Additionally, if you compare the percentage of renters in California to other states, it's often much higher, and this is a result of the fact that the cost of purchasing a home is substantially higher than renting the same home. Prop 13 enables this because these same PE firms who are able to leverage long term action are willing to prop up the value of homes in the short term since it is incredibly cheap in the long term.

It last sold in 1977 for $30,500. Over the last 40 years, climbing at 2% a year as allowed by Prop 13, it's current assessed value is $60,716, nearly 20X under its actual market value!

This past year, the owners paid $1,857.78 in property taxes: $724.40 in ad valorem tax at a rate of 1.3486% and $1,133.38 in fixed parcel taxes. The new owners will pay $16,979.43 in property taxes, with $15,846.05 due to the ad valorem portion. That's 9X the previous owner, which works out to $1,414.95 a month in taxes!

And the old owners were probably angry about the increasing fixed portion, which went from $548.28 in 2005, to $1,133.38 this past year, and which for them makes up the bulk of their property taxes.

When you look at the actual, concrete numbers, it really is mind-boggling. Prop 13 aside, this house has appreciated 40x in 40 years, only 4x of which is due to inflation. Do you think the new owners will see another 10x in real returns over the next 40 years? Will the sales price in 2058 really be $45 million dollars? Somehow, I doubt it.

I still hate the "fair market valuation lock-in". So much of it comes down to timing and nothing else. When rates were high in the 70s and 80s, people locked in a tax rate at a low price. Therefore, it's probably advantageous, from a property tax perspective, to buy in a high rate environment in CA. Rates have been going down consistently since then, and thus we have all of these older people that have locked in their property tax rate at a ridiculously low valuation. There is just so much the market can do that legislating these things like growth into the law just has too many unpredictable effects.

I was renting a place for 2500/mo from a woman's son who paid $600/year in property taxes. He wasn't the least bit interested in maintaining it either.

The fact that Prop 13 assessed values can be passed down to children and grandchildren and is also applied to corporations causes its unfairness to continue to increase each year. The sooner it is repealed the better.

Proposition 13 does not target the elderly. It gives tax breaks to all property investors, including corporations and (due to Proposition 58) inherited estates.

[1] No doubt fanned by the usual anti-government, anti-civic rabble rousers that would eventually come to completely dominate politics.

Another way to determine who it targets is to suggest repealing it and watch who complains the loudest.

1) Elderly who bought early pay low tax, elderly who bought recently pay high tax

2) Younger people who are also rich pay high tax, but can afford it, and it is proportional to the amount of services they are receiving

3) Younger people who cant afford these property taxes are priced out of the area.

I feel like a clean repeal of Prop 13, while it would be good for California overall, just isn't possible.

What I would like to see is: -Prop 13 applies applies to only your lived in primary residence. This applies to new buyers as well. -Commercial and Investment properties have a 10 year sunset clause. That is to say property taxes go up to market rate over a 10 year period. (i.e. first year you're paying 10% more...then 20%...etc) up until year 10

I don't even think THAT is politically feasible here though, and I'm a home owner.

It's ironic that most of the people complaining about Prop 13 driving housing prices up are oblivious to the fact that they, if not born in the bay area, are the sole reason for the astronomical housing price increases. Housing is expensive in the bay area for one reason, more people want to live here than there are houses available. How about addressing the real root cause and implementing a new resident tax? We can use the proceeds to pay for affordable housing initiatives.

My opinion is that Prop 13 provides useful planning benefits to property owners and municipalities, and the rate of increase could be adjusted to still give those benefits, without having quite the same distortion. 5% annual assessment increase cap would probably be much too high, but 3% or 4% might be enough to stay within throwing distance of current values.

As a soon to be former CA property owner it was nice to be able to know for sure my taxes would basically grow at 2% once prices started climt. Municipalities could count on property tax revenues staying flat or even continuing to grow during the housing market collapse because so many owners had their assessments constrained, and many of the sellers had assessments below even the depressed market value. Having constrained assessments also reduces the burden of assessment appeals, which I've heard is significant in locales without constraints.

Prop 13 is framed as something for the rich because it's for the rich and it's the rich who benefit.

As awkward as it is, the purpose of property taxes is to keep land economically productive. These policies are needed to enable governments to provision services and at least slow down the hereditary growth of wealth. If you can't afford the house, that's the policies working as intended. It's time to sell and get something you can afford.

Real pain, and the empathy and compassion that respond to it, do not always justify a change in public policy. Especially in a place like California, where we tend to enact that wonderful empathy and compassion as half-assed public policy that transfers wealth from the young to the older.

If people are worried about high home and property tax prices, isn't it time for them to move to an area they can afford?

Empathy is a powerful emotion, but not a good way to get to sound policy. It's rarely difficult to find a way to evoke empathy on any side of any given issue.

If I offer you a ton of money to buy your house, you can accept that or reject it. Rejecting it is a fine choice. But you still have to pay higher "rent" to the government just because I'm willing to buy your house for a lot? It's nice to stabilize people's homes against the market.

None of this would be a problem if the proposition had been sane. They could have just allowed primary home owners over a certain age (59.5, 65, etc) to have locked-in property taxes. The bullshit is that the “stabilization” applies to corporations with indefinite lifespans, and that the tax rates can be inherited. By corporations we’re not just talking big, actual business like Google. The way the proposition works incentivizes real estate funds to simply buy all the land they can as soon as possible to lock in a low rate that can be maintained indefinitely. This brings housing prices further up and disincentivizes actual land ownership over the long term (it makes it cheaper to rent from a group that structurally locked in a stupid low property tax rate).

It’s such a stupid fucking law. Clearly nobody bothered to think of the long term consequences

If you have $1M in capital in your $1.5M house, banks will be begging you to take out a reverse mortgage to pay your taxes. It just means that your heirs will get a slightly smaller windfall from your death rather than the full $1M.

The result of your policy is not only increased cost of housing and underdevelopment, but higher sales taxes as well. If California had a more healthy proportion of property taxes, then sales taxes wouldn't be forced up to nearly 10% to fund government.

If your turn it into apartments though, you've probably eliminated turnover, since it's much easier to own apartments through corporate forms that won't trigger a reassessment.

In other words, “investing” in property by purchasing it but not putting it to use is an unproductive investment

I bet more people will be in the later bucket than the ones who analyze things like you do. Since (property) tax policy depends on politics, which is driven mostly by emotions rather than reason, how would you persuade people to think like you? And if one cannot persuade them and simply try to impose one's preferred tax policy by whatever means, then we will see a tax revolt similar to what happened in 1978 with Prop 13.

The prop 13 issue seems pretty nuanced but a component of it is certainly helpful to low income long time residents.

I wish I had a problem like this — I could just sell the house, cash in the profit and retire...

Kind of interesting there are those who want certain people kicked out of the area (elderly homeowners) but not others (homeless).

I don’t want to kick anyone out of the area, but I don’t think people who made a million of dollars (in the example above) are the ones who need the protection the most.

Numerous elderly have trouble moving due to their poor health. Forcing them to sell is akin to an early death sentence.

I’m not sure why you keep talking about homeless though.

> The most important thing in this country is not the school system, nor the police department nor the fire department. The right to have property in this country, the right to have a home in this country, that’s important.

Now it has made a lot of very rich people even richer (not to mention driven elderly renters out of their homes) as well as caused a budgetary crisis in California.

Jon Coupon's (current president) response to this budgetary crisis that they helped caused is to argue that California state pensions add up to too much of an unfunded liability and should be slashed.

- remove Prop 13 protections for non-people owners (i.e. corporations, trusts etc)

- remove Prop 58 protections (inheritance benefits) for non-primary residences

- remove Prop 13 protections for non-primary residences

Let's inundate California voters with ballots which will start removing Prop 13 protections from those who don't deserve them. Some ballot initiatives will fail, but some will succeed and things will be better for them.

This is incorrect.

It's limited to an annual increase of 2%. That's still limited, but far different from 2% of the original purchase price.

https://www.californiataxdata.com/pdf/Prop13.pdf

But my main point is that it seems unfair (for lack of a better word) to force someone to have to sell their home because it’s paper value has increased.