That's the trick.

"value isn't realized until it's sold" doesn't mean anything when you can borrow against your appreciated asset (tax free btw) to acquire more property.

If you borrow against appreciated asset, the property is considered refinanced which would mean that the property tax would be on the appreciated value of the property. This is why many people don’t refinance because even that would be a burden when one is on fixed income.

That sounds fine but my point still stands.

Even with tax reassessment after a loan they've come out way ahead. The strategy isn't unique to California.

You are making an assumption that people would want to borrow against primary dwelling.

Debt and loans are not always attractive to everyone. Especially if they are older and retired. They are likely to get a reverse mortgage if they have no income or if they are on fixed income. And that’s a risky strategy to many.