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Who caused the Bay Area’s housing shortage?

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Re: Who caused the Bay Area’s housing shortage?

#11

Post by kqr2 »

closure wrote: post #3
fricat1ve wrote: post #2

Not one mention of Prop 13? Poor reporting. It's basically the rent control story writ large. Everyone who bought in the 20th century has such an "amazing deal" that they won't give it up unless you a) entice them with a better deal or b) gore their oxen and repeal 13.

How does prop 13 cause a housing crisis? It certainly entices people to hold and rent properties they own rather than sell, but those units are still part of the housing stock. I think repealing prop 13 for commercial properties makes sense as a way to raise tax revenue, but don’t see doing so for residential property having an impact on housing costs.

Prop 13 creates bad incentives for existing property owners since the rising cost of services can be passed onto future home owners. If all home owners had to bear the true market cost of services they would either have to settle for less or reduce per home owner cost by allowing more density.

Re: Who caused the Bay Area’s housing shortage?

#12

Post by zapita »

babaganoosh89 wrote: post #9
closure wrote: post #3

Earlier quoted context omitted.

How does prop 13 cause a housing crisis? It certainly entices people to hold and rent properties they own rather than sell, but those units are still part of the housing stock. I think repealing prop 13 for commercial properties makes sense as a way to raise tax revenue, but don’t see doing so for residential property having an impact on housing costs.

Higher property taxes makes housing allocation more efficient as people not using the house, retired people in high cost areas, etc would be incentivized to either sell or rent their house out.

Note that repealing prop13 would probably not raise property taxes overall. It would spread them more fairly across all owners, instead of the current arrangement of newcomers subsidizing established owners.

Re: Who caused the Bay Area’s housing shortage?

#13

Post by dragonwriter »

tedivm wrote: post #8
closure wrote: post #3

Earlier quoted context omitted.

How does prop 13 cause a housing crisis? It certainly entices people to hold and rent properties they own rather than sell, but those units are still part of the housing stock. I think repealing prop 13 for commercial properties makes sense as a way to raise tax revenue, but don’t see doing so for residential property having an impact on housing costs.

There's a guy on my street that owns 27 houses, all bought in the 90s. While that guy is getting subsidized income by paying less taxes on high value property he is less likely to sell that property to developers who will build higher density housing. The same can be applied to the people who own vacation or retirement homes out here (there's a surprising amount of vacant property out here). The taxes that aren't bei…

> The taxes that aren't being paid by all those people has to be made up for somewhere, so the taxes on new property owners are higher

No, they aren't. Prop 13 limits maximum property tax rates to very low amounts as well as limiting assessment increases, so no jurisdiction is able to make up for artificially low assessments by jacking up the nominal rate.

> (as are the number if different fees and things like sales tax).

Mostly, it's state income tax, though state and local sales tax are also affected (there are general and program-specific revenue sharing mechanisms by which state revenue goes into local coffers to pay for local programs.)

Re: Who caused the Bay Area’s housing shortage?

#14

Post by dragonwriter »

zapita wrote: post #12
babaganoosh89 wrote: post #9

Earlier quoted context omitted.

Higher property taxes makes housing allocation more efficient as people not using the house, retired people in high cost areas, etc would be incentivized to either sell or rent their house out.

Note that repealing prop13 would probably not raise property taxes overall. It would spread them more fairly across all owners, instead of the current arrangement of newcomers subsidizing established owners.

> Note that repealing prop13 would probably not raise property taxes overall.

A straight-up repeal of Prop 13 would repeal rate limits on property taxes as well as assessment increase limits (both are part of Prop 13) and probably lead to jurisdictions, over time, increasing property tax rates and overall property taxes. It would probably reduce increases in sales, income, and other taxes, which currently are used in place of property taxes because they have no Constitutional rate limits.

Re: Who caused the Bay Area’s housing shortage?

#15

Post by acchow »

dragonwriter wrote: post #13
tedivm wrote: post #8

Earlier quoted context omitted.

There's a guy on my street that owns 27 houses, all bought in the 90s. While that guy is getting subsidized income by paying less taxes on high value property he is less likely to sell that property to developers who will build higher density housing. The same can be applied to the people who own vacation or retirement homes out here (there's a surprising amount of vacant property out here). The taxes that aren't bei…

> The taxes that aren't being paid by all those people has to be made up for somewhere, so the taxes on new property owners are higher No, they aren't. Prop 13 limits maximum property tax rates to very low amounts as well as limiting assessment increases, so no jurisdiction is able to make up for artificially low assessments by jacking up the nominal rate. > (as are the number if different fees and things like sales…

Property value is reassessed on change-of-ownership.

Lower housing stock leads to inflated home prices, causing higher taxes paid by more-recently-purchased homes.

Re: Who caused the Bay Area’s housing shortage?

#16

Post by dragonwriter »

closure wrote: post #3
fricat1ve wrote: post #2

Not one mention of Prop 13? Poor reporting. It's basically the rent control story writ large. Everyone who bought in the 20th century has such an "amazing deal" that they won't give it up unless you a) entice them with a better deal or b) gore their oxen and repeal 13.

How does prop 13 cause a housing crisis? It certainly entices people to hold and rent properties they own rather than sell, but those units are still part of the housing stock. I think repealing prop 13 for commercial properties makes sense as a way to raise tax revenue, but don’t see doing so for residential property having an impact on housing costs.

> How does prop 13 cause a housing crisis?

Because it discourages owners of existing residential real estate from upgrading it to higher density to meet new demand, since doing do would trigger full-value assessment and decrease the returns; this means even discounting NIMBYism and zoning issues, market response to demand is slower and involves more rent increase to source the same level of redevelopment as would be the case without Prop 13.

Also, it subsidized people mstsying in their currently-owned single family homes, which makes the unwilling to (and thus demanding a higher premium to) move out of a place in-demand for working people when they retire, even if they are over housed. (This is, in fact, just a slightly different view of the retirees-being-forced-out-by-property-tax image that was used to sell Prop 13.)

Re: Who caused the Bay Area’s housing shortage?

#17

Post by thephyber »

dragonwriter wrote: post #13
tedivm wrote: post #8

Earlier quoted context omitted.

There's a guy on my street that owns 27 houses, all bought in the 90s. While that guy is getting subsidized income by paying less taxes on high value property he is less likely to sell that property to developers who will build higher density housing. The same can be applied to the people who own vacation or retirement homes out here (there's a surprising amount of vacant property out here). The taxes that aren't bei…

> The taxes that aren't being paid by all those people has to be made up for somewhere, so the taxes on new property owners are higher No, they aren't. Prop 13 limits maximum property tax rates to very low amounts as well as limiting assessment increases, so no jurisdiction is able to make up for artificially low assessments by jacking up the nominal rate. > (as are the number if different fees and things like sales…

Prop 13 limits increases while a property remains within the ownership of the same immediate family.

It is reassessed at market value after a non-family sale.

Re: Who caused the Bay Area’s housing shortage?

#18

Post by dragonwriter »

acchow wrote: post #15
dragonwriter wrote: post #13

Earlier quoted context omitted.

> The taxes that aren't being paid by all those people has to be made up for somewhere, so the taxes on new property owners are higher No, they aren't. Prop 13 limits maximum property tax rates to very low amounts as well as limiting assessment increases, so no jurisdiction is able to make up for artificially low assessments by jacking up the nominal rate. > (as are the number if different fees and things like sales…

Property value is reassessed on change-of-ownership. Lower housing stock leads to inflated home prices, causing higher taxes paid by more-recently-purchased homes.

> Property value is reassessed on change-of-ownership.

Actually, it's reassessed annually, there is just a limit to annual assessment increases except with qualifying events.

Which doesn't change the fact that Prop 13 limited nominal rates to lower values than many jurisdictions (including core Bay Area ones) were before Prop 13; jurisdictions aren't making up with artificially low assessments on long-held properties with higher taxes on other properties. Yes, those other properties are assessed closer to full value, but it's not offsetting anything. If you cut the food you eat on weekdays by 50% and that on weekends by 66%, you aren't making up for the reduced weekend calories by eating more during the week.

Re: Who caused the Bay Area’s housing shortage?

#19

Post by bradlys »

fricat1ve wrote: post #2

Not one mention of Prop 13? Poor reporting. It's basically the rent control story writ large. Everyone who bought in the 20th century has such an "amazing deal" that they won't give it up unless you a) entice them with a better deal or b) gore their oxen and repeal 13.

On top of this, you can continue to give large multi-million dollar estates down indefinitely to your children without the estates being reassessed for tax purposes. That was an expansion of prop 13 which I definitely think shouldn't exist. So many people I have met here get to live here because of these ridiculous laws that basically keep the 1% the 1%. It props up real estate prices and only benefits wealthy individuals. Even now, you need something like 400k+/yr income to buy a house in quite a few areas. Not realistic for single income! Difficult for dual income if one of them isn't a software engineer at a big tech company.

I've always had to be in these as a tenant. Current one, lady inherited this old 1930's property decades ago and the taxes are less than $6,000/yr for a $1.8mil property. She's making a cool $5k/month off us in profit. I live in the in-law unit and another person rents the house itself. She plans to pass it down to her children so that they can have the rental income too.

Last unit I was in was a 9 unit apartment building. It applies to those too and I think that's bonkers! Guy bought the place back in the 1970's. As you can imagine, it was also about 10-15% of the tax it would be if the property was reassessed. Again, their kids are going to get that for practically free and have tens of thousands of dollars in income with very minimal tax.

I am fiercely against prop 13 but I know it'll never hit the ballot. It would likely send a hell of crushing wave in real estate prices for California. Other states would hate California even more for the mass influx of Californians.

Re: Who caused the Bay Area’s housing shortage?

#20

Post by littlestymaar »

The XXth century's “American way of life” myth, with individual homes in suburbs and a car to go to work. That just doesn't scale well, espacially with the geography of the Bay Area.

And if you're really looking for a “who”: the car manufacturers who fuelled this myth through advertising.

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