4 ms·

> You'll just end up kicking people out of their homes sorted from poorest to richest as the bubble intensifies. No, it's the richest people with the smallest

by aianus 9y ago

> You'll just end up kicking people out of their homes sorted from poorest to richest as the bubble intensifies. No, it's the richest people with the smallest cash flow that get kicked out first. Property tax for a salaried worker with a $1m mortgaged house is totally manageable, property tax for a retiree with a $2m paid-off house could be unaffordable. The latter person (who's much richer) has to move, the former doesn't.

dv_dt 9y ago
I think you're splitting silly hairs - technically its anyone with bad cash flow. If someone has no liquid assets and their "wealth" is only tied in the property they're living in, it's monopoly bubble money, and you're kicking them out because they're fixed income doesn't match the real estate market values (which may be unrealistic in a bubble). If you're truly wealthy, and want to preserve the property, then you'll have many options to transition even fairly illiquid assets to keep a property.
- aianus 9y ago
  I don't agree it's hair-splitting. You can't get kicked out by surprise by repealing Prop 13 unless you've enjoyed huge capital gains and are therefore likely rich. It would make no difference for poor people who don't own property that was acquired at low cost many years ago. It's really the opposite situation of what you said.
  - tehlike 9y ago
    At the rates real estate prices are rising in bay area, you would be kicking people out of where they called home for years. Whether they sit on huge gains or not is irrelevant, they wouldnt be able to afford it.
  - dv_dt 9y ago
    That capital gain isn't accessible unless there is a sale. If its a sale because the owner can't afford the property tax it is likely someone with limited/fixed income. Once you force a sale, a buyer, rich enough to buy the home takes ownership, they have exactly the same incentive to approve or disapprove new homes as the original owner. The person you've forced out on the other hand, now pays the tax, the transfer costs with a real estate agent and likely repair costs on the home, has the same fixed income, and now has to find a home to live in, but now has 5-10% less capital to work with then they had before. It's a bubble, and likely real estate costs in the near area are just as high. So what has been accomplished at the end of this other than harming the living situation of the original property owner and kicking out someone of limited income for someone with more income?
    - aianus 9y ago
      What's accomplished is that productive workers can live close to work instead of the double whammy of having a long commute and paying extra to subsidize rich people that don't work. The fact that some people have been there longer than others shouldn't absolve them of their duty to pay their fair share of taxes based on the value of their property.
      - deleted 9y ago
        [deleted]
    - JamesBarney 9y ago
      The seller will maybe pay 7-8% in terms of transaction costs. Lets assume a 30% increase in a house payments is enough to kick someone out. The costs of a typical house costs 6%(mortgage + taxes + insurance + repairs). That's means you need $1,000 a month for a 200k house.(Seems reasonable). Avg. California property taxes are 1.25%. So for that to increase your total payments by 30% you would need your house' value to increase $288,000 before it knocked you out of house and home. Of course with the 8% in transactions costs you leave with a modest $260k in profit. I might be heartless but it's hard for me to feel too much sympathy for this individual.
      - dv_dt 9y ago
        260k in profit which needs to be rolled into a place to live in the same market that just kicked you out of your home...
        xyzzyz 9y ago
        Not the same market -- in some saner market somewhere else. That's the whole point of the exercise.
        pyrale 9y ago
        So the goal is to make the poor go away, in a place that will have less economic opportunities ?
pyrale 9y ago
Are you asserting that the tax won't be passed down to renters ? It is indeed a sort by cash flow, but whether you own the place or not won't impact the decision.

by aianus 9y ago

dv_dt 9y ago

I think you're splitting silly hairs - technically its anyone with bad cash flow. If someone has no liquid assets and their "wealth" is only tied in the property they're living in, it's monopoly bubble money, and you're kicking them out because they're fixed income doesn't match the real estate market values (which may be unrealistic in a bubble). If you're truly wealthy, and want to preserve the property, then you'll have many options to transition even fairly illiquid assets to keep a property.

aianus 9y ago
I don't agree it's hair-splitting. You can't get kicked out by surprise by repealing Prop 13 unless you've enjoyed huge capital gains and are therefore likely rich. It would make no difference for poor people who don't own property that was acquired at low cost many years ago. It's really the opposite situation of what you said.
- tehlike 9y ago
  At the rates real estate prices are rising in bay area, you would be kicking people out of where they called home for years. Whether they sit on huge gains or not is irrelevant, they wouldnt be able to afford it.
- dv_dt 9y ago
  That capital gain isn't accessible unless there is a sale. If its a sale because the owner can't afford the property tax it is likely someone with limited/fixed income. Once you force a sale, a buyer, rich enough to buy the home takes ownership, they have exactly the same incentive to approve or disapprove new homes as the original owner. The person you've forced out on the other hand, now pays the tax, the transfer costs with a real estate agent and likely repair costs on the home, has the same fixed income, and now has to find a home to live in, but now has 5-10% less capital to work with then they had before. It's a bubble, and likely real estate costs in the near area are just as high. So what has been accomplished at the end of this other than harming the living situation of the original property owner and kicking out someone of limited income for someone with more income?
  - aianus 9y ago
    What's accomplished is that productive workers can live close to work instead of the double whammy of having a long commute and paying extra to subsidize rich people that don't work. The fact that some people have been there longer than others shouldn't absolve them of their duty to pay their fair share of taxes based on the value of their property.
    - deleted 9y ago
      [deleted]
  - JamesBarney 9y ago
    The seller will maybe pay 7-8% in terms of transaction costs. Lets assume a 30% increase in a house payments is enough to kick someone out. The costs of a typical house costs 6%(mortgage + taxes + insurance + repairs). That's means you need $1,000 a month for a 200k house.(Seems reasonable). Avg. California property taxes are 1.25%. So for that to increase your total payments by 30% you would need your house' value to increase $288,000 before it knocked you out of house and home. Of course with the 8% in transactions costs you leave with a modest $260k in profit. I might be heartless but it's hard for me to feel too much sympathy for this individual.
    - dv_dt 9y ago
      260k in profit which needs to be rolled into a place to live in the same market that just kicked you out of your home...
      - xyzzyz 9y ago
        Not the same market -- in some saner market somewhere else. That's the whole point of the exercise.
        pyrale 9y ago
        So the goal is to make the poor go away, in a place that will have less economic opportunities ?

pyrale 9y ago

Are you asserting that the tax won't be passed down to renters ? It is indeed a sort by cash flow, but whether you own the place or not won't impact the decision.