8 ms·

The principal issue, full stop, in the Bay Area and most of California is housing. There are two solutions to this: 1) Build more. But this is outrageously di

The principal issue, full stop, in the Bay Area and most of California is housing. There are two solutions to this: 1) Build more. But this is outrageously difficult due to a well-meaning political view of safety / fairness / etc. These restrictions employ an awful lot of bureaucrats for enforcement but add $10s of thousands in fees and delays for builders, that are IRR driven and would rather concentrate their efforts in more favorable markets (1) 2) Prop 13. For those unfamiliar this essentially locks in property taxes at the owner's basis (with a maximum 2% adjustment for inflation). Meaning if in Silicon Valley you bought a house for $250,000 in the 1990s that's now worth $2,000,000 you're paying about $3,000 a year on taxes instead of $30,000 a year in taxes your next door neighbor is paying that just bought in. Oh and if you sell your house, and then buy a new house that's less than you sold your old house for, you get to transfer the low tax basis! This was put into law due to the "sentiment that older Californians should not be priced out of their homes through high taxes" which I think is noble, but it's also not realistic or fair. In many Bay Area neighborhoods you have a bizarre composition of young families hanging by their fingernails to pay for these "entitlements" for the retirees, and then the retirees that have a gigantic financial incentive to stay put which minimizes inventory and inflates home prices. - - - - 1 - http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou... 2 - https://en.wikipedia.org/wiki/California_Proposition_13_(1978) https://en.wikipedia.org/wiki/California_Proposition_13_(197...

dev_dull 8y ago
They can also do things like re-zoning, or ending absurd and antiquated setback rules which require me to keep 700 sqft of dead grass in front of my house instead of more home.
bigdubs 8y ago
Some extra color on Prop 13; a more sinister view is that it was a time bomb designed to "starve the beast" and limit tax revenues in the future.
- jjeaff 8y ago
  California doesn't seem very interested in starving the beast overall. So it seems unlikely the motivation of this prop was that.
  - bigdubs 8y ago
    If that was the prevailing opinion, and your goal was to limit tax revenue, you would need to get creative and Prop 13 is just that.
  - johnmyleswhite 8y ago
    Prop 13 passed when California was a red state: http://www.latimes.com/projects/la-pol-ca-california-voting-history/ http://www.latimes.com/projects/la-pol-ca-california-voting-...
    - jjeaff 8y ago
      And the prevailing reason for that prop (and the reason it passed) was to keep from pricing the elderly out of their homes. Not "starving the beast".
- claydavisss 8y ago
  What time bomb? California tax receipts showed a $9 billion surplus this past tax year. The state is collecting more revenue than ever.
frgtpsswrdlame 8y ago
There's a third option which is encouraging people to move elsewhere.
- jpao79 8y ago
  There is likely some truth to this as it encourages new housing stock to be built. I also suspect that it does lead to a more sustainable long term growth that's less likely to have major sell offs since owners will hold onto their property to maintain their tax advantage. I openly wonder if this is the reason that California housing, particularly in the Bay Area, did not implode during the dotcom bubble.
- claydavisss 8y ago
  This advice is sound yet still evokes silent rage (i.e. downvotes) on HN or reddit. The rest of the country is just fine. Decent jobs, nice people, reasonable mix of climate. One thing every other place in the entire country has in common relative to the Bay Area is cheaper housing. You might make 20% less in Seattle or Austin but you will have access to housing, which will have much a much more profound long-term impact on your finances than toughing it out as a renter in a "better" job market. If you wake up at 45 still renting, you can probably forget about anything resembling a traditional retirement.
pascalxus 8y ago
And, to add insult to injury: the ones paying 3000 a year in taxes rather than 30k, are the ones who made millions of dollars in equity off the gain. That's extremely Regressive and completely the opposite of what CA supposedly stands for: Progressive income taxes.
- ng12 8y ago
  What I don't understand is why they can pocket that appreciation. When you sell the taxman should come knocking for all the abatements you've received over the years.
  - refurb 8y ago
    Not sure why CA doesn't do what a lot of cities do. Tell homeowners they can either pay the higher property tax or put a lien on the property, payable when the house is sold (take it out of the appreciation). I agree it's ridiculous when the people getting tax breaks are the ones that made $1M on their home in a decade.
- aresant 8y ago
  That is a fascinating point that is obvious but until you said it outloud it hadn't crystallized for me. The problem for the retirees is quite often they have a fixed income - solution to "unlock" that equity is maybe it's held as a liability against the equity @ the eventual sale price.
- frgtpsswrdlame 8y ago
  I think the problem is that you're thinking of it in purely economic terms. Ending Prop 13 will increase home turnover because it prices people out of their homes but I don't think that's really what we want in our housing market. Telling people to think of their homes as a commodity upon which market forces should be brought to bear in order to ensure production of housing services at competitive prices is obtuse. People purchase property, rather than renting, largely to gain security and control, to escape the vicissitudes of the market. https://www.interfluidity.com/v2/6287.html https://www.interfluidity.com/v2/6287.html (It's actually a really good article, I would encourage others to read it for a contrarian view on housing deregulation.) People want to be able to buy a home and raise their kids or grow old in it. If your ideal market structure doesn't allow for that then you're missing the point.
andy-x 8y ago
Ending Prop. 13 will not solve anything. If more people want to live here they need to build more housing. You instead proposing to kick out people who already live here just because they cannot afford to pay much higher taxes. Sounds pretty close to genocide to me. And in the first place who said that taxes proportional to property prices is the best economically viable option? Are schools or police or roads become proportionally more expensive with rising property prices?
- twblalock 8y ago
  > Ending Prop. 13 will not solve anything. If more people want to live here they need to build more housing. You instead proposing to kick out people who already live here just because they cannot afford to pay much higher taxes. Sounds pretty close to genocide to me. Uh, no, that's nowhere close to genocide.
  - andy-x 8y ago
    Gentricide then :)
    - pscsbs 8y ago
      No.
internetman55 8y ago
Wouldn't it make sense to have higher taxes on old people? They have more significant money and wealth I believe.
- frgtpsswrdlame 8y ago
  Wouldn't it make sense to have higher taxes on tech workers? They have more significant money and wealth I believe. If you want to tax wealth or income just do it directly.
  - vertexFarm 8y ago
    Property taxes are indeed a direct tax on one of the most significant forms of wealth in the US. Most equity for the average American family is their home. It doesn't make sense to tax people with greater property and generational wealth a tenth as much as younger people with less wealth. And yes, there should be and are higher taxes on tech workers, inasmuch that there should be and are higher taxes on people with greater incomes. To an extent, at least. That is also directly taxing income, as you said. We've already seen the prosperity of the mid-20th century in regards to high upper tax rates and social spending, and we've seen the Kansas tax cut experiments when it comes to dropping them all and absolutely ruining the state. These aren't theories or opinions anymore, they are fact. To clarify, I don't think taxes should be based on age or anything. But when you have something like prop 13, it isn't explicitly worded to tax people based on youth, but that is the obvious outcome of the situation. And that's ridiculous. A wise nation do not devour their young.
- CodeCube 8y ago
  it should absolutely not be based on age ... some old people are quite poor, while some young people are quite wealthy.
segmondy 8y ago
It's not just SV that has similiar stuff to Prop 13, most places do so. If not, the locals will simply have to pack up and move just because their property value went up which can be quite disruptive. I personally think it's fair. You shouldn't be forced to move out of a city you are rooted in where you have family and friends. Imagine getting old and deciding you wish to downsize to a smaller house because all the kids are grown. Do you want to start over in a new city when you are now replying on retirement income and are old? Of course not. That's what Prop 13 tries to stop. I don't consider it entitlement, it sucks to not be at the receiving end, but hey that's the gain for being their first. BTW, I don't live in the Bay area and never have. I live in Detroit area and we have this same rubbish and I've had to pay 3x property tax of folks who own 5x the value of my property. It sucks but I understand.
- nerfhammer 8y ago
  But this also means that without prop 13 or something like it local homeowners would have every reason to try to keep housing prices at sane levels rather than trying to get them as high as possible, would it not?
  - andy-x 8y ago
    Short answer: no.
    - mavelikara 8y ago
      Why?
    - andromeduck 8y ago
      Why's that?
  - slezakattack 8y ago
    I'm not a fan of Prop 13 and I've considered what the effects would be if it was phased out in some way. I really wanted to gain a better understanding of the housing climate back in the 70's when this proposition came to pass. Apparently it was really, really bad. Found this NYT article from 1981 that did a pretty good job outlining what was happening[1]. I don't think we can possibly go along without it but I don't understand why Prop 13 has to be applied to businesses, landlords, and investors buying up as non-primary residences... [1] https://www.nytimes.com/1981/08/17/opinion/housing-boom-goes-bust-in-los-angeles.html https://www.nytimes.com/1981/08/17/opinion/housing-boom-goes...
slg 8y ago
Prob 13 is meant to address the first issue. Repealing prob 13 would cause the existing housing to be redistributed in a new way, but it wouldn't address the underlying need for more housing. All it would do is speed up gentrification.
- ThrustVectoring 8y ago
  Barriers to movement causes an inefficient use of housing with respect to commutes and job sites. Someone locked in to a house in Mountain View with a job in SF cannot trade houses with someone locked in to a house in SF with a job in Mountain View - not without a huge increase in property taxes. The redistribution gets rid of a deadweight loss in commuting, easing traffic and transit congestion and allowing more housing to be within commuting distance of jobs.
  - slg 8y ago
    Sure, but that is just a symptom of the overall problem. We aren't going to get anywhere by just treating the symptoms while ignoring the cause of the problem that there are more people than there are places for them to live.
    - lern_too_spel 8y ago
      Repealing Prop 13 also removes another impediment to increasing housing stock. People who already own property and don't feel the effects of quickly increasing property prices will vote against new development more often than people who have to pay higher taxes when property values go up.
      - slg 8y ago
        That argument relies on somewhat circular logic. You say one cause is that home owners don't want new housing. You solve that by repealing prop 13 giving them a financial stake in the market value of homes. However, why would the home owners support that repeal if they are against new housing in the first place? Either the home owners are against new housing or they aren't. If your suggestion was a feasible solution to the problem, it would prove that that your proposed cause was not actually the cause of the problem.
sulam 8y ago
Forget older Californians, you can get priced out of your house just from property value increases in the last decade! Also keep in mind that there's no great system for appraising houses. As someone who has bought two houses and sold one, the appraisal system comes down to "can I find a few houses in this neighborhood that have roughly equivalent room count and square footage that have sold in the last 6 months." So now you hate your neighbors for moving out, you hate the new neighbors for paying whatever market rate is, and you start having to figure out how to move to Sacramento and whether or not you'll be able to get a teaching, policing, fire, nursing, etc job there -- all this despite the fact that you may not actually be able to sell your house for even 80% of what the appraised value is. What Prop 13 did was to say "the best indicator of the value of your property is the amount the market settled on at the last transaction". It also tries to cover some edge cases (the biggest of which is the McMansion remodel -- look at Palo Alto where $2M gets you a teardown and then you build a $6M house on the lot). Still seems reasonable to me, although of course it's not perfect.
- twblalock 8y ago
  The problem is the last transaction might have been decades ago. This leads to some people paying several times as much property tax as their neighbors who own houses of similar market values, simply because their neighbors bought their homes years earlier. That's not reasonable. It also means you could sell your home, move across town into a home that costs the same as the one you sold, and your property tax could quadruple. That's not reasonable either.
  - sulam 8y ago
    Both of those things sound imminently reasonable compared to the alternatives, at least to me. Both of those things are a product of choices that a market-participant made. The alternative pre-Prop 13 was that a non-participant was financially affected by the behavior of their neighbors. In the scale of reasonableness, this is less reasonable than life under Prop 13.
    - twblalock 8y ago
VirtualAirwaves 8y ago
I'm all for building more housing. Lots more housing! But Prop 13 is not to blame! Inflation hasn't been at 2%/year, yet property taxes rise 2%/year every year. California already has the highest income tax and the highest sales tax in the Nation. Do we need the highest property tax, too? Right now it's right at about the median. That's fine. Just because someone was stupid enough to pay $3,000,000 for a 1800 sq/ft home in Sunnyvale doesn't mean the people living next door need to have their property taxes raised from $3000 to $30,000/year. Anyone who thinks so is pure evil.
flog 8y ago
$3,000 sounds almost reasonable for property taxes. $30,000 sounds like daylight robbery.
- pm90 8y ago
  On a $2 mil FMV? Give me a break.
  - bluedino 8y ago
    If they are both 1500 sq ft homes, what makes the other house $27,000 more taxable? Are you getting that much more municipal service?
    - francisofascii 8y ago
      Municipal services is not the point of property taxes. It is a fee paid to the community for occupying that space of land. It makes sense for the fee to be based on the desirability or value of that land.
almost_usual 8y ago
I think the transferring of the low tax basis is bogus but Prop 13 does protect blue collar families. I personally know someone who works for a low hourly wage and now owns his home he bought in the 1970s. If he did not have those tax protections he would lose the home he raised his family in and have to move immediately. I understand it's frustrating to outsiders who are new to the city and are trying to "make it" but forcing families out of their homes isn't right.
- kcorbitt 8y ago
  How would your friend feel about property taxes that scale with market value, but can be deferred until the moment the home is sold, at which point the deferred taxes are paid from the home's appreciation? We could even add a provision capping the maximum tax bill to the actual amount of appreciation since the home was bought. That way nobody is priced out of their home, but the taxes to pay for services that everybody uses are still distributed equitably among all residents.
  - almost_usual 8y ago
    "How would your friend feel about property taxes that scale with market value, but can be deferred until the moment the home is sold" I can't speak for him but this makes sense to me.
  - andromeduck 8y ago
    I think that would be an essential part of a comprehensive solution but on it's own wouldn't incentivize efficient land use in the interim.
  - patmcguire 8y ago
    Housing changes hands much less because the tax gap means all other factors things being equal the house is worth more to the seller than the buyer - they can't live in a similar place for the same money. Deferring taxes just makes that gap in value bigger. And there's not necessarily a point where the city gets money for services, tax rates are passed down with inherited housing.
- 8y ago
claydavisss 8y ago
Ending Prop 13 would eventually result in 20% of the state's homeowners being forced to sell and become renters. The US is full of affordable housing in places that are not (despite what you might think) utter cultural wastelands. Do not wait for Prop 13 to be repealed, you will be in your grave before that happens.
- eli_gottlieb 8y ago
  >The US is full of affordable housing in places that are not (despite what you might think) utter cultural wastelands. Have you considered that some people might be attached to locations in the urban core for pretty much the same reasons you're attached to those non-wastelands in Middle America? For instance, family history, or workplaces that don't do remote work.
jorgen123 8y ago
I think this is too narrow a view, covering only the supply side. What about demand? Why does everybody only want to live on the peninsula? Traffic is a big factor there. We have a total and complete lack of modern/fast public transport reaching out into the outlying areas and unlocking their potential.
bedhead 8y ago
Wow it's almost like the free market could've solved this problem but government laws got in the way and distorted everything and caused more problems than they solved. Weird.

dev_dull 8y ago

They can also do things like re-zoning, or ending absurd and antiquated setback rules which require me to keep 700 sqft of dead grass in front of my house instead of more home.

bigdubs 8y ago

Some extra color on Prop 13; a more sinister view is that it was a time bomb designed to "starve the beast" and limit tax revenues in the future.

jjeaff 8y ago
California doesn't seem very interested in starving the beast overall. So it seems unlikely the motivation of this prop was that.
- bigdubs 8y ago
  If that was the prevailing opinion, and your goal was to limit tax revenue, you would need to get creative and Prop 13 is just that.
- johnmyleswhite 8y ago
  Prop 13 passed when California was a red state: http://www.latimes.com/projects/la-pol-ca-california-voting-history/ http://www.latimes.com/projects/la-pol-ca-california-voting-...
  - jjeaff 8y ago
    And the prevailing reason for that prop (and the reason it passed) was to keep from pricing the elderly out of their homes. Not "starving the beast".
claydavisss 8y ago
What time bomb? California tax receipts showed a $9 billion surplus this past tax year. The state is collecting more revenue than ever.

frgtpsswrdlame 8y ago

There's a third option which is encouraging people to move elsewhere.

jpao79 8y ago
There is likely some truth to this as it encourages new housing stock to be built. I also suspect that it does lead to a more sustainable long term growth that's less likely to have major sell offs since owners will hold onto their property to maintain their tax advantage. I openly wonder if this is the reason that California housing, particularly in the Bay Area, did not implode during the dotcom bubble.
claydavisss 8y ago
This advice is sound yet still evokes silent rage (i.e. downvotes) on HN or reddit. The rest of the country is just fine. Decent jobs, nice people, reasonable mix of climate. One thing every other place in the entire country has in common relative to the Bay Area is cheaper housing. You might make 20% less in Seattle or Austin but you will have access to housing, which will have much a much more profound long-term impact on your finances than toughing it out as a renter in a "better" job market. If you wake up at 45 still renting, you can probably forget about anything resembling a traditional retirement.

pascalxus 8y ago

And, to add insult to injury: the ones paying 3000 a year in taxes rather than 30k, are the ones who made millions of dollars in equity off the gain. That's extremely Regressive and completely the opposite of what CA supposedly stands for: Progressive income taxes.

ng12 8y ago
What I don't understand is why they can pocket that appreciation. When you sell the taxman should come knocking for all the abatements you've received over the years.
- refurb 8y ago
  Not sure why CA doesn't do what a lot of cities do. Tell homeowners they can either pay the higher property tax or put a lien on the property, payable when the house is sold (take it out of the appreciation). I agree it's ridiculous when the people getting tax breaks are the ones that made $1M on their home in a decade.
aresant 8y ago
That is a fascinating point that is obvious but until you said it outloud it hadn't crystallized for me. The problem for the retirees is quite often they have a fixed income - solution to "unlock" that equity is maybe it's held as a liability against the equity @ the eventual sale price.
frgtpsswrdlame 8y ago
I think the problem is that you're thinking of it in purely economic terms. Ending Prop 13 will increase home turnover because it prices people out of their homes but I don't think that's really what we want in our housing market. Telling people to think of their homes as a commodity upon which market forces should be brought to bear in order to ensure production of housing services at competitive prices is obtuse. People purchase property, rather than renting, largely to gain security and control, to escape the vicissitudes of the market. https://www.interfluidity.com/v2/6287.html https://www.interfluidity.com/v2/6287.html (It's actually a really good article, I would encourage others to read it for a contrarian view on housing deregulation.) People want to be able to buy a home and raise their kids or grow old in it. If your ideal market structure doesn't allow for that then you're missing the point.

andy-x 8y ago

Ending Prop. 13 will not solve anything. If more people want to live here they need to build more housing. You instead proposing to kick out people who already live here just because they cannot afford to pay much higher taxes. Sounds pretty close to genocide to me. And in the first place who said that taxes proportional to property prices is the best economically viable option? Are schools or police or roads become proportionally more expensive with rising property prices?

twblalock 8y ago
> Ending Prop. 13 will not solve anything. If more people want to live here they need to build more housing. You instead proposing to kick out people who already live here just because they cannot afford to pay much higher taxes. Sounds pretty close to genocide to me. Uh, no, that's nowhere close to genocide.
- andy-x 8y ago
  Gentricide then :)
  - pscsbs 8y ago
    No.

internetman55 8y ago

Wouldn't it make sense to have higher taxes on old people? They have more significant money and wealth I believe.

frgtpsswrdlame 8y ago
Wouldn't it make sense to have higher taxes on tech workers? They have more significant money and wealth I believe. If you want to tax wealth or income just do it directly.
- vertexFarm 8y ago
  Property taxes are indeed a direct tax on one of the most significant forms of wealth in the US. Most equity for the average American family is their home. It doesn't make sense to tax people with greater property and generational wealth a tenth as much as younger people with less wealth. And yes, there should be and are higher taxes on tech workers, inasmuch that there should be and are higher taxes on people with greater incomes. To an extent, at least. That is also directly taxing income, as you said. We've already seen the prosperity of the mid-20th century in regards to high upper tax rates and social spending, and we've seen the Kansas tax cut experiments when it comes to dropping them all and absolutely ruining the state. These aren't theories or opinions anymore, they are fact. To clarify, I don't think taxes should be based on age or anything. But when you have something like prop 13, it isn't explicitly worded to tax people based on youth, but that is the obvious outcome of the situation. And that's ridiculous. A wise nation do not devour their young.
CodeCube 8y ago
it should absolutely not be based on age ... some old people are quite poor, while some young people are quite wealthy.

segmondy 8y ago

It's not just SV that has similiar stuff to Prop 13, most places do so. If not, the locals will simply have to pack up and move just because their property value went up which can be quite disruptive. I personally think it's fair. You shouldn't be forced to move out of a city you are rooted in where you have family and friends. Imagine getting old and deciding you wish to downsize to a smaller house because all the kids are grown. Do you want to start over in a new city when you are now replying on retirement income and are old? Of course not. That's what Prop 13 tries to stop. I don't consider it entitlement, it sucks to not be at the receiving end, but hey that's the gain for being their first. BTW, I don't live in the Bay area and never have. I live in Detroit area and we have this same rubbish and I've had to pay 3x property tax of folks who own 5x the value of my property. It sucks but I understand.

nerfhammer 8y ago
But this also means that without prop 13 or something like it local homeowners would have every reason to try to keep housing prices at sane levels rather than trying to get them as high as possible, would it not?
- andy-x 8y ago
  Short answer: no.
  - mavelikara 8y ago
    Why?
  - andromeduck 8y ago
    Why's that?
- slezakattack 8y ago
  I'm not a fan of Prop 13 and I've considered what the effects would be if it was phased out in some way. I really wanted to gain a better understanding of the housing climate back in the 70's when this proposition came to pass. Apparently it was really, really bad. Found this NYT article from 1981 that did a pretty good job outlining what was happening[1]. I don't think we can possibly go along without it but I don't understand why Prop 13 has to be applied to businesses, landlords, and investors buying up as non-primary residences... [1] https://www.nytimes.com/1981/08/17/opinion/housing-boom-goes-bust-in-los-angeles.html https://www.nytimes.com/1981/08/17/opinion/housing-boom-goes...

slg 8y ago

Prob 13 is meant to address the first issue. Repealing prob 13 would cause the existing housing to be redistributed in a new way, but it wouldn't address the underlying need for more housing. All it would do is speed up gentrification.

ThrustVectoring 8y ago
Barriers to movement causes an inefficient use of housing with respect to commutes and job sites. Someone locked in to a house in Mountain View with a job in SF cannot trade houses with someone locked in to a house in SF with a job in Mountain View - not without a huge increase in property taxes. The redistribution gets rid of a deadweight loss in commuting, easing traffic and transit congestion and allowing more housing to be within commuting distance of jobs.
- slg 8y ago
  Sure, but that is just a symptom of the overall problem. We aren't going to get anywhere by just treating the symptoms while ignoring the cause of the problem that there are more people than there are places for them to live.
  - lern_too_spel 8y ago
    Repealing Prop 13 also removes another impediment to increasing housing stock. People who already own property and don't feel the effects of quickly increasing property prices will vote against new development more often than people who have to pay higher taxes when property values go up.
    - slg 8y ago
      That argument relies on somewhat circular logic. You say one cause is that home owners don't want new housing. You solve that by repealing prop 13 giving them a financial stake in the market value of homes. However, why would the home owners support that repeal if they are against new housing in the first place? Either the home owners are against new housing or they aren't. If your suggestion was a feasible solution to the problem, it would prove that that your proposed cause was not actually the cause of the problem.

sulam 8y ago

Forget older Californians, you can get priced out of your house just from property value increases in the last decade! Also keep in mind that there's no great system for appraising houses. As someone who has bought two houses and sold one, the appraisal system comes down to "can I find a few houses in this neighborhood that have roughly equivalent room count and square footage that have sold in the last 6 months." So now you hate your neighbors for moving out, you hate the new neighbors for paying whatever market rate is, and you start having to figure out how to move to Sacramento and whether or not you'll be able to get a teaching, policing, fire, nursing, etc job there -- all this despite the fact that you may not actually be able to sell your house for even 80% of what the appraised value is. What Prop 13 did was to say "the best indicator of the value of your property is the amount the market settled on at the last transaction". It also tries to cover some edge cases (the biggest of which is the McMansion remodel -- look at Palo Alto where $2M gets you a teardown and then you build a $6M house on the lot). Still seems reasonable to me, although of course it's not perfect.

twblalock 8y ago
The problem is the last transaction might have been decades ago. This leads to some people paying several times as much property tax as their neighbors who own houses of similar market values, simply because their neighbors bought their homes years earlier. That's not reasonable. It also means you could sell your home, move across town into a home that costs the same as the one you sold, and your property tax could quadruple. That's not reasonable either.
- sulam 8y ago
  Both of those things sound imminently reasonable compared to the alternatives, at least to me. Both of those things are a product of choices that a market-participant made. The alternative pre-Prop 13 was that a non-participant was financially affected by the behavior of their neighbors. In the scale of reasonableness, this is less reasonable than life under Prop 13.
  - twblalock 8y ago

VirtualAirwaves 8y ago

I'm all for building more housing. Lots more housing! But Prop 13 is not to blame! Inflation hasn't been at 2%/year, yet property taxes rise 2%/year every year. California already has the highest income tax and the highest sales tax in the Nation. Do we need the highest property tax, too? Right now it's right at about the median. That's fine. Just because someone was stupid enough to pay $3,000,000 for a 1800 sq/ft home in Sunnyvale doesn't mean the people living next door need to have their property taxes raised from $3000 to $30,000/year. Anyone who thinks so is pure evil.

flog 8y ago

$3,000 sounds almost reasonable for property taxes. $30,000 sounds like daylight robbery.

pm90 8y ago
On a $2 mil FMV? Give me a break.
- bluedino 8y ago
  If they are both 1500 sq ft homes, what makes the other house $27,000 more taxable? Are you getting that much more municipal service?
  - francisofascii 8y ago
    Municipal services is not the point of property taxes. It is a fee paid to the community for occupying that space of land. It makes sense for the fee to be based on the desirability or value of that land.

almost_usual 8y ago

I think the transferring of the low tax basis is bogus but Prop 13 does protect blue collar families. I personally know someone who works for a low hourly wage and now owns his home he bought in the 1970s. If he did not have those tax protections he would lose the home he raised his family in and have to move immediately. I understand it's frustrating to outsiders who are new to the city and are trying to "make it" but forcing families out of their homes isn't right.

kcorbitt 8y ago
How would your friend feel about property taxes that scale with market value, but can be deferred until the moment the home is sold, at which point the deferred taxes are paid from the home's appreciation? We could even add a provision capping the maximum tax bill to the actual amount of appreciation since the home was bought. That way nobody is priced out of their home, but the taxes to pay for services that everybody uses are still distributed equitably among all residents.
- almost_usual 8y ago
  "How would your friend feel about property taxes that scale with market value, but can be deferred until the moment the home is sold" I can't speak for him but this makes sense to me.
- andromeduck 8y ago
  I think that would be an essential part of a comprehensive solution but on it's own wouldn't incentivize efficient land use in the interim.
- patmcguire 8y ago
  Housing changes hands much less because the tax gap means all other factors things being equal the house is worth more to the seller than the buyer - they can't live in a similar place for the same money. Deferring taxes just makes that gap in value bigger. And there's not necessarily a point where the city gets money for services, tax rates are passed down with inherited housing.
8y ago

claydavisss 8y ago

Ending Prop 13 would eventually result in 20% of the state's homeowners being forced to sell and become renters. The US is full of affordable housing in places that are not (despite what you might think) utter cultural wastelands. Do not wait for Prop 13 to be repealed, you will be in your grave before that happens.

eli_gottlieb 8y ago
>The US is full of affordable housing in places that are not (despite what you might think) utter cultural wastelands. Have you considered that some people might be attached to locations in the urban core for pretty much the same reasons you're attached to those non-wastelands in Middle America? For instance, family history, or workplaces that don't do remote work.

jorgen123 8y ago

I think this is too narrow a view, covering only the supply side. What about demand? Why does everybody only want to live on the peninsula? Traffic is a big factor there. We have a total and complete lack of modern/fast public transport reaching out into the outlying areas and unlocking their potential.

bedhead 8y ago

Wow it's almost like the free market could've solved this problem but government laws got in the way and distorted everything and caused more problems than they solved. Weird.