5 ms·

Early born privilege.

spicymaki 4y ago
This is local democracy in action. Vested landowners can put up barriers to entry to prop up their investments. They can also hand it down to their family, entrenching wealth for generations. Sucks to be an outsider.
- rahimnathwani 4y ago
  "They can also hand it down to their family, entrenching wealth for generations." Not any more.
  - HWR_14 4y ago
    Why not? What changed?
    - rahimnathwani 4y ago
      Prop 19
  - gnicholas 4y ago
    I think this new rule only applies to property that is inherited and not lived in by the inheritor (e.g., rental property or vacation home). If you inherit a home and live in it, I think you can still keep the old property tax basis. There may be some dollar value limitations or other rules I’m not remembering though. EDIT: just checked, the property value can go up by $1M from when it was purchased without the inheritor owing additional tax. [1] Beyond that, tax is due on the incremental additional appreciation. In reality, this will only affect properties in a few metro areas (Bay Area, LA, OC, SD) and certain beachside properties. This isn't to say that the law is good or bad, just to describe the scope of its likely impact. 1: https://www.cunninghamlegal.com/california-legal-services/california-prop-13-protection-prop-19-strategy/ https://www.cunninghamlegal.com/california-legal-services/ca...
    - rahimnathwani 4y ago
      IIRC the taxable value (not sure of the technical term）goes up by up to $1MM
      - throwaway_4ever 4y ago
        No, it's $1m of taxable value increase is waived if and only if a parent's only home is sold/transferred to a child's only home. Example 1: Bay Area home $1.7m; old taxable value $300k, new taxable value $700k (1.7m - 1m), prop taxes ~9k/year. Example 2: Fresno home $700k; old taxable value $200k, new taxable value $200k (700k - 1m, so no affect) Grandparent's home? Parent's second home? Child's second home? Uncle's home? Sibling's home? No. Bay home is now $1.7m taxable, $21k/year
  - gautamdivgi 4y ago
    You can via trusts. If you have a $2m house put it in a trust.
- jeffbee 4y ago
  Local example of this in action. In Berkeley there were two candidates for District 4 supervisor in 2022: the incumbent, who owns two houses, each worth over $2 million, and the challenger, a renter. The challenger had to withdraw from the race because his rent was increased to a level he can no longer afford.
- parineum 4y ago
  The biggest barrier to entry for first time home buyers is by far mortgage rates. Low mortgage rates cause house values to go up because value is based on what an affordable monthly payment for that house. Low rates means value goes up to equalize payments which is mostly superfluous for people with only one home and good for anyone with investment property but it causes a 20% down payment to be an unsurmountable barrier to entry for those looking to enter the market. Home ownership is one if not the best way for families to generationally escape poverty.
  - imtringued 4y ago
    How would you value a perpetuity? If the present and future are worth the same, then the value of land is practically infinite because millions of generations of humans can use it. The obvious problem in this case is that nobody should own land forever.
    - parineum 4y ago
      Unless you know someone that lives forever, nobody does.
  - 999900000999 4y ago
    If we're talking California, I'd argue a 200k down payment on a million dollar house is a bigger barrier.
    - parineum 4y ago
      That's exactly my point. If a house is a million dollars with a 3% loan, that house will be significantly cheaper with a 15% loan but the payments will remain relatively static making a 20% down payment significantly easier for those who are trying to get in the market for the first time. When people bring up the prices of houses for baby boomers they totally overlook the interest rates and monthly payments. The price of a house doesn't really matter. The payment and the down payment are what matter and the volatility of those isn't based on the piece of land changing value (in the shorter term). In the last 6 years, my house doubled in value. Also, I recently refinanced for less than half the rate. When borrowing money is cheap, there's a lot more competition for things bought with loans. On the other hand, the market rates for rent don't really change because the people don't suddenly have more disposable income.

This is local democracy in action. Vested landowners can put up barriers to entry to prop up their investments. They can also hand it down to their family, entrenching wealth for generations. Sucks to be an outsider.

rahimnathwani 4y ago
"They can also hand it down to their family, entrenching wealth for generations." Not any more.
- HWR_14 4y ago
  Why not? What changed?
  - rahimnathwani 4y ago
    Prop 19
- gnicholas 4y ago
  I think this new rule only applies to property that is inherited and not lived in by the inheritor (e.g., rental property or vacation home). If you inherit a home and live in it, I think you can still keep the old property tax basis. There may be some dollar value limitations or other rules I’m not remembering though. EDIT: just checked, the property value can go up by $1M from when it was purchased without the inheritor owing additional tax. [1] Beyond that, tax is due on the incremental additional appreciation. In reality, this will only affect properties in a few metro areas (Bay Area, LA, OC, SD) and certain beachside properties. This isn't to say that the law is good or bad, just to describe the scope of its likely impact. 1: https://www.cunninghamlegal.com/california-legal-services/california-prop-13-protection-prop-19-strategy/ https://www.cunninghamlegal.com/california-legal-services/ca...
  - rahimnathwani 4y ago
    IIRC the taxable value (not sure of the technical term）goes up by up to $1MM
    - throwaway_4ever 4y ago
      No, it's $1m of taxable value increase is waived if and only if a parent's only home is sold/transferred to a child's only home. Example 1: Bay Area home $1.7m; old taxable value $300k, new taxable value $700k (1.7m - 1m), prop taxes ~9k/year. Example 2: Fresno home $700k; old taxable value $200k, new taxable value $200k (700k - 1m, so no affect) Grandparent's home? Parent's second home? Child's second home? Uncle's home? Sibling's home? No. Bay home is now $1.7m taxable, $21k/year
- gautamdivgi 4y ago
  You can via trusts. If you have a $2m house put it in a trust.
jeffbee 4y ago
Local example of this in action. In Berkeley there were two candidates for District 4 supervisor in 2022: the incumbent, who owns two houses, each worth over $2 million, and the challenger, a renter. The challenger had to withdraw from the race because his rent was increased to a level he can no longer afford.
parineum 4y ago
The biggest barrier to entry for first time home buyers is by far mortgage rates. Low mortgage rates cause house values to go up because value is based on what an affordable monthly payment for that house. Low rates means value goes up to equalize payments which is mostly superfluous for people with only one home and good for anyone with investment property but it causes a 20% down payment to be an unsurmountable barrier to entry for those looking to enter the market. Home ownership is one if not the best way for families to generationally escape poverty.
- imtringued 4y ago
  How would you value a perpetuity? If the present and future are worth the same, then the value of land is practically infinite because millions of generations of humans can use it. The obvious problem in this case is that nobody should own land forever.
  - parineum 4y ago
    Unless you know someone that lives forever, nobody does.
- 999900000999 4y ago
  If we're talking California, I'd argue a 200k down payment on a million dollar house is a bigger barrier.
  - parineum 4y ago
    That's exactly my point. If a house is a million dollars with a 3% loan, that house will be significantly cheaper with a 15% loan but the payments will remain relatively static making a 20% down payment significantly easier for those who are trying to get in the market for the first time. When people bring up the prices of houses for baby boomers they totally overlook the interest rates and monthly payments. The price of a house doesn't really matter. The payment and the down payment are what matter and the volatility of those isn't based on the piece of land changing value (in the shorter term). In the last 6 years, my house doubled in value. Also, I recently refinanced for less than half the rate. When borrowing money is cheap, there's a lot more competition for things bought with loans. On the other hand, the market rates for rent don't really change because the people don't suddenly have more disposable income.