: "The poorest lose 8% of their income to the Council Tax system whilst the richest only lose 2%." ( https://www.equalitytrust.org.uk/how-regressive-our-tax-system https://www.equalitytrust.org.uk/how-regressive-our-tax-syst... ) "Europe tells UK to reform ‘regressive’ council tax system": http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressive-council-tax-system/36432 http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressi...
- 1stop 11y ago
  Curious why you are getting down votes... Your post is good. Seems HN group think favours regressive tax?
  - oldmanjay 11y ago
    There is a very enjoyable irony to the notion that you would accuse a community of groupthink for a perceived lack of accepting your opinion as the one true way.

btbuildem 11y ago

And this has exactly nothing to do with Vancouver..

biot 11y ago

In Vancouver, property tax is based on calculating the cost of the provided services, then dividing the cost over all the homes based on home price and adjusted for and a few factors such as location. Every home is assessed annually, which becomes the basis for how much tax you pay. Theoretically, if the cost of providing the services were constant and all home values increased at the same rate, your property tax would never change.

louprado 11y ago

A Canadian who invests in single-family homes recently told me that the U.S. state of Indiana charges double real-estate taxes if the home is not owner-occupied. As a Californian who owns rental property in Arizona, I am all in favor of this, provided that means my primary residence would be taxed less. Real-estate taxes on your primary residence is the equivalent of paying rent. It has become so high in some states (e.g. Oregon) that it discourages home ownership.

matthewmcg 11y ago
Most jurisdictions have a "homestead exemption" that reduces property taxes on owner-occupied property (though not to half, as this policy does).
toast0 11y ago
California does give a homeowners exemption on property tax; but it's in the constitution at $7000 of value, so it's only a $70/year discount, and there's a lot of rules to follow if the legislature wants to change it, it looks like they have to also increase the renters credit, and be revenue neutral for local governments; I don't expect it's likely to be increased by legislative action.
FuriouslyAdrift 11y ago
Indiana also put a 2% cap on property tax into the constitution. Indy has some really nice Gilded Age mansions under $2 mil.
vkou 11y ago
Renters pay property taxes, too - indirectly through their landlord.
- ArkyBeagle 11y ago
  This may actually not be true, if rent prices must be competitive. Georgist taxes have the interesting feature that land rents taxation ( not rack rent, which is what you pay the landlord ) cannot be passed on.
11y ago

anigbrowl 11y ago

Another thing to keep in mind regarding prop 13 is that it also affects commercial real estate - commercial landlords tend to set up a company to own/insure/maintain a building, and then rather than selling the building they just change the beneficial ownership of the company, preserving the low property tax rates. As a homeowner myself I'm being a bit hypocritical here because we bought at a low point in the market and now pay a fairly low rate of tax relative to the change in the property value, but on the other hand that outcome was the result of years of waiting for an opportunity to time the market.

shostack 11y ago
Yeah, something to the tune of $9B in avoided commercial taxes from stuff like that [1]. [1] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...

surfmike 11y ago

It would make the law more complicated, but I think the property tax should be recalculated annually based on your property value but it should also be capped to a percentage of income. You could set a floor of the existing prop-13 tax rate. And ideally only the land value is taxed, not the structure on top of it.

brc 11y ago

It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % of the sale price. This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). Furthermore, the state government has unpredictable revenue streams based on the ups and downs of the property market (you can have high prices but low volume) and the labor market is more calcified because people are unlikely to sell and move to access a new job. The result is tightly held real estate, variable state government revenue and ever-higher prices. Adding fuel to the mess is a universal belief by local governments that housing development is evil and must be curtailed, so they concentrate on high density and infill development, which drives the prices of stand alone property ever higher. Unsurprisingly, Australia just about outpaces Canada for the most severely unaffordable housing market. And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.

fleitz 11y ago
Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing) It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.
- CountSessine 11y ago
  Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. This is new - has the owner said that multiple families will live in that house? It's stupid to expect to be able to live in detached housing in a world class city Since when did Vancouver become a world class city? I don't mean that to be cruel; I live here myself. But Vancouver has neither the culture nor the power nor the money to be considered world class. The people are poor, the economy has a paucity of opportunities, and now the housing really is only marginally affordable, even if you go out somewhere crazy far like White Rock.

rdlecler1 11y ago

Those house owning elderly you're feeling sorry benefitted from the biggest bull market it history. They may have saw 100x gains on their house while many youth will are spending 30-50% of their income on housing if they're lucky to get a good job. If they do, they can look forward to paying entitlements to these elderly people while they themselves may never see the same turn done to them because the system will be bankrupt by then. I don't see why the elderly should be any more immune to economic realities than everyone else. If you can't afford to live in your house or city any more, at least you had an opportunity to roll the dice and make the best of your life there. Others won't even get that. What about the people who will never afford to, people who might have made a positive net improvement to the economy if we weren't so concerned with protecting people. If it gets too expensive, let them sell their house and go live out their lives very comfortably in a low cost city and open the room for people who are going to contribute to the economy that has to pay for their entitlements.

rayiner 11y ago
It's insane. The people who don't work live close to the business districts collecting social security paid for by the people who do work who have to commute in from afar for the privilege. Then the people who don't work vote themselves favorable property tax rules so they don't have to pay their fair share of keeping up the city.
- hvmonk 11y ago
  oligarchy at micro level, creating obstacle in path of hard working common people. Prop 13 was created by these very elderly people only, and they are now reaping its benefits while the new generation suffers. Not saying all old people are like that, but this is what it is.
  - thinkdoge 11y ago
    Don't worry, old people eventually die and we will be old.
    - 11y ago

jpollock 11y ago

How are property taxes calculated in... New Zealand. 1 The local government sets their budget. 2 Then a valuing company sets property values once every 3 years based on permits and local sales. 3 Then the mill rate (property tax percentage) is set at a rate to clear the budget. Tax rates are stable as property prices increase. The only thing that wouldn't be under your democratic control would be if your neighborhood suddenly became very desirable, changing your house price substantially while leaving other areas unchanged. If you cannot afford the tax bill, there are programs for low-income or retired persons to get debt forgiveness.

pmorici 11y ago

"This is such a hard problem to solve, no one wants to force elderly people to move" Not really, in Maryland property taxes are reduced for house holds making under 60k and are zero for people who make under 10k. There are limits on the value of the home so you can't buy a mansion and then live in it retired and tax free but it protects poor people and old people.

ScottBurson 11y ago

> This is such a hard problem to solve Actually, it's an easy problem to solve technically; the hard part is selling the solution politically. All you have to do is, instead of capping the growth of the tax rate, you cap the growth of the required payment against the tax. If the tax is greater than the required payment in a given year, the locality gets a lien on the property for the difference; but, critically, that lien does not become due until the property is sold. This system would let localities collect, in the steady state, as much property tax as they would have before; it's just that they wouldn't actually receive part of the tax on a given property until it was sold, so the money coming in would be a little lumpy. But that doesn't seem like a serious problem. Anyway, the point is, if localities could still collect the amount of property tax on residential properties that they need, they would be more inclined to encourage residential construction. It's been done in places, and it should have been done in California. Prop. 13 is destroying the state.

jernfrost 11y ago

Oslo, Norway where I live is a pretty expensive city, but we don't have property taxes so that is not an issue. But like Vancouver we have serious issues with the housing market. We have a green area around Oslo were you can't build on (that is where everybody goes skiing and hiking). And we have the extra problem that due to being so far north we can't build high rises otherwise we wouldn't get any sun in the city in winter time. But they have started turning a lot of old villa areas in to 4-5 story buildings. So densification is definitely a strategy being followed in Oslo.

DrScump 11y ago

<Prop 13 basically keeps the property taxes constant (or 1% increase) as the value of your house increases (doubles or triples)> No, it sets your base tax value at purchase to 1% of the purchase/FMV price, and its increases from there are annual and limited to 2% of the previous tax. e.g. assuming a purchase price in 2015 of $1 million: Year Tax 1: $102,000 max 2: $104,040 max etc. (initial * (1.02 ^ year#)) <Your tax gets re-calculated only if you sell your house> Or any other change in majority ownership. It can also be triggered by improvements. Note that local governments heap many additional taxes in the form of "parcel taxes" that are fixed amounts -- a regressive tax effect (a $20M estate and a $300K condo pay the same amount).

nosuchthing 11y ago

Incentive the use of land to facilitate more people. Encourage / incentivize mixed use developments with affordable housing units. Tax unused empty lots, empty apartments, low volume office buildings, etc.. Build affordable compact mobile homes.

verylongname 11y ago

Moreover, in most of California, the supply of housing has been artificially restricted using overly stringent zoning rules and laws. I'm in favor of reasonable zoning rules, but in my city the only justification for limiting new constructing seems to be existing homeowners who "want to live in a small town" and enrich themselves at the expense of newcomers who have little choice but to settle in the area for economic reasons.

marincounty 11y ago

Do you really think the housing problem in the Bay Area is the result of prop. 13? The housing problem is multifaceted. "Let's just get rid of prop. 13 today." Do you really think the price of realestate, or rentals will go down? In my county, the county workers are already paid over $100k/yr. for picking up trash on our supposedly filthy trails. Our county workers are paid very well. Where I reside we have cops everywhere. You could remove 75 percent of them, and I don't think anyone would notice, except for the fees they bring in. Howard Jarvis knew what government did with more money; they spent it on themselves. O.k.--I'm not in the mood for this, but the housing crisis in the Bay Area is due to a lot of factors. It's a nice place to live. Your boss wants the best. I don't know why they picked the Bay Area. There's other nice places, with temperate climates? He wants only the best for himself, and his spawn. The best house. The best schools. The best car. And by golly, he only deserves the best? San Francisco, and Marin county are not designed to scale. San Francisco has a better shot at growth than Marin, but I leave that alone. They can go up in S.F.? But I don't think that city will ever see real subways, and not because of money. Some Bay Area residents are NIMBY'S. Some have good reason--look at 101 at 3:30 p.m. The sewers are old, and small. The streets are narrow. It's surrounded by oceans, federal parks, etc. It's not a vast area. Local governments almost never approve variances. Sure they take the money, but never approve. It's very difficult to build in the Bay Area. It's almost like they go out of their way to curtail growth. I would love to build a small cabin. Twenty years ago my dreams were shattered when I tried. The kind lady at the planning department, said I'll take your money for the variance, but honestly-- they never approve. When I was a kid Howard Jarvis wrote a book, called I'm Mad as Hell. My father was a new journeyman electrician, and when my father would look at that property tax bill yearly. My father was beyond disgusted looking at those rising numbers. Every year they took money, and spent it on Themselfs. My father was a conservative Rebublican, but was all for prop. 13, along with millions of Californians. Even though I was a kid, I could feel the anger among adults. The politicians had a little game back then; raise the assessed value one year, raise the tax rate the next. There was always the same loser in this games, and it was the guy who paid the taxes. If you honestly think the housing crisis is due to prop. 13, read ISBN: 0-8129-0858-9 I'm Mad As Hell. By the way, I'm disgusted with the housing situation along with everyone else. I don't blame prop. 13 though. A few weeks ago I heard a lady on the radio say, "I lowered my tenants rent $500 a month." Announcer, "Why?" Moral lady, "I was having a hard time looking at myself in the mirror."

specialist 11y ago

While Prop 13 is terrible, it's the not cause of the housing shortage (or bubble). Land use policy is the cause, preventing supply to meet demand. California’s High Housing Costs: Causes and Consequences http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou... "Building Less Housing Than People Demand Drives High Housing Costs. California is a desirable place to live. Yet not enough housing exists in the state’s major coastal communities to accommodate all of the households that want to live there. In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. A shortage of housing along California’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well. In addition to a shortage of housing, high land and construction costs also play some role in high housing prices."

Spooky23 11y ago

Prop 13 is certainly unfair policy, but is almost certainly not a causal factor. New York is a great example of a place with runaway train property taxes and perennial housing shortages in the NYC Metro area. Property tax escalation creates vicious cycles, vaporizing buying power and creating disincentives for property maintenance, especially in older houses and poor neighborhoods. In those areas, government aid programs create a housing price floor, so property owners maintain the minimum requirements for habitability, run the property down to zero value, and walk away.

nibs 11y ago

In Toronto it is based on assessed value. You get a letter each year with a fairly conservative estimate of the value of your home, and your tax is a flat percentage based on the line item in the budget (city, education and transit). Calculator: http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform