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If prices continue to rise, they will put even more pressure on couples to leave SFBA once they retire and don't need to be within commuting distance of the maj

by nugget 8y ago

If prices continue to rise, they will put even more pressure on couples to leave SFBA once they retire and don't need to be within commuting distance of the major tech companies. It could become extremely rare to see any retirees at all in the area, which could have downstream affects on where their kids and other relatives move or stay.

slezakattack 8y ago
You mean like retirees like baby boomers or way in the future retirees? As long as Prop 13 stays around, you have quite a few retirees who've been in their current home for 40+ years and only pay like $700 in property taxes a year. They won't go anywhere and in fact are incentivized to stay.
- nugget 8y ago
  Today, when a house in SFBA is $2 million and a comparable house in Arizona is $400k, yes. But if prices continue to diverge, then the math could change. What happens if trends continue and SFBA is $4 million and Arizona is $600k? The foregone return on "dead" home equity (once prices do hit a ceiling and appreciation slows) can rapidly outpace any differential in property taxes. IIRC there's also some portability of proposition 13 tax basis within California, which would allow retirees to relocate intrastate, which would presumably create inflationary pressure in those secondary housing markets.
troygoode 8y ago
Prop 13 means you're heavily incentivized to stay in your home as a retiree and not move (even if it is "too much" home for you). If you're going to move, its almost certainly out of California entirely – but that is often not a practical option given friends & family nearby.
- refurb 8y ago
  What do you do when you need to pull the equity out of your home to retire? Reverse mortgage?
  - troygoode 8y ago
    Well your kids can't afford to buy their own home so they probably live with you and help with expenses...
  - bradlys 8y ago
    Yes, reverse mortgage. My SO's grandmother did this. Sucks for the kids - as they won't get to inherit a really expensive home with extremely low tax burden (prop 13 continues the low tax burden to those who inherit the property). Banks are so happy to do these right now.

by nugget 8y ago

slezakattack 8y ago

You mean like retirees like baby boomers or way in the future retirees? As long as Prop 13 stays around, you have quite a few retirees who've been in their current home for 40+ years and only pay like $700 in property taxes a year. They won't go anywhere and in fact are incentivized to stay.

nugget 8y ago
Today, when a house in SFBA is $2 million and a comparable house in Arizona is $400k, yes. But if prices continue to diverge, then the math could change. What happens if trends continue and SFBA is $4 million and Arizona is $600k? The foregone return on "dead" home equity (once prices do hit a ceiling and appreciation slows) can rapidly outpace any differential in property taxes. IIRC there's also some portability of proposition 13 tax basis within California, which would allow retirees to relocate intrastate, which would presumably create inflationary pressure in those secondary housing markets.

troygoode 8y ago

Prop 13 means you're heavily incentivized to stay in your home as a retiree and not move (even if it is "too much" home for you). If you're going to move, its almost certainly out of California entirely – but that is often not a practical option given friends & family nearby.

refurb 8y ago
What do you do when you need to pull the equity out of your home to retire? Reverse mortgage?
- troygoode 8y ago
  Well your kids can't afford to buy their own home so they probably live with you and help with expenses...
- bradlys 8y ago
  Yes, reverse mortgage. My SO's grandmother did this. Sucks for the kids - as they won't get to inherit a really expensive home with extremely low tax burden (prop 13 continues the low tax burden to those who inherit the property). Banks are so happy to do these right now.