6 ms·

Prop 13 Is Not Passed on to Renters

28 points by rcpt 3y ago

oblib 3y ago
I lived in LA when Prop 13 was passed. It was intended (promoted) to keep long time homeowners from paying more in taxes than their monthly payment to the bank each month, which was mostly affecting folks of retirement age. Hard to imagine they didn't omit homes that were being rented back then.
idopmstuff 3y ago
This seems pretty intuitively obvious to me - of course landlords, especially those who own for the sole purpose of investing (as opposed to someone who buys a duplex and rents the back), are going to charge what the market allows. I think Prop 13 is a good thing for the reason it was pitched for - you don't want old people on fixed income forced to sell their homes because property values are going up rapidly. Beyond that, though, it seems like it just extends way, way too far. Why should you get a huge tax break on a second home that you use for vacation or a property that you own solely for investment?
- paulryanrogers 3y ago
  Why not a homestead exemption instead? Benefits retirees without incentivizing housing as an investment.
  - rcpt 3y ago
    Because Jarvis wanted to bleed the state as much as possible. > I think the public school system is a cancer on this society. The only difference between the public schools and the Mafia is that the public schools steal more money. https://prop13.wtf/2023/06/18/howard-jarvis-bestof.html#howard-jarvis-referred-to-the-california-public-school-system-as-a-cancer-on-this-society-which-manufactures-permanent-welfare-recipients https://prop13.wtf/2023/06/18/howard-jarvis-bestof.html#howa...
- fizx 3y ago
  If I'm an old person on fixed income, and my equity doubles from $1M to $2M, causing my property tax to double, I can take out a home equity loan against my house and be not only just fine on payments, but far ahead of where I was otherwise. This argument was also a lie.
  - thatfrenchguy 3y ago
    Or the government just collects when you sell, easy.
    - idopmstuff 3y ago
      This is definitely the better solution in my view - I'm pretty against policies that force people to take on otherwise unnecessary debt.
  - sethammons 3y ago
    you take the home equity loan against, presumably, a paid off house. That loan has to be paid back. You now have a payment where none was before. If you were still paying on the property, your new payment is now larger than it was before. Seniors on a fixed income cannot absorb that.
    - wmf 3y ago
      The loan is paid back by your heirs selling the house after you die.
      - sethammons 3y ago
        That loan has to be serviced and a loan company will want to take on that risk. So you are saying that old people should be forced into a reverse mortgage solution? How is that helping anything other than the mortgage industry?
        wmf 3y ago
- dilyevsky 3y ago
  Don’t forget - commercial properties enjoy prop 13 as well. There was an effort to repeal it by zuck foundation in 2020 which failed
- dublinben 3y ago
  >you don't want old people on fixed income forced to sell their homes because property values are going up rapidly Why not? Regular turnover is healthy for both markets and neighborhoods. These beneficiaries of rapidly appreciated properties could sell their home to a new family, and take their profits to downsize to more age-appropriate housing.
  - neptun3z 3y ago
    Exactly. When old people have no incentive to move out of their giant homes, there's less housing for young families, less reason to build senior housing, and home prices soar.
    - idopmstuff 3y ago
      They do have incentives, though. Maintenance costs are higher on larger houses and tend to increase with the age of a structure. You have to clean out all those extra bedrooms that are never used or end up with a bunch of cobwebs everywhere. That second story becomes much less practical when your knees start to go. If you want more housing, the solution is just... build more housing.
    - foogazi 3y ago
      Why not build more giant homes instead of taking from others ?
      - HDThoreaun 3y ago
        We have run out of land where people want to live.
      - duped 3y ago
        Despite being the largest state there's not a ton of room in the biggest metro areas for new housing - people are already packed like sardines between foothills, and going up into them is just begging for destruction due to wildfire.
- aiisahik 3y ago
  > "you don't want old people on fixed income forced to sell their homes because property values are going up rapidly" Yes you do. It's called downsizing and relocating. This allows for large houses near good schools and close to work to be owned by working age folks with children. Buying and selling is one of the ways the market reallocates scarce resources.
  - sethammons 3y ago
    I'm having trouble getting my words out. Your view is so myopic and harsh. Communities need older folks. Older folks need communities. Having such a view, I can only assume you've never had a long time home. That you could walk in and force a person from a lifelong home because you feel there is some marginal economic improvement is simply fucked up. If the price goes up enough, they can choose to sell and relocate. Forcing that is wrong. Just because you want it more doesn't make it right to force someone to sell something. This is the same thought pattern as the people who get angry at handicapped parking lot spaces, "how dare those handicapped people exist, I could have used that parking spot better!" (not to mention the marginal added parking spot would already be taken by the time you are prowling the lot looking for a coveted space).
    - rcpt 3y ago
      Seniors and the disabled don't have to pay property taxes in California if they don't want to. The California Tax Postponement Program protects them. It's a fine policy.
    - HDThoreaun 3y ago
      The issue is that prop 13 has not caused "marginal economic" problems. It's caused absolutely fucking massive problems and is largely responsible for california being completely unaffordable if you don't already own a home there. The juice just isn't worth the squeeze here, the incentives are too distorted.
      - sethammons 3y ago
        Homes are not affordable anywhere people want to live. There is no prop 13 in North Carolina, and people are being priced out of our area. Same is true in Montana. Rents are not higher because prop 13, but taxes collected are lower. High rents and high cost of homes is a supply and demand problem. Move out to Adalanto or Victorville, CA and you can buy a nice house for under $400k. If you and a partner make $50k each, you can do it. That's is not unlike we did. We got priced out of California and had to move. This is an anti prop 13 article with some numbers: https://projects.scpr.org/prop-13/stories/housing-shortage/ https://projects.scpr.org/prop-13/stories/housing-shortage/ The best they can say is that Oakland has 3k undeveloped lots that could be houses. The claim is prop 13 allows them to hold onto what would otherwise be someone's purchased home. That wont even house 1% of Oakland. You could magically put houses there and the market price for housing wouldn't change. Being angry with prop 13 feels like being angry at handicapped parking spaces being unused. If the spot were not only for handicapped people, you still wouldn't have found parking there because someone else would have already taken it.
- mattw2121 3y ago
  I don't know exactly what the answer is. If a rental property has a long term renter, I don't want to see that tenant have their rent increased by huge amounts year over year. I'm a life long conservative, but I see huge value in making sure landlords can't kick out well behaved, paying on time tenants. I also believe that landlords should be severely limited in the amount they can increase rent at renewal time.
  - CodeWriter23 3y ago
    This is what local rent control laws are for. And probably much better for it to be decided locally than at the "one size fits all of the Californias" Sacramento would inevitably come up with.
    - mattw2121 3y ago
      Thanks, but I live in Florida. I'm not familiar with rent control laws, since we don't have any. In fact, rent control laws are forbidden in Florida.
      - CodeWriter23 3y ago
        Prop 13, the topic of discussion, is a California Law.
  - idopmstuff 3y ago
    The answer is just more housing, and at least it's starting to look like CA is making strides in that direction. The best protection for renters is a market where there's abundant supply - landlords will be severely limited in house much they can increase rent if a big rent increase means they're out of line with the market and can't get tenants.
- rcpt 3y ago
  It wasn't really pitched for low income seniors. The California Tax Postponement Program solves that and predates Prop 13. Other states have similar targeted laws, eg. the NJ "senior freeze". Jarvis was going for a "tax revolt" to punish the state. That's why Prop 13 covers all property and not just primary residence
chung8123 3y ago
The renter equivalent of Prop 13 is RSO.
HDThoreaun 3y ago
Obviously, landlords are price takers, charging the maximum anyone will pay to rent their unit. The question is whether prop 13 increases supply in the medium to long run which would lead to lower rents. Unfortunately California NIMBYism makes that impossible.
- runarberg 3y ago
  Question: If the goal is to increase supply and lower rent in the long run, would you consider social housing, that is the state build housing in large numbers specifically to rent them? For me this seems like a more straightforward way and likelier to succeed in its intention without unforeseen consequences, as opposed to landlord subsidies.
  - HDThoreaun 3y ago
    This worked well on Vienna, but government run housing has a very bad rep in this country that imo will make it hard to pull this off. NIMBYism is the biggest obstacle here anyway and it’s largely being pushed by the government which also concerns me. In the end as long as more housing I being built I’ll be happy
daft_pink 3y ago
I think it works in a different way. The newer properties have to compete with older properties that charge less because they pay less taxes. If you increased real estate taxes, it should be obvious that rents would increase. It’s basic economics. However, you should not expect a rent price difference especially at the quoted price for property based on the underlying tax differential.
- foogazi 3y ago
  > The newer properties have to compete with older properties that charge less because they pay less taxes. In reality the market sets the rental price tenants won’t pay more because your taxes are higher - tenants set the price with the money they are willing to spend on housing
Cupertino95014 3y ago
45 years later, and some people are still litigating it. Give it up and move on. Prop 13 is not going away.
- jexter45 3y ago
  But Prop 13 DID go away. Two years ago when Californians voted for Prop 19. (Prop 19 won by a 1% margin). Now we're seeing people kicked out of their homes... whole apartment buildings being evicted.... rental homes going OFF the rental market. Yes, it's happening.
  - jexter45 3y ago
    Oh, and btw... long-standing corporations are STILL enjoying the benefits of prop 13, since their property never changes hands, unlike residential properties. When that issue was on the ballot a few years ago, big businesses dumped a lot of money into marketing to convince us little voters that if businesses' property taxes went up -- all of us would be hurt. So us Calif. voters gave them a pass. But now, with Prop 19, which big real estate company mucky mucks poured millions of $$ into marketing (they want to sell more properties), the working class and retired folks are getting kicked in the teeth, losing their homes. That tax program for seniors, to defer prop. tax.... it only lasts each year until it runs out of money. So I don't think that's a sure fire solution for a lot of seniors.
fdsafdasf 3y ago
I don't like Prop 13 either but the logic in this article is outright flawed. Their claim is that if prop 13 reduced rents, you would see lower rents in single family homes owned for longer periods compared to new owners. That's... completely meaningless and not even remotely close to how prices in a free market work. If you invested your life savings into a house would you lower the rent just because you got a good deal on fixing the roof?
- readthenotes1 3y ago
  I think what the author is pointing out is that the cost of tax is detached from the price of rent in similar houses in similar locations. That is, he is pointing out that in the highly regulated market of housing (not even close to a free market) that Prop 13 does not help renters and instead favors long-standing owners mightily.
tpmoney 3y ago
Some thoughts from reading the article: 1) The newspaper quoted at the beginning doesn't seem to be talking specifically about a tax savings. It's not quite clear, but the snippet implies to me this is some single one time event thing. 2) Given that < 30 year holdings follow the assessments pretty closely, and > 30 year holdings don't, is it possible there are other perhaps larger concerns that affect rental prices of 30+ year old buildings? Roof replacements, HVAC replacements, plumbing fixes, bringing electrical up to code for those things. I would expect that sort of thing acts as a much stronger driver on the cost of rent than the taxes overall once you get to 30+ years old. Yes newly transferred properties might be older as well, but the article doesn't say whether they're comparing age of property too. 3) In the concrete example they give, how much does location make a difference? I don't know much about LA, but I've heard of Sunset Blvd, and the high rent example is a block away from Sunset, where as the other property isn't, but it is located pretty close to a highway with all the traffic noise that entails. 4) Related to location, what about amenities? The higher rent property also appears to have a useable yard, be in the middle of a residential area and appears to be a single unit, where as the one that is used as matching the tax assessments appears by the tax records to be split into 3 units (one multi bedroom and two studios?), and is thus actually 300 sqft smaller than the higher rent property, with no usable yard space and the property itself appears to be just off a commercial zone (the Home Depot across the street) 5) It would be nice to see this analysis done in any of the other HCOL locations in the country without Prop 13 to see how the rents compare.
dave333 3y ago
Seems reasonable for prop 13 to apply only to owner occupiers.
- rcpt 3y ago
  Yes
Nellyz 3y ago
[dead]

28 points by rcpt 3y ago

I lived in LA when Prop 13 was passed. It was intended (promoted) to keep long time homeowners from paying more in taxes than their monthly payment to the bank each month, which was mostly affecting folks of retirement age. Hard to imagine they didn't omit homes that were being rented back then.

idopmstuff 3y ago

This seems pretty intuitively obvious to me - of course landlords, especially those who own for the sole purpose of investing (as opposed to someone who buys a duplex and rents the back), are going to charge what the market allows. I think Prop 13 is a good thing for the reason it was pitched for - you don't want old people on fixed income forced to sell their homes because property values are going up rapidly. Beyond that, though, it seems like it just extends way, way too far. Why should you get a huge tax break on a second home that you use for vacation or a property that you own solely for investment?

paulryanrogers 3y ago
Why not a homestead exemption instead? Benefits retirees without incentivizing housing as an investment.
- rcpt 3y ago
  Because Jarvis wanted to bleed the state as much as possible. > I think the public school system is a cancer on this society. The only difference between the public schools and the Mafia is that the public schools steal more money. https://prop13.wtf/2023/06/18/howard-jarvis-bestof.html#howard-jarvis-referred-to-the-california-public-school-system-as-a-cancer-on-this-society-which-manufactures-permanent-welfare-recipients https://prop13.wtf/2023/06/18/howard-jarvis-bestof.html#howa...
fizx 3y ago
If I'm an old person on fixed income, and my equity doubles from $1M to $2M, causing my property tax to double, I can take out a home equity loan against my house and be not only just fine on payments, but far ahead of where I was otherwise. This argument was also a lie.
- thatfrenchguy 3y ago
  Or the government just collects when you sell, easy.
  - idopmstuff 3y ago
    This is definitely the better solution in my view - I'm pretty against policies that force people to take on otherwise unnecessary debt.
- sethammons 3y ago
  you take the home equity loan against, presumably, a paid off house. That loan has to be paid back. You now have a payment where none was before. If you were still paying on the property, your new payment is now larger than it was before. Seniors on a fixed income cannot absorb that.
  - wmf 3y ago
    The loan is paid back by your heirs selling the house after you die.
    - sethammons 3y ago
      That loan has to be serviced and a loan company will want to take on that risk. So you are saying that old people should be forced into a reverse mortgage solution? How is that helping anything other than the mortgage industry?
      - wmf 3y ago
dilyevsky 3y ago
Don’t forget - commercial properties enjoy prop 13 as well. There was an effort to repeal it by zuck foundation in 2020 which failed
dublinben 3y ago
>you don't want old people on fixed income forced to sell their homes because property values are going up rapidly Why not? Regular turnover is healthy for both markets and neighborhoods. These beneficiaries of rapidly appreciated properties could sell their home to a new family, and take their profits to downsize to more age-appropriate housing.
- neptun3z 3y ago
  Exactly. When old people have no incentive to move out of their giant homes, there's less housing for young families, less reason to build senior housing, and home prices soar.
  - idopmstuff 3y ago
    They do have incentives, though. Maintenance costs are higher on larger houses and tend to increase with the age of a structure. You have to clean out all those extra bedrooms that are never used or end up with a bunch of cobwebs everywhere. That second story becomes much less practical when your knees start to go. If you want more housing, the solution is just... build more housing.
  - foogazi 3y ago
    Why not build more giant homes instead of taking from others ?
    - HDThoreaun 3y ago
      We have run out of land where people want to live.
    - duped 3y ago
      Despite being the largest state there's not a ton of room in the biggest metro areas for new housing - people are already packed like sardines between foothills, and going up into them is just begging for destruction due to wildfire.
aiisahik 3y ago
> "you don't want old people on fixed income forced to sell their homes because property values are going up rapidly" Yes you do. It's called downsizing and relocating. This allows for large houses near good schools and close to work to be owned by working age folks with children. Buying and selling is one of the ways the market reallocates scarce resources.
- sethammons 3y ago
  I'm having trouble getting my words out. Your view is so myopic and harsh. Communities need older folks. Older folks need communities. Having such a view, I can only assume you've never had a long time home. That you could walk in and force a person from a lifelong home because you feel there is some marginal economic improvement is simply fucked up. If the price goes up enough, they can choose to sell and relocate. Forcing that is wrong. Just because you want it more doesn't make it right to force someone to sell something. This is the same thought pattern as the people who get angry at handicapped parking lot spaces, "how dare those handicapped people exist, I could have used that parking spot better!" (not to mention the marginal added parking spot would already be taken by the time you are prowling the lot looking for a coveted space).
  - rcpt 3y ago
    Seniors and the disabled don't have to pay property taxes in California if they don't want to. The California Tax Postponement Program protects them. It's a fine policy.
  - HDThoreaun 3y ago
    The issue is that prop 13 has not caused "marginal economic" problems. It's caused absolutely fucking massive problems and is largely responsible for california being completely unaffordable if you don't already own a home there. The juice just isn't worth the squeeze here, the incentives are too distorted.
    - sethammons 3y ago
      Homes are not affordable anywhere people want to live. There is no prop 13 in North Carolina, and people are being priced out of our area. Same is true in Montana. Rents are not higher because prop 13, but taxes collected are lower. High rents and high cost of homes is a supply and demand problem. Move out to Adalanto or Victorville, CA and you can buy a nice house for under $400k. If you and a partner make $50k each, you can do it. That's is not unlike we did. We got priced out of California and had to move. This is an anti prop 13 article with some numbers: https://projects.scpr.org/prop-13/stories/housing-shortage/ https://projects.scpr.org/prop-13/stories/housing-shortage/ The best they can say is that Oakland has 3k undeveloped lots that could be houses. The claim is prop 13 allows them to hold onto what would otherwise be someone's purchased home. That wont even house 1% of Oakland. You could magically put houses there and the market price for housing wouldn't change. Being angry with prop 13 feels like being angry at handicapped parking spaces being unused. If the spot were not only for handicapped people, you still wouldn't have found parking there because someone else would have already taken it.
mattw2121 3y ago
I don't know exactly what the answer is. If a rental property has a long term renter, I don't want to see that tenant have their rent increased by huge amounts year over year. I'm a life long conservative, but I see huge value in making sure landlords can't kick out well behaved, paying on time tenants. I also believe that landlords should be severely limited in the amount they can increase rent at renewal time.
- CodeWriter23 3y ago
  This is what local rent control laws are for. And probably much better for it to be decided locally than at the "one size fits all of the Californias" Sacramento would inevitably come up with.
  - mattw2121 3y ago
    Thanks, but I live in Florida. I'm not familiar with rent control laws, since we don't have any. In fact, rent control laws are forbidden in Florida.
    - CodeWriter23 3y ago
      Prop 13, the topic of discussion, is a California Law.
- idopmstuff 3y ago
  The answer is just more housing, and at least it's starting to look like CA is making strides in that direction. The best protection for renters is a market where there's abundant supply - landlords will be severely limited in house much they can increase rent if a big rent increase means they're out of line with the market and can't get tenants.
rcpt 3y ago
It wasn't really pitched for low income seniors. The California Tax Postponement Program solves that and predates Prop 13. Other states have similar targeted laws, eg. the NJ "senior freeze". Jarvis was going for a "tax revolt" to punish the state. That's why Prop 13 covers all property and not just primary residence

chung8123 3y ago

The renter equivalent of Prop 13 is RSO.

HDThoreaun 3y ago

Obviously, landlords are price takers, charging the maximum anyone will pay to rent their unit. The question is whether prop 13 increases supply in the medium to long run which would lead to lower rents. Unfortunately California NIMBYism makes that impossible.

runarberg 3y ago
Question: If the goal is to increase supply and lower rent in the long run, would you consider social housing, that is the state build housing in large numbers specifically to rent them? For me this seems like a more straightforward way and likelier to succeed in its intention without unforeseen consequences, as opposed to landlord subsidies.
- HDThoreaun 3y ago
  This worked well on Vienna, but government run housing has a very bad rep in this country that imo will make it hard to pull this off. NIMBYism is the biggest obstacle here anyway and it’s largely being pushed by the government which also concerns me. In the end as long as more housing I being built I’ll be happy

daft_pink 3y ago

I think it works in a different way. The newer properties have to compete with older properties that charge less because they pay less taxes. If you increased real estate taxes, it should be obvious that rents would increase. It’s basic economics. However, you should not expect a rent price difference especially at the quoted price for property based on the underlying tax differential.

foogazi 3y ago
> The newer properties have to compete with older properties that charge less because they pay less taxes. In reality the market sets the rental price tenants won’t pay more because your taxes are higher - tenants set the price with the money they are willing to spend on housing

Cupertino95014 3y ago

45 years later, and some people are still litigating it. Give it up and move on. Prop 13 is not going away.

jexter45 3y ago
But Prop 13 DID go away. Two years ago when Californians voted for Prop 19. (Prop 19 won by a 1% margin). Now we're seeing people kicked out of their homes... whole apartment buildings being evicted.... rental homes going OFF the rental market. Yes, it's happening.
- jexter45 3y ago
  Oh, and btw... long-standing corporations are STILL enjoying the benefits of prop 13, since their property never changes hands, unlike residential properties. When that issue was on the ballot a few years ago, big businesses dumped a lot of money into marketing to convince us little voters that if businesses' property taxes went up -- all of us would be hurt. So us Calif. voters gave them a pass. But now, with Prop 19, which big real estate company mucky mucks poured millions of $$ into marketing (they want to sell more properties), the working class and retired folks are getting kicked in the teeth, losing their homes. That tax program for seniors, to defer prop. tax.... it only lasts each year until it runs out of money. So I don't think that's a sure fire solution for a lot of seniors.

fdsafdasf 3y ago

I don't like Prop 13 either but the logic in this article is outright flawed. Their claim is that if prop 13 reduced rents, you would see lower rents in single family homes owned for longer periods compared to new owners. That's... completely meaningless and not even remotely close to how prices in a free market work. If you invested your life savings into a house would you lower the rent just because you got a good deal on fixing the roof?

readthenotes1 3y ago
I think what the author is pointing out is that the cost of tax is detached from the price of rent in similar houses in similar locations. That is, he is pointing out that in the highly regulated market of housing (not even close to a free market) that Prop 13 does not help renters and instead favors long-standing owners mightily.

tpmoney 3y ago

Some thoughts from reading the article: 1) The newspaper quoted at the beginning doesn't seem to be talking specifically about a tax savings. It's not quite clear, but the snippet implies to me this is some single one time event thing. 2) Given that < 30 year holdings follow the assessments pretty closely, and > 30 year holdings don't, is it possible there are other perhaps larger concerns that affect rental prices of 30+ year old buildings? Roof replacements, HVAC replacements, plumbing fixes, bringing electrical up to code for those things. I would expect that sort of thing acts as a much stronger driver on the cost of rent than the taxes overall once you get to 30+ years old. Yes newly transferred properties might be older as well, but the article doesn't say whether they're comparing age of property too. 3) In the concrete example they give, how much does location make a difference? I don't know much about LA, but I've heard of Sunset Blvd, and the high rent example is a block away from Sunset, where as the other property isn't, but it is located pretty close to a highway with all the traffic noise that entails. 4) Related to location, what about amenities? The higher rent property also appears to have a useable yard, be in the middle of a residential area and appears to be a single unit, where as the one that is used as matching the tax assessments appears by the tax records to be split into 3 units (one multi bedroom and two studios?), and is thus actually 300 sqft smaller than the higher rent property, with no usable yard space and the property itself appears to be just off a commercial zone (the Home Depot across the street) 5) It would be nice to see this analysis done in any of the other HCOL locations in the country without Prop 13 to see how the rents compare.

dave333 3y ago

Seems reasonable for prop 13 to apply only to owner occupiers.

rcpt 3y ago
Yes

Nellyz 3y ago

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