8 ms·

I feel that the solution to the issue you raise is to reform property tax in CA, not to stick with Prop 13. Prop 13 definitely doesn't benefit people who don't

I feel that the solution to the issue you raise is to reform property tax in CA, not to stick with Prop 13. Prop 13 definitely doesn't benefit people who don't own real estate because property owners have an incentive not to sell: they can keep their lower tax rate and their expensive home! This restricts supply and raises property prices.

zepto 6y ago
Property prices in CA have risen because salaries and IPOs have enabled people to compete for property. Property owners should be able to keep an affordable tax and their home, regardless of what their home cost. Raising property taxes based on market values, is taxing people based on how much other people want their homes. I agree that property taxes should be reformed. Let’s not make houses even more risky and expensive to own. Instead, let’s fund public services in other ways, so school quality isn’t dependent on the average income bracket of the neighborhood, for example.
- tqi 6y ago
  Property owners are also artificially inflating their own home values by blocking any and all attempts to build more houses.
  - zepto 6y ago
    That’s not typically how the relationship between building and home values works over time. Places where density increases also see increases in prices for existing homeowners. But sure - Prop 13 and new building are separate issues.
    - tqi 6y ago
      Home owners definitely believe that proximity to multitenant housing lowers property values, and vote accordingly (whether that is actually the case is up for debate, but also less relevant to voting behavior than perception). [1] page 4: https://www.jchs.harvard.edu/sites/default/files/rr07-14_obrinsky_stein.pdf https://www.jchs.harvard.edu/sites/default/files/rr07-14_obr...
      - zepto 6y ago
        Yes, the belief is prevalent, even though mostly wrong. My guess is that other downsides, real and imagined, make people overestimate the impact on prices.
  - majormajor 6y ago
    That's not what single family zoning does. It keeps the value of the land a bit lower than it would be otherwise by preventing denser development. In most areas, a developer can get a lot more money out of a medium-density condo building or a tower than out of a house. If that wasn't the case, developers wouldn't want to build denser buildings. Consider how much would it cost to get a standalone house with a sizable yard on Manhattan?
    - Nasrudith 6y ago
      I thought they meant homeowners by property owners rather than developers. While selling to a developer for density would benefit the initial sellers it would cannibalize the value of other houses by fulfilling demand.
      - zepto 6y ago
        Generally that isn’t how it works. More density usually doesn’t come close to satisfying actual demand, but it does make the existing real estate more valuable.
        imtringued 6y ago
        It doesn't get close because of the size of the problem. If 85% of real estate is single family housing then how is a 1% increase in density supposed to solve the problem? > but it does make the existing real estate more valuable. No it doesn't. Existing real estate is valuable because there is a mismatch between commercial and residential real estate. By building more residential real estate you are reducing the mismatch.
- caturopath 6y ago
  There are a lot of reasons that property taxes have risen in California. Giving people free money that expires when they sell their home is one. Making building more housing mostly illegal is another. Economic prosperity among some people in the urban regions of California is certainly one too. Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using. Funding schools based on tiny districts is of course a poor policy, and local taxes -- be it property taxes, income taxes, corporate taxes, sales tax, fees, whatever -- shouldn't be what dictates the funding of local schools. That's really a separate question.
  - zepto 6y ago
    I’m glad you agree that Prop 13 is not the cause of rising prices. > That's really a separate question. Schools are just one example of a service funded by property taxes. It’s not a separate question at all. > Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using. What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places.
    - warkdarrior 6y ago
      > What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places. Allocating resources to the people who want it most (and presumably make the most of it) seems like a good goal to have. Wouldn't that be the most effective use of resources?
      - zepto 6y ago
        > just a measure of how much other people want the property. Estimated property price doesn’t measure how much the existing owner wants the property. If they don’t want to sell it, we can safely assume that they want it more than the other people do.
- rendang 6y ago
  I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home. Imagine you spent your life eating a certain kind of shellfish, which used to be cheap, but then a foreign country started importing this shellfish in huge quantities and drove the price very high. I don't think you should feel entitled to be able to buy the product for the rest of your life at the cheaper price you were used to. People who bought may feel more entitled to a stake than renters, but in either case it's necessary to have some kind of incentive (high property tax) to drive out people who don't want to pay the market rate for living somewhere, so that available housing slots end up being given to those people who are willing to pay the most for them.
  - zepto 6y ago
    > I don't think that having gotten lucky and bought a home somewhere when it was cheap What makes you think it was luck? How about people who saw the potential in a place before other people did, and contributed to its success? How about ordinary working class families who have lived there for generations? > should entitle you to enjoy living there forever when others are willing to pay more for the same home. I don’t see why people with money should have the right to force people out of their homes. > that available housing slots end up being given to those people who are willing to pay the most for them I see, so this is about people with lots of money being able to force people out of their homes. Why are there limited slots? Why not just invest in other places? There are many underdeveloped towns even in California, where prices are cheaper. The market signal is that people should go and invest in those places.
    - llampx 6y ago
      Is there any other space where taxes are so inequitable as with property in California? Why don't they move to a more equitable tax scheme based on, say, what the district requires rather than what the home was bought for? I already know the answer, because nobody would vote for it. It is the same in Berlin, where I live. People voted for the Mietendeckel but the only group of people that benefitted from it are the long-term renters who already have all the house they need. Among the screwed: small-time landlords, new renters and new families who need bigger apartments.
- pbuzbee 6y ago
  Since you seem to think Prop 13 is beneficial, I'd be curious to hear your ideas on reforming property taxes! What would you keep or change?
  - eweise 6y ago
    One way would be to tie property rates for everyone to inflation. Not sure why just because housing prices double, that the government needs twice as much money.
    - jdxcode 6y ago
      Prop 13 is already limited to 2%
- imtringued 6y ago
  > Property prices in CA have risen because salaries and IPOs have enabled people to compete for property. They have risen because nobody resists commercial development, only residential development. The reason? Commercial real estate still brings in taxes and it increases home values which also increases property taxes on homes. The insistence to only reap the benefits of commercial development without further residential development is what is causing problems in the first place.

zepto 6y ago

Property prices in CA have risen because salaries and IPOs have enabled people to compete for property. Property owners should be able to keep an affordable tax and their home, regardless of what their home cost. Raising property taxes based on market values, is taxing people based on how much other people want their homes. I agree that property taxes should be reformed. Let’s not make houses even more risky and expensive to own. Instead, let’s fund public services in other ways, so school quality isn’t dependent on the average income bracket of the neighborhood, for example.

tqi 6y ago
Property owners are also artificially inflating their own home values by blocking any and all attempts to build more houses.
- zepto 6y ago
  That’s not typically how the relationship between building and home values works over time. Places where density increases also see increases in prices for existing homeowners. But sure - Prop 13 and new building are separate issues.
  - tqi 6y ago
    Home owners definitely believe that proximity to multitenant housing lowers property values, and vote accordingly (whether that is actually the case is up for debate, but also less relevant to voting behavior than perception). [1] page 4: https://www.jchs.harvard.edu/sites/default/files/rr07-14_obrinsky_stein.pdf https://www.jchs.harvard.edu/sites/default/files/rr07-14_obr...
    - zepto 6y ago
      Yes, the belief is prevalent, even though mostly wrong. My guess is that other downsides, real and imagined, make people overestimate the impact on prices.
- majormajor 6y ago
  That's not what single family zoning does. It keeps the value of the land a bit lower than it would be otherwise by preventing denser development. In most areas, a developer can get a lot more money out of a medium-density condo building or a tower than out of a house. If that wasn't the case, developers wouldn't want to build denser buildings. Consider how much would it cost to get a standalone house with a sizable yard on Manhattan?
  - Nasrudith 6y ago
    I thought they meant homeowners by property owners rather than developers. While selling to a developer for density would benefit the initial sellers it would cannibalize the value of other houses by fulfilling demand.
    - zepto 6y ago
      Generally that isn’t how it works. More density usually doesn’t come close to satisfying actual demand, but it does make the existing real estate more valuable.
      - imtringued 6y ago
        It doesn't get close because of the size of the problem. If 85% of real estate is single family housing then how is a 1% increase in density supposed to solve the problem? > but it does make the existing real estate more valuable. No it doesn't. Existing real estate is valuable because there is a mismatch between commercial and residential real estate. By building more residential real estate you are reducing the mismatch.
caturopath 6y ago
There are a lot of reasons that property taxes have risen in California. Giving people free money that expires when they sell their home is one. Making building more housing mostly illegal is another. Economic prosperity among some people in the urban regions of California is certainly one too. Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using. Funding schools based on tiny districts is of course a poor policy, and local taxes -- be it property taxes, income taxes, corporate taxes, sales tax, fees, whatever -- shouldn't be what dictates the funding of local schools. That's really a separate question.
- zepto 6y ago
  I’m glad you agree that Prop 13 is not the cause of rising prices. > That's really a separate question. Schools are just one example of a service funded by property taxes. It’s not a separate question at all. > Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using. What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places.
  - warkdarrior 6y ago
    > What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places. Allocating resources to the people who want it most (and presumably make the most of it) seems like a good goal to have. Wouldn't that be the most effective use of resources?
    - zepto 6y ago
      > just a measure of how much other people want the property. Estimated property price doesn’t measure how much the existing owner wants the property. If they don’t want to sell it, we can safely assume that they want it more than the other people do.
rendang 6y ago
I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home. Imagine you spent your life eating a certain kind of shellfish, which used to be cheap, but then a foreign country started importing this shellfish in huge quantities and drove the price very high. I don't think you should feel entitled to be able to buy the product for the rest of your life at the cheaper price you were used to. People who bought may feel more entitled to a stake than renters, but in either case it's necessary to have some kind of incentive (high property tax) to drive out people who don't want to pay the market rate for living somewhere, so that available housing slots end up being given to those people who are willing to pay the most for them.
- zepto 6y ago
  > I don't think that having gotten lucky and bought a home somewhere when it was cheap What makes you think it was luck? How about people who saw the potential in a place before other people did, and contributed to its success? How about ordinary working class families who have lived there for generations? > should entitle you to enjoy living there forever when others are willing to pay more for the same home. I don’t see why people with money should have the right to force people out of their homes. > that available housing slots end up being given to those people who are willing to pay the most for them I see, so this is about people with lots of money being able to force people out of their homes. Why are there limited slots? Why not just invest in other places? There are many underdeveloped towns even in California, where prices are cheaper. The market signal is that people should go and invest in those places.
  - llampx 6y ago
    Is there any other space where taxes are so inequitable as with property in California? Why don't they move to a more equitable tax scheme based on, say, what the district requires rather than what the home was bought for? I already know the answer, because nobody would vote for it. It is the same in Berlin, where I live. People voted for the Mietendeckel but the only group of people that benefitted from it are the long-term renters who already have all the house they need. Among the screwed: small-time landlords, new renters and new families who need bigger apartments.
pbuzbee 6y ago
Since you seem to think Prop 13 is beneficial, I'd be curious to hear your ideas on reforming property taxes! What would you keep or change?
- eweise 6y ago
  One way would be to tie property rates for everyone to inflation. Not sure why just because housing prices double, that the government needs twice as much money.
  - jdxcode 6y ago
    Prop 13 is already limited to 2%
imtringued 6y ago
> Property prices in CA have risen because salaries and IPOs have enabled people to compete for property. They have risen because nobody resists commercial development, only residential development. The reason? Commercial real estate still brings in taxes and it increases home values which also increases property taxes on homes. The insistence to only reap the benefits of commercial development without further residential development is what is causing problems in the first place.