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CA is losing population too and building houses in those desirable locations. Why don't prices go down? These are financialized assets bought on credit. Some 8-
by kurthr 3y ago
CA is losing population too and building houses in those desirable locations. Why don't prices go down? These are financialized assets bought on credit. Some 8-10% of SF rental and 2% of owned housing is vacant (over 25% of commercial), but you don't see prices go down. Building 1% per year would involve a project on every single residential city block. That would have huge externalities. Why should current residents deal with the mess so more people can move in? So builders can get rich charging $1000/sqft?
The quick way to lower prices would be to annually tax vacancies (if you can't show a CA resident/corp paying rental income on a residential/commercial property) then pay the sales tax income the city would have received from those in an occupied location. This would encourage people to lower rents/prices to fill vacancies. Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk than an occupied older property since it would lower their leverage on asset appreciation. A residence tax wouldn't be limited to the Prop13 assessment (5-10% of current value).
If there is ever a bubble pop, prices would likely to stay low for a generation. Just like Japan. It's not that different from bitcoin/NFT (other than some people live in them).
- cwalv 3y ago> Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk Doesn't prop13 only apply to primary residence?
- bugglebeetle 3y agoNo, it insanely applies to commercial properties as well.
- kurthr 3y agoSo you can sell the LLC that "owns" the property and maintain the low tax assessment.
- seanmcdirmid 3y agoCalifornia's property bubble did pop in the late 80s/early 90s (ironically, or maybe related to, Japan's bubble pop). It recovered since then. Most people leave California because "it's too crowded, no one goes there anymore" (leading to high housing costs) problems, not because of other reasons. Eventually an equilibrium will be reached, and prices shouldn't drastically pop unless something else happens (like a tech sector crash).
- ulfw 3y agoPeople aren't leaving California because it's "too crowded". They're leaving because it's unaffordable (extremely high housing cost, high taxes)
- seanmcdirmid 3y agoIsn’t that how too much demand for limited supply works? Taxes aren’t that high in California, they are higher than average but that’s it. In fact, given that taxation is extremely progressive, you can wind up paying less in taxes in CA then states like Alabama (where taxation is very regressive) if you don’t make a lot of money.