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How California Became America’s Housing Market Nightmare

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Re: How California Became America’s Housing Market Nightmare

#81

Post by g2ah5z »

helen___keller wrote: post #71
g2ah5z wrote: post #51

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 pu…

> When they try to make housing more affordable, it becomes dramatically less affordable. Zoning law (the biggest factor in restricting new housing growth) was never about making housing more affordable, it was supposed to be about quality of life (and many times was actually about racism, see redlining era)

I was referring to Prop 13, rent control laws, federal tax breaks given to homeowners, and the numerous subsidized home loan products provided by Fannie, Freddie, the Federal Housing Administration, and the Veterans Administration. All of these were intended to make housing more affordable, but ended up jacking up asset prices to extreme levels.

I agree with you that zoning was never intended to make housing more affordable, but it's not the only policy in play.

Re: How California Became America’s Housing Market Nightmare

#82

Post by yonran »

jayd16 wrote: post #55
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 If opponents of prop 13 want it repealed they're going to have to buy out existing homeowners to get the votes.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…

Proposition 13 was advertised to protect the poor and elderly citizens, but its design does not target them. In particular, it benefits those who don’t need help: commercial landlords, rental landlords, and (after Proposition 58/193) feudal estates. And it harms those poor and elderly who are unable to purchase a house. In short, it is an entitlement that benefits homeowners, at the expense of renters and home-seekers. It takes some tautological reasoning to defend its poor design if the goal is protecting lower income households; see the Stevens dissent to Nordlinger v Hahn https://www.law.cornell.edu/supct/html/90-1912.ZD.html

Re: How California Became America’s Housing Market Nightmare

#83

Post by almost_usual »

pound wrote: post #75
almost_usual wrote: post #43

Earlier quoted context omitted.

I honestly think it has less to do with money than the younger HN community realizes. Older people don't like change, especially significant changes like moving. Most of the people who have been here for decades stay because it's their home and they have no where else to go. Getting rid of Prop 13 and raising taxes to tech market rate is the equivalent of deporting someone from their home.

non-primary residences as well as commercial properties are also covered by it. It's about wealth, not about keeping someone in their home.

I can get on board with amending non-primary residences and commercial properties.

Re: How California Became America’s Housing Market Nightmare

#84

Post by tmh79 »

malvosenior wrote: post #66
FreakyT wrote: post #15

Earlier quoted context omitted.

> The alternative is that we basically force people out of houses they've bought by gouging them with taxes. I would argue that being able to afford a place in the 1970s does not endow one with an inalienable right to remain there forever. Locking the property taxes creates an artificial incentive to hold onto property forever, thus creating market stagnation.

I would argue that buying a house does give you the inalienable right to live there forever (if you so choose). Anything else is basically the elimination of the concept of private property. Kicking people out of their houses is not a sign of a healthy society.

so you support rent control below CPI?

Re: How California Became America’s Housing Market Nightmare

#85

Post by carty76ers »

nerfhammer wrote: post #46
FreakyT wrote: post #15

Earlier quoted context omitted.

> The alternative is that we basically force people out of houses they've bought by gouging them with taxes. I would argue that being able to afford a place in the 1970s does not endow one with an inalienable right to remain there forever. Locking the property taxes creates an artificial incentive to hold onto property forever, thus creating market stagnation.

A more palatable argument is that it would create incentives to keep housing prices stable, rather than expecting a lifetime skyrocketing windfall at everyone else's expense.

The counter argument is: If a widowed elderly woman lives in a 900 sqft home bought in 1963, how is it her fault that the world went crazy and values it at $1,200,000+ today? Have you seen a 1963 house? They’re a fire hazard not worth 1.2M.. And yet, you want her owe tax on that crazy value, yet she is stuck with a static retirement income? Where should she go? Idaho?

I’m for increasing tax on income earners, but not on retired elderly who just want to die in peace. The younger generation could move to other geographies much easier

Re: How California Became America’s Housing Market Nightmare

#86

Post by mistermann »

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…

> 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 but this rule only takes effect if they don't sell their house and continue to live in it.

I've always found it weird this dichotomy that seems to exist where so many people (who aren't even home owners) find it "logically" inappropriate for home owners to pay any increased taxes based on returns on housing (via prop 13, capital gains exemptions, etc), yet find it completely reasonable that those who earn more money working should pay not just higher total dollars in taxes, but also a higher percentage of their income to taxes, and are outraged at any suggestions to the contrary.

Higher earned income is typically a result of some combination of investment in education, risk taking, and hard work (things that actually require effort), whereas noteworthy returns on real estate, at least for the average Joe home owner, seems to be typically little more than just being in the right place at the right time, doing the same thing that most anyone does: buy a house and live in it.

Rewarding dumb luck and "punishing" hard work seems like the exact opposite of how a society should be run.

As for what to do with all these complexities that have built up over time in our societies, I increasingly think we should look to China and see what they do, because from all the Youtube videos I watch on that country (aka reality itself, or at least a portion of it, whereas reading books and news articles can easily give completely polar opposite impressions of reality), because whatever it is they are doing certainly seems to be bearing fruit that is extremely beneficial to broad society, across all income classes.

Re: How California Became America’s Housing Market Nightmare

#87

Post by Fainsan »

More Housing is no solution. That's compounding the issue at hand. Lower Property taxes plus value adjustments for areas based on median income could help ensure you don't price residents out of their areas and ensure healthy participation in the rest of the economy.

Re: How California Became America’s Housing Market Nightmare

#88

Post by helen___keller »

g2ah5z wrote: post #81
helen___keller wrote: post #71

Earlier quoted context omitted.

> When they try to make housing more affordable, it becomes dramatically less affordable. Zoning law (the biggest factor in restricting new housing growth) was never about making housing more affordable, it was supposed to be about quality of life (and many times was actually about racism, see redlining era)

I was referring to Prop 13, rent control laws, federal tax breaks given to homeowners, and the numerous subsidized home loan products provided by Fannie, Freddie, the Federal Housing Administration, and the Veterans Administration. All of these were intended to make housing more affordable, but ended up jacking up asset prices to extreme levels. I agree with you that zoning was never intended to make housing more aff…

A lot of these products probably made sense in an era where there was a massive amount of undeveloped farmland suddenly available to build houses on and connect via road - if undeveloped land is cheap, the costs of a new house can't rise significantly above the cost to build a new house, so offering incentives to homeowners makes some amount of sense.

This doesn't happen anymore as most cities are at "peak suburb" - the undeveloped land that still exists is so far out that nobody wants the insane drive into the city (and rightfully so).

But yeah in the 21st century where everyone is competing the afford the same few properties in the same few neighborhoods, subsidizing homeownership is just subsidizing bidding wars. There's no productive economic activity being subsidized like it used to be (construction of new homes on undeveloped land yields more living space for the city, which I would consider productive) - a bidding war just leads to the previous homeowner getting a fatter payout.

In theory, if prices were kept to reasonable levels via sufficient construction, I could get behind (toned down versions of) prop 13 and rent control. It's just clearly they exacerbate price issues, and to say California has a price issue is an understatement.

Re: How California Became America’s Housing Market Nightmare

#89

Post by undersuit »

almost_usual wrote: post #43
FreakyT wrote: post #15

Earlier quoted context omitted.

> The alternative is that we basically force people out of houses they've bought by gouging them with taxes. I would argue that being able to afford a place in the 1970s does not endow one with an inalienable right to remain there forever. Locking the property taxes creates an artificial incentive to hold onto property forever, thus creating market stagnation.

I honestly think it has less to do with money than the younger HN community realizes. Older people don't like change, especially significant changes like moving. Most of the people who have been here for decades stay because it's their home and they have no where else to go. Getting rid of Prop 13 and raising taxes to tech market rate is the equivalent of deporting someone from their home.

Why are we bending over backwards to appease them though. Renters have to leave their residences all the time due to rental increases, often after being financially stressed to a limit. The home owners could at least take out credit against their property to pay for the taxes if they don't want to move. In fact I think that's a good thing! A large number of California home owners all needing large lines of credit backed by highly valued properties could devalue the properties or cause a crash.

Re: How California Became America’s Housing Market Nightmare

#90

Post by malvosenior »

tmh79 wrote: post #84
malvosenior wrote: post #66

Earlier quoted context omitted.

I would argue that buying a house does give you the inalienable right to live there forever (if you so choose). Anything else is basically the elimination of the concept of private property. Kicking people out of their houses is not a sign of a healthy society.

so you support rent control below CPI?

No. I don't think the government should be manipulating the housing market directly like that.

I do think it should invest more in building low income houses and that zoning should mix incomes though. I think that would make for a healthier environment for everyone.

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