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

Re: How California Became America’s Housing Market Nightmare

#51

Post by g2ah5z » Wed, Nov 06, 2019, 6:25 PM UTC

This is the great irony of government intervention in the economy.

When they try to make housing more affordable, it becomes dramatically less affordable.

When they try to make college more accessible, it ends up raising the cost of tuition to astronomical levels.

When they try to correct a perceived injustice, it ends up creating real injustice by picking winners and losers.

When they raise the minimum wage, they put people out of work.

When they try to guarantee defined retirement benefits, they end up going bankrupt and robbing their workers of the pensions they were promised.

When they subsidize dying industries to "save jobs", they ending destroying more jobs than they save.

Yet despite these failures, people on both sides of the aisle seem to think that the solution to the problems created by government policy should be solved by additional layers of policy. It's a feedback loop of insanity.

Re: How California Became America’s Housing Market Nightmare

#52

Post by collias » Wed, Nov 06, 2019, 6:25 PM UTC

x0x0 wrote: post #16

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…

Why should someone who bought a house for $100k get $2m years later?

Why should someone who bought $100k of Apple stock get $2m years later?

Re: How California Became America’s Housing Market Nightmare

#53

Post by jread » Wed, Nov 06, 2019, 6:25 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.

I agree with Prop 13 for primary residences until death. My beef is that it also covers second homes, commercial property and with follow on Props 58 and 193, children and grandchildren can inherit the tax base in perpetuity. It creates an almost feudal system with younger generations of renters at the bottom often with very little upward possibilities.

Re: How California Became America’s Housing Market Nightmare

#54

Post by _jwilde » Wed, Nov 06, 2019, 6:26 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…

Not sure I agree—

1. A lot of these property values wouldn’t be 2M if current owners had to pay the taxes. Prop 13 directly incentivizes home owners to (a) never sell and (b) block new housing in their neighborhood that might increase supply.

2. Prop 13 directly incentivizes cities to court Google/FB/Apple to come in. With Prop 13 limiting access to property taxes, most cities look to sales and business tax income to fill in the difference.

3. It’s not all or nothing like ”we need Prop 13 or seniors get kicked out of their homes!” Prop 13 is unique in that it blindly exempts large businesses and wealthy folks who can afford to pay, not just folks who need help.

Other regions (e.g. Boston area) address this with targeted property tax breaks for vulnerable communities, and California would be better served with a well-tested, reliable solution like that.

But that’s hard to implement because California ballot props are wildly difficult to get rid of.

Re: How California Became America’s Housing Market Nightmare

#55

Post by jayd16 » Wed, Nov 06, 2019, 6:26 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

Its easy to complain but the reality of what your demanding is that many more elderly citizens should be unable to afford their homes and be forced out of them. That's not a preventable side effect, that's the desired outcome. It seems obvious to me why many don't think that's ideal.

If opponents of prop 13 want it repealed they're going to have to buy out existing homeowners to get the votes. I won't pretend to know what that would take but you won't get the moral high ground with a straight repeal so you might as think of some sugar coating.

Re: How California Became America’s Housing Market Nightmare

#56

Post by Fainsan » Wed, Nov 06, 2019, 6:26 PM UTC

Why should California be allowed to have the same percentage based property tax to begin with? Assessed values that skyrocketed due to Silicon Valley and Corrupted Mortgages and Appraisals shouldn't mean California gets to give itself a humongous raise at the expense of it's constituents. More so due to the bail out and them artificially keeping interest rates down re-enabling these high values. The economy as a whole would be better off by managing housing values to not be out of line with median incomes of any given area.

Re: How California Became America’s Housing Market Nightmare

#57

Post by Shivetya » Wed, Nov 06, 2019, 6:26 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

well the proposition system is near as many will get to straight up democracy, which comes down to voting everything yourself and people like yourself with occasional as in infrequent guilt trip votes.

13 was part of the problem but it really all comes down to a system by which politicians and special interest groups can simply tie up development until they get their pound of flesh. it simply is too easy to burden new development with requirements and also too easy to nimby it behind well meaning suits that merely mask the bigotry underneath

Re: How California Became America’s Housing Market Nightmare

#58

Post by bachmeier » Wed, Nov 06, 2019, 6:27 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…

Tax deferral seems fair. A lower tax overall does not.

Re: How California Became America’s Housing Market Nightmare

#59

Post by georgeecollins » Wed, Nov 06, 2019, 6:27 PM UTC

jread wrote: post #17

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

With follow-on Props 58 and 193, property tax assessments can be inherited/assumed by children and grandchildren. So not only do they inherit the property tax-free, but get the added benefit of often well-below market property tax rate in perpetuity. Then expand this to not only primary residences, but also second homes and commercial property.

As a 5th generation Californian this is the thing I see in my life. My parent's have a house that has become really expensive (to be fair it was always nice) and they pay a lot less property tax than I do on my more modest California home. That crazy low tax rate is ultimately transferable to one of us, even if we move. Me or my sister will inherit the ability to own $x amount of real estate and pay $y worth in property taxes.

Insanity.

Re: How California Became America’s Housing Market Nightmare

#60

Post by sjg007 » Wed, Nov 06, 2019, 6:27 PM UTC

fortran77 wrote: post #36

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

Everyone benefits, not just "boomers". Anyone who buys a house ever gets the same protection. No more than 2% property tax increase/year. So if you bought a house in Silicon Valley for $1.5Million and the house next door sell for $3MM because someone had a lot of cash from their facebook stock, your property tax doesn't double.

One $3M cash buyer doesn't change the taxable FMV on your house. That price isn't considered in assessments. Now if 10 houses in your neighborhood sold similarily and are roughly equivalent to your house, then your tax would go up. This actually happened in Palo Alto when Zuckerberg bought the houses around his home.