4 ms·

> huge money source for local home owners, who are the demographic setting the local policies. And why do you think this? A home is one of the least liquid ass

> huge money source for local home owners, who are the demographic setting the local policies. And why do you think this? A home is one of the least liquid assets one can own. It’s not a huge money source. It’s not even a money source home owners at all.

hfern 7y ago
Because a housing crisis leads to skyrocketing home values. They benefit from increased housing prices. Further, any countering increase in property taxes is dampened by Prop 13. So there is very little reason to sell and cash-in vs just holding on for longer as the problem worsens. When you are a homeowner with an expensive house, you don't want more homes built. That will increase supply and lower price.
- sjg007 7y ago
  You actually do want more homes built because that will attract more services and the cost of living will go down.
  - pwinnski 7y ago
    Convince California homeowners of that. Good luck!
  - hasbot 7y ago
    That's not true. More homes require more/better infrastructure (e.g. water, sewage, roadways). Infrastructure improvements cost massive amounts of money meaning tax increases.
    - sjg007 7y ago
      More customers means more businesses, a wider tax base.
      - hasbot 7y ago
        Infrastructure costs far far outweigh tax increases. Portland's East Side Big Pipe built to reduce the amount of sewage going into the river cost $1.4 billion paid by real-estate taxes.
        sjg007 7y ago
        Chicken-Egg
        hasbot 7y ago
        I don't see a chicken-egg problem here at all. Please explain.
  - llampx 7y ago
    How does having more services result in lower col?
- ryandrake 7y ago
  As a Bay Area single-family home owner, I do not see how I am benefiting from increased housing prices. I have lived in my home for almost 10 years and expect to live in it for another 20. I don't rent it out or derive any income from it. My home is not a "money source". The only visible effect of increasing home prices in my neighborhood is a slight increase in my tax bill every year. It's arguably unfair that Prop 13 means my tax bill doesn't go up more proportionally, and that people who bought 20 years ago pay a tiny fraction of what I pay, but that's a topic for a different thread. I don't even know how much my house is worth anymore. I don't care. It doesn't affect my life at all. I'd oppose a 100 unit high-rise apartment being built next door to me not because of housing prices, but because there'd be 100 more cars on my street which is made for far fewer. There'd be 100 more noisy neighbors partying at all hours. There'd be 100 more kids in my daughter's already overcrowded school. I'm not a real estate investor. I don't care about supply and demand and market prices and all that crap.
  - AnthonyMouse 7y ago
    > As a Bay Area single-family home owner, I do not see how I am benefiting from increased housing prices. I have lived in my home for almost 10 years and expect to live in it for another 20. I don't rent it out or derive any income from it. My home is not a "money source". Most people buy a larger house while raising a family, then sell it for a smaller one after the kids grow up. The increase in price funds much of their retirement. (This is basically a pyramid scheme, but when the population actually looked more like a pyramid than it does now, it mostly worked. This is now breaking down but a lot of people haven't accepted that yet.) Moreover, even while you continue to live in your house, having more equity allows you to take out a home equity loan to e.g. send your kids to college. > I'd oppose a 100 unit high-rise apartment being built next door to me not because of housing prices, but because there'd be 100 more cars on my street which is made for far fewer. There'd be 100 more noisy neighbors partying at all hours. There'd be 100 more kids in my daughter's already overcrowded school. I'm not a real estate investor. I don't care about supply and demand and market prices and all that crap. Nobody is saying that there shouldn't exist single family homes. The problem is that the landscape is covered in them and we need to convert some percentage of that land into higher density housing. You may not like that to be your house, but take consolation in the fact that if it is, the value of your land will increase significantly (because someone will want to buy it and put up a high rise), and then you can take the money and buy a different single family home in an area still zoned for lower density. And have hundreds of thousands of dollars left over to use for whatever you want as compensation for your trouble, because a single family home in the area still zoned for lower density won't cost you as much as you got for your existing one which is now zoned for higher density.
- dev_dull 7y ago
  > Because a housing crisis leads to skyrocketing home values. They benefit from increased housing prices. That’s the point I’m trying to make. A home’s value is NOT liquid. You can’t extract any portion of it until you move. And you have to move AWAY to get that value. The best you get is a relatively low interest HELOC but that’s hardly a money maker. In fact a lot of people are stuck in their homes for that reason. Any move would be a 5x or 10x change in property tax bill.
  - Kalium 7y ago
    > The best you get is a relatively low interest HELOC but that’s hardly a money maker. When your home is appreciating faster than the interest rate combined with property tax rate, it definitely can be a money maker.
    - dev_dull 7y ago
      You’re taking a loan out. How’s does it “make” money without negative interest rate? And I missing something??
      - Kalium 7y ago
        You have an asset. It's worth $1000. You borrow $1000 against it. The next year, after taxes and interest, you owe $1050. Meanwhile, the asset is now worth $1100. Your net worth has gone up and you have turned that appreciation into extra money to spend. You can do the same thing the next year, and your asset will be taxed as if it's worth $1010, and your net position is still in the black. What you've perhaps missed, I think, is that property tax rates in CA don't scale with appreciation.
  - triceratops 7y ago
    > Any move would be a 5x or 10x change in property tax bill. Nope. Prop 13 allows moves in the same county with no change as long as the new places is of equal or lesser value.
ryan93 7y ago
Obviously people would rather have a home worth 2 million than 1 million even if its illiquid
Kalium 7y ago
It's a very valuable source of equity one can borrow against, especially if it is taxed at a value far below its actual market value.
- mywittyname 7y ago
  > It's a very valuable source of equity one can borrow against ...At insanely favorable rates. A person in SF could build quite the nest egg by doing a cash-out refi every year and investing the proceeds.
luckydata 7y ago
You don't exactly day trade houses but it's not that difficult to sell one, otherwise we wouldn't have so many real estate agents. It's a HUGE money source in two ways: who got to a heavily gentrified area first and bought a cheap house, reaped the benefits of good jobs and increasing values for years, especially with how California sets real estate taxes. After 20-30 years of tax-free appreciation they can sell their once 500k house for 2.5M and move to a lower cost of living area. IF you're from around here and didn't notice this pattern then you need to be paying a little more attention.
authoritarian 7y ago
Anecdotally, since I purchased my house in the summer of 2016 in the PNW, it has appreciated nearly 50%. That's a 6 figure increase just because of the area I live in, and I've done virtually nothing to the home

hfern 7y ago

Because a housing crisis leads to skyrocketing home values. They benefit from increased housing prices. Further, any countering increase in property taxes is dampened by Prop 13. So there is very little reason to sell and cash-in vs just holding on for longer as the problem worsens. When you are a homeowner with an expensive house, you don't want more homes built. That will increase supply and lower price.

sjg007 7y ago
You actually do want more homes built because that will attract more services and the cost of living will go down.
- pwinnski 7y ago
  Convince California homeowners of that. Good luck!
- hasbot 7y ago
  That's not true. More homes require more/better infrastructure (e.g. water, sewage, roadways). Infrastructure improvements cost massive amounts of money meaning tax increases.
  - sjg007 7y ago
    More customers means more businesses, a wider tax base.
    - hasbot 7y ago
      Infrastructure costs far far outweigh tax increases. Portland's East Side Big Pipe built to reduce the amount of sewage going into the river cost $1.4 billion paid by real-estate taxes.
      - sjg007 7y ago
        Chicken-Egg
        hasbot 7y ago
        I don't see a chicken-egg problem here at all. Please explain.
- llampx 7y ago
  How does having more services result in lower col?
ryandrake 7y ago
As a Bay Area single-family home owner, I do not see how I am benefiting from increased housing prices. I have lived in my home for almost 10 years and expect to live in it for another 20. I don't rent it out or derive any income from it. My home is not a "money source". The only visible effect of increasing home prices in my neighborhood is a slight increase in my tax bill every year. It's arguably unfair that Prop 13 means my tax bill doesn't go up more proportionally, and that people who bought 20 years ago pay a tiny fraction of what I pay, but that's a topic for a different thread. I don't even know how much my house is worth anymore. I don't care. It doesn't affect my life at all. I'd oppose a 100 unit high-rise apartment being built next door to me not because of housing prices, but because there'd be 100 more cars on my street which is made for far fewer. There'd be 100 more noisy neighbors partying at all hours. There'd be 100 more kids in my daughter's already overcrowded school. I'm not a real estate investor. I don't care about supply and demand and market prices and all that crap.
- AnthonyMouse 7y ago
  > As a Bay Area single-family home owner, I do not see how I am benefiting from increased housing prices. I have lived in my home for almost 10 years and expect to live in it for another 20. I don't rent it out or derive any income from it. My home is not a "money source". Most people buy a larger house while raising a family, then sell it for a smaller one after the kids grow up. The increase in price funds much of their retirement. (This is basically a pyramid scheme, but when the population actually looked more like a pyramid than it does now, it mostly worked. This is now breaking down but a lot of people haven't accepted that yet.) Moreover, even while you continue to live in your house, having more equity allows you to take out a home equity loan to e.g. send your kids to college. > I'd oppose a 100 unit high-rise apartment being built next door to me not because of housing prices, but because there'd be 100 more cars on my street which is made for far fewer. There'd be 100 more noisy neighbors partying at all hours. There'd be 100 more kids in my daughter's already overcrowded school. I'm not a real estate investor. I don't care about supply and demand and market prices and all that crap. Nobody is saying that there shouldn't exist single family homes. The problem is that the landscape is covered in them and we need to convert some percentage of that land into higher density housing. You may not like that to be your house, but take consolation in the fact that if it is, the value of your land will increase significantly (because someone will want to buy it and put up a high rise), and then you can take the money and buy a different single family home in an area still zoned for lower density. And have hundreds of thousands of dollars left over to use for whatever you want as compensation for your trouble, because a single family home in the area still zoned for lower density won't cost you as much as you got for your existing one which is now zoned for higher density.
dev_dull 7y ago
> Because a housing crisis leads to skyrocketing home values. They benefit from increased housing prices. That’s the point I’m trying to make. A home’s value is NOT liquid. You can’t extract any portion of it until you move. And you have to move AWAY to get that value. The best you get is a relatively low interest HELOC but that’s hardly a money maker. In fact a lot of people are stuck in their homes for that reason. Any move would be a 5x or 10x change in property tax bill.
- Kalium 7y ago
  > The best you get is a relatively low interest HELOC but that’s hardly a money maker. When your home is appreciating faster than the interest rate combined with property tax rate, it definitely can be a money maker.
  - dev_dull 7y ago
    You’re taking a loan out. How’s does it “make” money without negative interest rate? And I missing something??
    - Kalium 7y ago
      You have an asset. It's worth $1000. You borrow $1000 against it. The next year, after taxes and interest, you owe $1050. Meanwhile, the asset is now worth $1100. Your net worth has gone up and you have turned that appreciation into extra money to spend. You can do the same thing the next year, and your asset will be taxed as if it's worth $1010, and your net position is still in the black. What you've perhaps missed, I think, is that property tax rates in CA don't scale with appreciation.
- triceratops 7y ago
  > Any move would be a 5x or 10x change in property tax bill. Nope. Prop 13 allows moves in the same county with no change as long as the new places is of equal or lesser value.

ryan93 7y ago

Obviously people would rather have a home worth 2 million than 1 million even if its illiquid

Kalium 7y ago

It's a very valuable source of equity one can borrow against, especially if it is taxed at a value far below its actual market value.

mywittyname 7y ago
> It's a very valuable source of equity one can borrow against ...At insanely favorable rates. A person in SF could build quite the nest egg by doing a cash-out refi every year and investing the proceeds.

luckydata 7y ago

You don't exactly day trade houses but it's not that difficult to sell one, otherwise we wouldn't have so many real estate agents. It's a HUGE money source in two ways: who got to a heavily gentrified area first and bought a cheap house, reaped the benefits of good jobs and increasing values for years, especially with how California sets real estate taxes. After 20-30 years of tax-free appreciation they can sell their once 500k house for 2.5M and move to a lower cost of living area. IF you're from around here and didn't notice this pattern then you need to be paying a little more attention.

authoritarian 7y ago

Anecdotally, since I purchased my house in the summer of 2016 in the PNW, it has appreciated nearly 50%. That's a 6 figure increase just because of the area I live in, and I've done virtually nothing to the home