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Started out with an every-man appealing headline and quickly showed its stripes of being a developer funded prop 13 hit article - totally separate from the horr

• landryraccoon 10y ago
  Prop 13 creates an incentive for homeowners to oppose development, since their housing values will rise with no drawback on property taxes. It also means that the government is forced to raise sales and income taxes in order to raise revenue. It is harmful for society to have high housing prices which falls especially on younger workers and workers moving into an area, in order to benefit a small number of incumbents. No other good is treated like housing this way. We don't say it's good if your computer or cell phone goes up in price, or if cars are more expensive every year.
  • ThrustVectoring 10y ago
    The bigger issue, IMO, is the mis-allocation of resources that happens when people aren't able to transmit information through prices and market mechanisms. Like, the empty-nester who works in downtown SF and happens to own a 4BR townhouse in Mountain View should really trade places with the family of four commuting from a 1BR condo in SF and commuting down to Mountain View. If they both bought their place at a tenth of the current price, the savings on property taxes can justify staying locked in with long commutes and incorrectly sized living spaces. Note that this sort of example is also one of the strongest arguments against rent control. If you're paying $400/mo for an apartment in downtown SF or NYC, it's worth keeping it as a place to occasionally go to on weekends or vacations or in case you decide to move back into the city. It's classic mis-allocation - even in the midst of a severe shortage, there's under-used resources that don't get used because people aren't allowed to compete on price to get them.
    • sbov 10y ago
      IIRC most counties let you transfer your prop 13 status to a smaller dwelling. But I think it has to be within the same county. I'm not sure how accurate that is, it was just something my mom mentioned in passing a while back. She lives in a 4 bedroom in San Jose she bought in the early 70's and has been considering downsizing. However, her property taxes are so low it wouldn't make sense to make the switch to a condo or apartment, as she pays so little in property taxes. HN likes to blame prop 13 for California's housing problem. But keep in mind that prop 13 was passed because of rapidly increasing property values. Given that, it seems likely that a large portion of California's housing prices have no relation to prop 13.
      • linkregister 10y ago
        In the article it notes a drastic increase in housing prices and a massive drop in development after the passing of prop 13. I didn't see a graph so it could be wildly exaggerating the impact of prop 13.
        • deleted 10y ago
          [deleted]
      • closeparen 10y ago
        >prop 13 was passed because of rapidly increasing property values The owners who passed it are content to sit on their houses in perpetuity. If property values had continued to rise past owners' appetite for property tax bills, CA homes would be occupied by people under financial pressure to sell them. It seems reasonable to think that would leave prices lower than where they are today. It wouldn't stop the pressure, probably wouldn't keep those people from getting displaced, but it'd be a relief valve for the tech workers trying to move in.
        • sbov 10y ago
          Why is a relief valve for tech workers more important than the people you would be displacing? I agree that, on average, prop 13 should go. But you cannot do it overnight. It would likely cause an over correction and a ton of other problems - including having owners who could afford their house under the final price, but still having to sell since counties tend to be slow at lowering property taxes. We saw it during the housing crash, where some cities would outright refuse to reduce property tax bills. If anything, there should be a gradual phase out. Or, let people keep their prop 13 status as long as they downgrade, and no prop 13 for those that "upgrade". This would slowly phase out those who are in an advantageous position. It will be slower, but it seems like a fair compromise to correct the problem.
  • prostoalex 10y ago
    > Prop 13 creates an incentive for homeowners to oppose development, since their housing values will rise with no drawback on property taxes. That is not necessarily true - increased development is sold at modern-day prices, pushing every homeowner's holy metric - $/sq.ft. - up. It's also taxed at modern-day prices, leading to municipal revenue increases. I was using this screenshot of downtown LA to illustrate a similar point on a Facebook group - https://www.evernote.com/shard/s103/sh/11bfc9c3-6500-401b-870a-6a1be16de1c8/64ea04d4195bb054990c375bad9a8438 https://www.evernote.com/shard/s103/sh/11bfc9c3-6500-401b-87... - the amount of residential square footage in LA built over the past years is immense, and some other mega-complexes are sold out while still being built. Increased vertical development brings more residents, which require more services (bars, restaurants, stores, coffee shops). The average $/sq.ft. only went up while DTLA added crazy amount of housing.
• joeldg 10y ago
  Exactly... if left unchecked entire communities would be engulfed by developers hungry to cash in on whatever market they decide to get into. Communities are barely able to fight them off as it is. I live in Venice and the locals are being all pushed out by illegal airbnb "hotels" taking over rent controlled buildings and every little lot suddenly having a three-story steel and glass monstrosity built on it right up the property lines.
• nugget 10y ago
  Proposition 13 is a massive subsidy provided to real estate investors. If the goal is to prevent retirees from being ''driven out of their homes'' then there is no reason not to limit the exclusion to a single property per person.
• jvm 10y ago
  > that reassessment is capped so when the market goes crazy people aren't driven out of their homes By definition, the people who would be "driven out" have seen their home values wildly appreciate and they have by that token become substantially wealthy. This is like saying that if someone is on food stamps but then becomes a millionaire, it's unfair to take away their foodstamps or raise their tax rate.
  • jacalata 10y ago
    No, it's like saying that when someone has an illiquid asset theoretically worth $1 million but not actually capable of being traded for cash, it is unfair to take away their food stamps and leave them with no way to buy food. The general idea is that it is impossible to trade in the value of your house for any replacement for 'spend my retirement in the area I spent my working life in', because the other houses that fulfil that requirement will also have appreciated in value. Edit: I mean, even actual food stamps don't make you sell your house to qualify.
    • ScottBurson 10y ago
      This is what home equity loans are for.
    • seanp2k2 10y ago
      ...and it's based on the assumption that it is one's right to continue living in a place just because they've lived there for a few decades, current market conditions be damned.
  • breischl 10y ago
    Pretending that home equity is like a bank account is just silly. They're wealthy, but can only access that wealth by moving somewhere else (probably out of state), becoming homeless, or taking on potentially risky bets like a reverse mortgage.
  • st3v3r 10y ago
    So how do they get that wealth while still being able to live in their home? Or, to put it another way, why should they no longer be able to live in their home just because the market went crazy?
• wahern 10y ago
  Yeah. I'd bet developers would happily pay 2-3x in fees if they didn't have to do environmental impact reviews (EIRs). It's not that EIRs themselves are especially troublesome. But the reviews are the hook for litigation by NIMBYs, especially in California where the state-based environmental review law makes it incredibly easy for challengers to tie up a project in court for an eternity; even tiny developments. Exceedingly rare is the case where a legitimate environmental issue is at stake; and on the whole EIRs have had the effect of encouraging urban sprawl--there are fewer challenges to EIRs in less populated areas. It's really difficult to keep investments lined-up for an indeterminate amount of time. Time and indeterminism is perhaps the most costly aspect. And it's compounded by the fact that California doesn't provide development-as-of-right, which means zoning reviews and permitting can drag out for years as committees hem and haw, or allow NIMBYs to control the process. Many if not most cases in the state are likely unconstitutional as a violation of Due Process. But the Supreme Court hates taking those cases because it's a tricky area of the law. Part of the problem is that developers are repeat players in the game, which means they tend to not want to, literally, make a federal case out of any particular project because they know they'll be black-balled on their next project. So the really good cases that would make for good law never materialize. It was maddening--nay, sickening--to see Governor Jerry Brown's development-as-of-right legislation fail in the legislature. Localities could still have had all the ridiculous zoning restrictions they wanted; it just would have required them to strictly apply their own rules, rather than making them up on-the-fly according to their and challengers' whims. Which is what Due Process technically requires, anyhow! And that legislation would have required 25% affordable units in a project, which means it wouldn't have applied to single-family units, nor effectively to most other projects except large inner city residential projects. Basically it would have had very limited effect. But localities across the state--rural and urban--went apoplectic at the mere hint of being subject to their very own rules.