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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 t

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.

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.