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The taxes themselves have to go down. Currently it's difficult to find a decent house in the Bay Area for less than $1m. That means you pay $1k/mo in taxes.

The taxes themselves have to go down. Currently it's difficult to find a decent house in the Bay Area for less than $1m. That means you pay $1k/mo in taxes. With out prop 13 that can go up arbitrarily. Soon only tech employees will be able to afford to live here. Maybe that's just what the Silicon Valley companies who are so adamant about repealing prop 13 want but even they will find it difficult when the service industry people are gone or living in ghetto block flats. I don't buy the argument that property values will drop of prop 13 is repealed.

ScottBurson 8y ago
Prop. 13 discourages cities from permitting residential construction, because commercial construction will bring them more tax revenue. While it's certainly not the only factor that has led to the Bay Area housing shortage, it's arguably a significant one. This article is 4 years old and mostly focused on San Francisco, but it still has a lot of good background: https://techcrunch.com/2014/04/14/sf-housing/ https://techcrunch.com/2014/04/14/sf-housing/
- jcoffland 8y ago
  Commercial construction can be held by a holding company indefinitely and avoid reassessment. It does not follow that cities should prefer commercial construction because of prop 13.
  - Gibbon1 8y ago
    > It does not follow that cities should prefer commercial construction because of prop 13. Two words: Sales taxes.
ubernostrum 8y ago
Proposition 13 provides an incredibly strong incentive not to sell property you own. This drives up prices in two ways. First, it reduces supply, since fewer people will be willing to take the property-tax hit of selling their existing property and buying something else. Second, it causes people who do sell to ask a higher price, in compensation for the tax benefit they're giving up by selling. Ending, or strongly reducing, the tax benefit for holding property would knock out both of these factors. If there's no massive tax penalty for selling, people will be more willing to sell, and if selling doesn't cost you a huge tax benefit, you don't feel as much need to inflate the price as compensation. When the supply of property increases, prices will go down. And when people no longer feel a need to ask inflated prices to make up for lost tax benefits, prices will go down. Additionally, the shock of the initial implementation and its effects would probably also have the additional effect of causing a smaller-scale 2008-style housing market crash, since many people currently rely on the "prices always go up, and always go up by a lot" model. This would initially be extremely harsh on people who paid $1m+ for small houses in not-particularly-great parts of the bay, and would certainly put them underwater on their mortgages, but any real solution to the bay area's housing crisis is going to involve that on some scale.
- jcoffland 8y ago
  House prices are not determined solely by the seller's feeling of what they ought to get. Demand matters. Assuming demand is either constant or increasing, thus the current problem, then supply must go up for prices to go down. Supply can be increased in two ways. First, by building more houses and second by people leaving the area. Prop 13 only reduces supply if it discourages people from leaving the area. If people move within the same area then supply stays the same. So, are you saying that you want to repeal prop 13 to drive people out of the Bay so that others can move in?
  - ubernostrum 8y ago
    House prices are not determined solely by the seller's feeling of what they ought to get. Lucky for me I didn't make that claim, then!
    - jcoffland 8y ago
      You did say: > Second, it causes people who do sell to ask a higher price, in compensation for the tax benefit they're giving up by selling. To me this implies that the seller can increase the sale price if they think they deserve more money.
      - ubernostrum 8y ago
        You inserted the word "solely", which is utterly unsupported by what I said, and seems pretty clear evidence of your intent not to engage with what I actually said. So I'm not going to bother trying to explain to you.
        jcoffland 8y ago
        Wow, that got combative quickly. I think if you could have heard my tone you wouldn't have been offended.
  - TheCoelacanth 8y ago

ScottBurson 8y ago

Prop. 13 discourages cities from permitting residential construction, because commercial construction will bring them more tax revenue. While it's certainly not the only factor that has led to the Bay Area housing shortage, it's arguably a significant one. This article is 4 years old and mostly focused on San Francisco, but it still has a lot of good background: https://techcrunch.com/2014/04/14/sf-housing/ https://techcrunch.com/2014/04/14/sf-housing/

jcoffland 8y ago
Commercial construction can be held by a holding company indefinitely and avoid reassessment. It does not follow that cities should prefer commercial construction because of prop 13.
- Gibbon1 8y ago
  > It does not follow that cities should prefer commercial construction because of prop 13. Two words: Sales taxes.

ubernostrum 8y ago

Proposition 13 provides an incredibly strong incentive not to sell property you own. This drives up prices in two ways. First, it reduces supply, since fewer people will be willing to take the property-tax hit of selling their existing property and buying something else. Second, it causes people who do sell to ask a higher price, in compensation for the tax benefit they're giving up by selling. Ending, or strongly reducing, the tax benefit for holding property would knock out both of these factors. If there's no massive tax penalty for selling, people will be more willing to sell, and if selling doesn't cost you a huge tax benefit, you don't feel as much need to inflate the price as compensation. When the supply of property increases, prices will go down. And when people no longer feel a need to ask inflated prices to make up for lost tax benefits, prices will go down. Additionally, the shock of the initial implementation and its effects would probably also have the additional effect of causing a smaller-scale 2008-style housing market crash, since many people currently rely on the "prices always go up, and always go up by a lot" model. This would initially be extremely harsh on people who paid $1m+ for small houses in not-particularly-great parts of the bay, and would certainly put them underwater on their mortgages, but any real solution to the bay area's housing crisis is going to involve that on some scale.

jcoffland 8y ago
House prices are not determined solely by the seller's feeling of what they ought to get. Demand matters. Assuming demand is either constant or increasing, thus the current problem, then supply must go up for prices to go down. Supply can be increased in two ways. First, by building more houses and second by people leaving the area. Prop 13 only reduces supply if it discourages people from leaving the area. If people move within the same area then supply stays the same. So, are you saying that you want to repeal prop 13 to drive people out of the Bay so that others can move in?
- ubernostrum 8y ago
  House prices are not determined solely by the seller's feeling of what they ought to get. Lucky for me I didn't make that claim, then!
  - jcoffland 8y ago
    You did say: > Second, it causes people who do sell to ask a higher price, in compensation for the tax benefit they're giving up by selling. To me this implies that the seller can increase the sale price if they think they deserve more money.
    - ubernostrum 8y ago
      You inserted the word "solely", which is utterly unsupported by what I said, and seems pretty clear evidence of your intent not to engage with what I actually said. So I'm not going to bother trying to explain to you.
      - jcoffland 8y ago
        Wow, that got combative quickly. I think if you could have heard my tone you wouldn't have been offended.
- TheCoelacanth 8y ago