not at all. the cost of housing has many factors. prop 13 is one. prop13 is a travesty irrespective of other housing cost factors.

 

Can’t completely disagree although I don’t view it as a travesty. It’s well intentioned legislation that’s ran its course. It has been chipped away at for years. None of which has lowered values. Initially it applied to commercial and every residential property owned. Those both went away and now if the ability to leave to heirs goes away I’d be fine right there. Agree to disagree.

 

Here is a fun tool to experiment with. It's some research project a college kid did that shows the effects of prop 13 on the California real estate market.

https://www.officialdata.org/ca-property-tax/
https://www.officialdata.org/ca-prop...61221313478,19

You can zoom in on any neighborhood you like and you can see the property tax differential that is in effect across the entire state. The effects of this tax law are felt across the board, though prop 13's responsibility for causing those effects, IMO, is not well understood. Most states' tax laws tax real-estate equally. This one does not.

One of it's biggest effects is to discourage selling a home if you're a long-time owner. It makes much more sense to keep it and rent it out at market rate indefinitely than it does to sell it. It's created an artificial scarcity, and we all know econ 101 supply and demand. This, more than anything else - including CA's restrictive and onerous regulatory environment - is what makes home ownership in CA so difficult for new comers.

 

Yes. That’s why leaving the burden to heirs went away for rental properties. It’s going to take some time but eventually rentals will all get reassessed. If you were to remove prop 13 and just make all properties pay tax based on value tomorrow guess what. Rent is going up.

 

i love checking around palos verdes to see $5m+ cliffside estates with $800 property tax bills.

the neighbors on either side are paying $150k and $70k a year.

 

as a half measure, eliminating the inheritability and the portability (taking your tax rate to a new home purchase) would be okay, if not my preference

 

If the tax suddenly goes from a $300K house in 1984 to a $2M assessment…many of those property owners would be forced to sell and relocate. That being said, there is no shortage of home sales in the Bay Area. Many sell within a few days and voila, new assessment. Many families set up trusts with property. Not sure what happens to heirs and taxes when those trusts are distributed in CA.

 

I checked the house I grew up in, and its property taxes are the same from when it was first sold in 1974 (or whatever the upper adjustment based on prop 13 has limited it to). It has never been sold by the original owner. They pay $2,300/yr in taxes and homes in that neighborhood rent for $5,000 - $8,000 per month. That's a net difference of between $57,000 and $90,000+ (every year) that those owners reap due to a law that gives them leverage which is not available to other people. In other words: it gives them legal, permanent arbitrage.

And while it's true that you identify the loophole has been "closed" for rental properties, if you dig into specific properties and look at a random sample, you will notice that a non-trival number of homes' legal owners are trusts - i.e. ownership entities that undergo no reassessment - ever. So while some rental homes may be reassessed, in practicality it is far, far short of "all." The guilded class knows what they are doing.

 

Most other states deal with this issue effectively WITHOUT something egregious like prop 13.

1) Homestead exemption during your working years reduces the tax burden of the appraised value AS LONG AS YOU ARE ACTUALLY LIVING IN THE HOME. Full taxes due if it is an investment property.

2) Age 65 your property tax gets locked in. No seniors get their homes taken away. Fixed income people paying fixed property taxes and get to keep their home.


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I don’t know enough about how property trusts are structured to have an educated opinion on that but it looks like a loophole that should be closed.
Houses are reassessed in ca. 2% annual max increase. You could simply increase that 2% over time making prop 13 irrelevant approaching 100% at some point in the future so it doesn’t take 75 years for the tax to double. That way folks will know thier max tax numbers in retirement. It solves most transition off prop 13 issues. Rent will be going up. No more cheap rentals because the owner has no mortgage and cheap tax.
Never thought I would be discussing ways to increase my taxes but I do agree with alot of the negative consequences posts.