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> The value may go up according to the market, but the owner's taxes are capped. So, the value according the market is not accurate. The value is actually hig

• dragonwriter 13y ago
  > So, the value according the market is not accurate. I'm not sure how a market value can be inaccurate, that implies that there is some objectively correct non-market value that you could meeasure the market value against, which is an odd idea. What Prop 13's limit on assessment increases does is (in terms of the forces that drive market prices) is decrease supply (because it increases the value of homes to people who already own them, by decreasing the cost -- in property taxes -- paid compared to the utility derived from holding the property), which, considered on its own, increases market clearing price. It may also increase demand (since it also decreases long-term expected costs for new buyers), but probably more weakly than it increases supply (since the decreased cost is already being realized by sellers -- and more strongly the longer they have held the whome -- wherease it will take several years for the decreased cost to be realized by a new buyer, since purchase events trigger assessment at full value.) > The problem isn't the laws. The problem is the market simply doesn't want to pay an appropriate amount for the person's property. The law adds non-transferrable value (or, less simply, provides a non-transferrable abatement of cost) as long as the owner holds the property. This creates an externally-imposed difference in the value to the owner and the value to other market participants.