Ok, now where are they supposed to live? All the other properties cost just as much, so now they're forced to not only move out of the city, but now they have to quit their job too! How is this productive? You're penalizing someone for living in a housing bubble and not taking advantage of it. Even worse, you're penalizing current residents for having their house values driven up by a bunch of out-of-state (or out-of-country) investors and speculators.
The other option is to ease pressure on home prices by laying down the NIMBYism and letting more housing be built in your community in a sustainable way!
This is the whole the point of self-corrective market forces: sure, you can choose to keep your low-density housing in a region that is attracting demand with great weather and strong industry, but prices are going to appreciate if you keep your doors closed to newcomers. Keep the door closed long enough and your self-defeating actions will force yourself out as well (see palo alto, where they now need to subsidize housing for anyone making under $250k/yr so they can have people like teachers and firefighters still live in the community).
The fact that taxes DON'T increase with demand distorts the self-corrective market forces that would otherwise stop people from closing the door to affordability.
That doesn't actually work in the real world. If you live in a desirable area, and you increase the housing supply in such a way that the area is still desirable, as soon as the price drops a tiny bit people move in from the outside and drive it back up again.
(If you have evidence of urban areas that have allowed lots of construction during periods of high population and job growth - cities like Dallas, Houston, or Atlanta - and have also seen high housing prices, please share it; I'm genuinely curious).
Part of the problem in the bay area is that there is minimal cooperation between the dozens of municipal governments to allow more housing. None of them want to be the first or only one to do it out of fear that they'll just end up with more density and high prices. It's a bit of a prisoner's dillema.
Orange groves and strawberry fields and outdoor movie theaters and old military bases were all leveled and turned into housing tracts. But housing didn't get any cheaper - the state added 20 million people from 1970 to 2010, because there were jobs and it had the reputation of being a nice place to live.
Prop 13 was put into place because the state and municipalities were raising taxes left and right without consideration of things like fixed income individuals being able to stay in their homes.
There was good and bad in the measure. Good - to a point - raising the need to add taxes above 50%+1 vote, the bad, it applied property tax issues to both commercial and residential properties equally.
It's much easier to set up a business entity to span generations and avoid taxes than it is a private home.
The measure also masked an issue of use. A single individual who bought a house for $500k would pay more in taxes than a family who bought a house in the same neighborhood for $350k, yet if the family has children in the schools, they are paying less in taxes and getting more out. Most property taxes have multiple assessments for schools.
It does need to be fixed, but the conversation so far has fixated on residential and ignored the commercial impacts of prop 13.
I shed exactly zero tears for someone whose $250k property quadruples in value to $1m in five years. Sell the house and dance with joy at your (untaxed!) $750k capital gain.
The only argument for freezing tax assessments is to soak the new residents in favor of the current residents. It's a result of the absolute worst kind of democracy: voting to make other people pay more taxes.