Earlier quoted context omitted.
> Prop 13 has nothing to do with real estate price inflation. Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. In other words, home owners would at least see some value in new construction. As it stands now, there is only downside.
>Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. Prop 13 exists in California because that's exactly what was happening. Prior to its passage you paid on the assessed value of you house, and it didn't stop prices from double digit percentage increases every year. People who'd owned their homes for decades were being forced to sell bec…
Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work.
It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller).
People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.