I'm sure there are plenty of non-rich people in older homes who don't want to ruin the feel of their favorite neighborhoods. The current anointed opinion in the tech community is that the housing crisis is mostly caused by the rich trying to fence off the city for themselves, but I do wonder where that split is. Has anybody done an actual survey? I know that if I spent decades building my life in an idyllic city by the bay, you bet I would fight tooth and nail to keep gaudy highrises and corporate influence out of my area.

Like many other problems in California, this one can be largely traced back to a single source:

Proposition 13

Which was created to combat the problem of grandma kicked out of her house because she can't afford her property taxes. How do you get around that?

You don't. Grandma should move to someplace cheaper. The cures are worse than the disease, and if property taxes really have increased that much, she's in for a nice windfall when she sells and buys something cheaper elsewhere.

People don't like to hear this because it is just a very non-PC narrative, but it is the truth.

In other real estate markets, this is a huge downward pressure on housing prices by the fact that if taxes get too high, it increases the inventory by the amount of people forced out. The Bay Area is almost entirely lacking in that pressure, which combined with other Prop 13-related issues and the area's popularity makes a perfect storm for this current fiasco.

Nobody wants ol' granny, or that single mom who has lived there forever, etc. to have to uproot their life and leave, but there simply is no way to have a happy outcome for everyone. And, to your point, if property taxes have increased that much, the increased home value should take some of the sting out of it when they go to sell.

There are very real emotional downsides to all of this, but ultimately I'm of the opinion that people being forced out of areas as they gentrify due to property taxes are a necessary part of a healthy real estate ecosystem.

Really curious to see what happens in the long game as the families who inherit homes that were locked into old tax levels are forced to sell as they can't pass them on to a second generation without the tax rate resetting.

Anyone have an estimate on when that may be? Perhaps we'll see a major correction in Bay Area house prices at that point as the inventory increases from that.

> Really curious to see what happens in the long game as the families who inherit homes that were locked into old tax levels are forced to sell as they can't pass them on to a second generation without the tax rate resetting.

That game has already been played. Transfers between generations do not cause reassessment.

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#1

Congratulations, California voters. You made bad into worse.

Wow, that's crazy. I knew there was an exclusion of reassessment for initial transfer between parents and children (or grandparents and grandchildren in the event of deceased parents) but I didn't realize it just continued in perpetuity down the generational line. My original understanding was that the home could be transferred without triggering the reset in this manner once, and then subsequent times caused a reset.

Bad into worse just about sums it up. If it wasn't for Prop 58 and 193 you'd expect that eventually, decades from now once the majority were reset, that Prop 13 would have a chance of being struck down, but this just ensures that future generations have every incentive to keep homes in the family.

Thanks for sharing the link.

Strategic marriages just got a whole lot more attractive in California.

"She's got huge ... tracts of land!"

https://www.youtube.com/watch?v=GPX-mW4l1rU

> Grandma should move to someplace cheaper.

..and somehow NIMBYs are painted as the heartless ones?

She can take the payout and buy some place more affordable, perhaps even an apartment in the building that replaces her house. Not the best outcome for her, I'm sure, but beats the hell out of starving municipal and state governments of revenue, broken infrastructure, and forcing everyone else to pay extortionate rents and mortgages just to live there.

If the law allows it and the regulatory compliance costs are low enough, maybe grandma can take out a home equity loan and turn her 1-story ranch into a 3-story apartment and take advantage of the cash flow. If she needs a little more, and her neighbors are also having trouble paying their property taxes, they can pool their resources together and build an even larger apartment block to replace their old houses. Win-win for everyone, except for busybody NIMBYs who care about "neighborhood character" to the exclusion of everything else.

Any argument that boils down to "grandma should move to make room for the techies" lacks perspective and will never gain any political traction. Moving is not just something you "do" after building a life somewhere for 40 years.

As I mentioned, she doesn't have to 'move' except in the most technical sense--she can take house a home equity loan (made possible by the house's appreciation) and convert her house into an apartment by adding another floor or converting a garage or by demolishing the house and building an apartment block in its stead. She can continue to live in one of the units, probably the first floor, and benefit from a reliable stream of income from tenants.

Oh, and BTW, this idea that "techies" aren't people, or somehow less deserving of moral consideration than everyone else, is reprehensible.

Speaking as a "technie" myself, I feel no one really addresses the undercurrent of entitlement to live in the city. Maybe I'm wrong, but I get the sense that a lot of the housing discussion in the tech community boils down to "but... I really want to live in SF for cheap". From what I understand, it's very common for programmers to live in the (very expensive) city and commute down to the South Bay for work. That's not a pattern borne out of necessity.

It is a necessity, because the rest of the Bay Area has even higher housing costs--at least the parts that aren't subject to terrible commutes, which are in large part caused by Proposition 13 starving governments of revenue. They don't want to live in SF for cheap, but they do want to live in SF for not-soul-crushingly-sums-of-money. Wanting to live where you work is certainly not an entitlement, at least not more than wanting your neighborhood to look the way it did 30 years ago forever and ever.

But tech industry salaries are inflated in lockstep. The rule of thumb is 30% of your income for rent, which is appropriate for $100k+ entry-level salaries. Also, out of the (admittedly very small and anecdotal) subset of programmers living in SF I've talked to, most have indicated that they live in SF because they like it there, not because it's cheaper than South Bay.

You chase everyone out it means:

- Service workers (everything from baristas to cops to teachers) either disappear or have to deal with punishing commutes

- Brain drain. When even people making a decent salary get pushed out, it's bad for cities (http://sanfrancisco.cbslocal.com/2015/05/26/silicon-valley-e...)

- Many people believe living in the place one was born/grew up in should be a right. That's a value difference. Markets do not get to dictate everything if we don't allow that.

Luckily, the market does have a solution to the housing problem itself: build a lot more of it, and prices will drop.

Will highrises and density bring rent down? I think it's been shown that the number of houses needed to actually do that is enormous. In practice, what's likely to happen is that the city will fill up with even more of the well-off. (That is to say, people working in tech.) In a decade rent might come back down, but by then all those groups will be long gone anyway.

Personally, I don't have any vested interest SF housing, as it's really not one of my favorite cities. But I keep thinking of what I would do if this was happening to a city I did actually love and live in, and I think in that situation I would be more sympathetic to the NIMBYs than the newcomers. I don't think there's any moral imperative for cities to keep growing.

At any given density, replacing low-rises with high-rises will bring rent down, as long as construction isn't overly burdened with neighborhood review and low-income-unit requirements. Sure, a lot of units will need to be constructed for rents to come down a significant amount, but a massive swath of the western sections of the city consists of 1-3 story single family houses, maybe with a shop on the first floor, which are ripe for conversion into 5-story walk-ups. That alone will provide a significant boost to housing stock without the seismic and elevator costs of high-rises.

SF isn't my favorite city either, but what has happened in my current and favorite city (Boston) has made my less sympathetic to NIMBYs, both the high-income (I want my house to appreciate without doing any work!) and low-income (I want 20% of units just for me!/Screw the middle class!) types--they are the ones making things worse. Cities grow because businesses move there, and businesses move there because they want to be close to and network with other businesses. Employees can't exactly prevent that by staying in Nowhere, KS. I agree, there isn't any moral imperative for cities for keep growing, but for now at least, there is a practical one, and thus there is a moral imperative for cities to accommodate those to wish to live there.

It is enormous, no question. If governments and people were serious about it, it could be done, though. I don't think anyone is arguing it would be easy.

I feel like any solution that thinks supply and demand shouldn't affect housing is missing some sort of perspective itself.

Any argument that boils down to "this other argument lacks perspective" presumes that there is a preferably alternative without all kinds of unintended consequences.

We're seeing the unintended consequences of one alternative. Of course, we haven't tested all of the possible universes yet.

My point is that changing the deeply-entrenched status quo is not a matter of looking at a spreadsheet and picking the "best" option. The consequences of the alternative have to be preferable over the consequences of the status quo to the voter base. No amount of rabble-rousing will make people vote against their own best interests.

> Which was created to combat the problem of grandma kicked out of her house because she can't afford her property taxes. How do you get around that?

No, it wasn't created to combat that problem; if it was, it would have (even had the same general approach been used) been narrowly drawn to residential property, and maybe even only to properties that are primary residence of the owner.

> How do you get around that?

Lots of ways, including going to full value annual assessment of all property, but allow, for owner-occupied primary residences, deferment of taxes in excess of the lesser of the total tax due in the year of sale [0] increased by 2% per year since the sale or some function of the owner's income (the exact function is an implementation detailed) to be deferred until the property is sold [0], with the taxing authority acquiring a lien on the property.

[0] Note that you can expand "sale" to include the same kind of improvements that allow new assessments under Prop 13, as well.

Grandma can get a reverse mortgage on her $3M house and pay the property taxes.

Have a narrow version of prop 13 for grandmas. If you've lived there for 10+ years, it's your primary residence, and can prove economic hardship, sure, you can get a break on your property taxes.

There's a simple solution:

The city puts on the lien on the home for the value of the accumulated rise in property taxes. Once the owner dies, family members sell the house, and pay off the lien.

I have no idea why Prop 13 was created when the aforementioned solution allows grandma to stay in her house without destroying the housing market in the process.

A compromise solution is to give people fully-paid relocation / temporary housing (e.g., putting them up in a hotel room), then guaranteeing them an apartment in the new housing development at their old price. Very small price to pay for a potentially massive number of units.

If it was primarily to protect those on fixed incomes, why does the cap also apply to commercial and non-owner-occupied property?

One way is to eliminate property taxes altogether and shift revenue to sales tax, payroll tax, VAT, or other non-property tax sources.

Except that taxes on land value have no deadweight loss, unlike all those others. And property taxes fall heavily upon land values.

The question was simply about how it could be guaranteed that grandmas can't be priced out of their own houses in conditions of sharply rising property values, not about optimal tax structure in general.

Quite simple, really--allow grandma to take full advantage of rising property values by adding apartment units to her existing house.

Increased density to reduce the upward pressure on the housing market. Basically you have enough homes so the prices don't get bid up to insane levels.

It's basic economics. If you have a somewhat fixed demand and artificially restrict supply, the price is going to shoot through the roof.

by means testing whether or not people can have their property seized over property taxes for one thing, rather than a blanket freeze on taxation except during sale that has horrific consequences.

I live in NJ and the property taxes here are among the highest in the nation. My parents house is currently at 8k per year and that is considered "good".

Even in neighborhoods with shit schools taxes are ludicrous, an acquaintance of my family is paying 14k taxes for a small single family home in a town with a high school ranked 294 out of about 400 in the state. She wants to sell the house but due to high taxes and shit school buyers are hard to find.

Property taxes almost doubled in the past 10 years in my area, I am not looking forward to buying a house and then the property taxes doubling in another 10 years.

Proposition 13 sounds great to someone from New Jersey.

This attitude works right up until the kids want to start their own families... Then they realize they can't possibly live near the grandparents and having one home worth $1.5m doesn't do anything to help you buy two unless you're already making or have a lot of money.

You can see this split hitting out in sunset, as former NIMBYs flip toward pro-housing as their kids return from college.

I grew up in the San Jose and live in Mountain View. I have never heard anyone in the Bay Area express this opinion, nor do I hold it myself. Moreover, I am a homeowner, and have voted pro-housing in every election where it was an issue, and expressed a strong pro-housing opinion in every survey the city has offered.

these kids are from places like woodside and atherton.