How California Became America’s Housing Market Nightmare • Hacker News Board

Re: How California Became America’s Housing Market Nightmare

#21

Post by damnyou » Wed, Nov 06, 2019, 6:16 PM UTC

malvosenior wrote: post #7

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

Totally agreed. Repeal prop 13 and allow deferring property taxes on market value gains until the property is sold.

Re: How California Became America’s Housing Market Nightmare

#22

Post by jdross » Wed, Nov 06, 2019, 6:16 PM UTC

malvosenior wrote: post #7

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

First, prices being where they are is at least partially a consequence of taxes staying the same which encouraged NIMBYism to build free equity instead of building.

Second, people who now have 2 million in equity with a 100k cost basis can take out financing for a portion of that to cover taxes into perpetuity and still have a huge equity appreciation.

Third, none of this precludes a slow path to getting people to paying FMV taxes by, for instance, capping tax increases at 10% per year. It'll take 20 years to catch up, but that's better than now. And it should probably accelerate if you hand the property down to the next generation.

Fourth, why does Prop 13 exist for people who rent out their homes or for commercial property? That's just a subsidy to the existing.

Re: How California Became America’s Housing Market Nightmare

#23

Post by novok » Wed, Nov 06, 2019, 6:16 PM UTC

spaced-out wrote: post #18

malvosenior wrote: post #7

Earlier quoted context omitted.

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

I think you would agree, though, that people shouldn't be able to get Prop 13 benefits on properties that aren't their primary residence. For example, someone owning multiple houses and renting them out at market rates.

Or corporate properties such as office towers.

Re: How California Became America’s Housing Market Nightmare

#24

Post by chiefalchemist » Wed, Nov 06, 2019, 6:17 PM UTC

> "How did we get here? Simply put, bad government—from outdated zoning laws to a 40-year-old tax provision that benefits long-time homeowners at the expense of everyone else—has created a severe shortage of houses. While decades in the making, California’s slow-moving disaster has reached a critical point for state officials, businesses and the millions who are straining to live there."

To be clear, and fair, the economic implosion circa 2007 / 2008 helpeda lot as well. That "crisis" led to a massive redistribution of (home equity) wealth.

The under-waters bottomed out and those with the resources stepped in and filled the void at pennies on the dollar. With so much control and so much demand rents only go up.

Re: How California Became America’s Housing Market Nightmare

#25

Post by georgeecollins » Wed, Nov 06, 2019, 6:18 PM UTC

malvosenior wrote: post #7

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

Why should prop 13 cover businesses? It is always defended because some poor retired home owner. Newsflash: not many retired home owners in California are poor anymore. But meanwhile car dealerships and shopping malls are also protected from fair market taxes on their land use.

Re: How California Became America’s Housing Market Nightmare

#26

Post by thrower123 » Wed, Nov 06, 2019, 6:18 PM UTC

malvosenior wrote: post #7

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

It's not particularly disastrous in the rest of the country, however.

Re: How California Became America’s Housing Market Nightmare

#27

Post by RubberSoul » Wed, Nov 06, 2019, 6:18 PM UTC

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

The injustice is actually larger than this paragraph makes it seem. First, people can pass their low property taxes on to their children using trusts, creating a sort of landed nobility in California. Second, Prop 13 results in neighbors who receive the same public services paying vastly different taxes to fund them. Taxing similarly situated individuals differently violates the norm of horizontal equity.

Re: How California Became America’s Housing Market Nightmare

#28

Post by triceratops » Wed, Nov 06, 2019, 6:18 PM UTC

malvosenior wrote: post #7

rcpt wrote: post #2

> California also has a distinct burden: Proposition 13, a measure approved by voters in 1978 that limits property-tax increases on homes until they’re sold. That’s been a boon for Baby Boomers who’ve lived in their houses for decades and aren’t assessed at anything close to their property’s market value. But it’s especially unfair to their children, who are in effect subsidizing their parents’ generation. yup

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

> The alternative is that we basically force people out of houses they've bought by gouging them with taxes.

So presumably you're also in favor of rent control^? The alternative is that we basically force people of out houses they've lived in forever by letting landlords (themselves benefiting from Prop 13) gouge them with crazy rent increases^^.

^ For the record I think both Prop 13 and rent control are bad ideas.

^^ The crazy rents are themselves due to Prop 13 removing any incentives for property owners to sell or upzone because property taxes on single-family homes are unaffordable.

Re: How California Became America’s Housing Market Nightmare

#29

Post by scarface74 » Wed, Nov 06, 2019, 6:18 PM UTC

BubRoss wrote: post #13

malvosenior wrote: post #7

Earlier quoted context omitted.

I don't know that it's more "unfair" to the younger generations to not increase property taxes than it would be to the home owners to do so. Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? A lot of these people probably had normal jobs and incomes, they didn't chose for Google/Apple/Facebook to move into town and send the property prices sky high. Yes, they benefit as owners…

It's not like these things happened over night. If someone bought a house for 100k and it is now worth two million, I'm not sure they can claim they are being gouged on a 2000% increase of equity. Buying land still doesn't entitle you to be able to perpetually afford to live in one of the most desirable places on earth.

Well. No one is “entitled” to live in California. There are 49 other states in the US. There are also many other cities where the pay vs cost of living makes a lot more sense.

Re: How California Became America’s Housing Market Nightmare

#30

Post by gyc » Wed, Nov 06, 2019, 6:19 PM UTC

tstrimple wrote: post #8

m15i wrote: post #6

So build more houses?

More houses? Not in MY back yard! Building more houses will depress housing prices. Home owners tend to value their equity more than ensuring housing is affordable for others.

Also wanting the neighborhood to be preserved in amber from when they bought the place.