Ironically Prop 13 makes it more difficult for kids to afford homes near their parents.

You have it backwards. Prop 13 overall increases house prices, yes. But kids, whose parents own a home, benefit the most from Prop 13.

Well, sure you might get a home from your parents when you are in your late 50s or 60s. Doesn't do much good when you needed that larger home to raise your own family.

Until 2018 you could inherit homes from parents or grandparents and keep the original assessed value, but that's no longer the case. So unless the kid is earning enough to pay taxes on a massively appreciated house, they're going to have to sell and/or move away.

EDIT: I was wrong about this.

CA property taxes are cheap enough that your taxes on that new big value you just inherited are still gonna be way lower than you'd pay rent for something else nearby... and often be pretty good even compared to some other big cities not in CA.

Or you have multiple kids and you sell the place and split the cash... nice windfall, taxes or no.

Meanwhile, the people whose parents DIDN'T leave them one of those houses are still way worse off...

Source for that no longer being the case? My SF housing activist friend says that this has not changed.

You're right. I confused it with something else.

No problem.

To an outsider like me, this seems like one of the worst features of Prop 13. Over time it separates people into two classes: those whose family has owned property for a long time, and everyone else who can't afford to buy a house because the taxes are prohibitive. (Even if you're very rich, it will make more sense to rent than to trigger tax reevaluation.) Call it neo-feudalism.

Taxes in CA are far from prohibitive, even with today's prices. The gap between affording something in the first place and being able to cover the tax is not that large. But the base prices are the killer.

But that's also largely a factor of mostly high-income people moving in, while mostly lower-income people are moving out. Keep up the business climate that fuels the inward funnel of money, and you'll keep prices high. Even if you reduce restrictions to building supply, you'll have a game theory bit of not lowering prices in any hurry since people can so clearly afford them and are so clearly willing to pay them.

My thought on that is prices reflect the ability of people to pay principal, interest, taxes, and maintence. Lower the property tax rate and prices just go up. Difference is taxes go to pay for public goods and services. Principal and interest do not.

Prop 13 benefits corporations, long term property owners, and people that inherit property. At the expense of renters, new home buyers, and beneficiaries of public goods and services.

Precisely true. Give a mortgage interest deduction, or lower interest rates? Good news! You can afford more house! _and so can everybody else_

...but even this Prop 13 Landed Gentry has a big problem:

They have to live in their fabulously high priced and undertaxed home to enjoy the benefits. They can't move to another town or maybe not even take a job in the other side of town.

They actually could, until December 2018.

https://en.wikipedia.org/wiki/1978_California_Proposition_13...

This is not a feature of prop 13. Generational transfers were added in two later propositions, first for parents to children, later for generation-skipping transfers.

But I still don't get the point though.. unless of course you are arguing that a non-Prop-13 world would have reduced tax for everyone under 1%. That isn't going to happen. we have never reduced taxes in Californa :)

Now let us look at it from the other side

1. The family, probably unfairly, benefited from not having to pay the full tax for so long.

2. In scenario that you mentioned the kid just inherited a $1m+ house. What part of it makes him poor that he can't pay the new property taxes? Sure, they might choose to cash out and go live somewhere else because it makes financial sense for him, but that is not `an unfortunate` situation at any stretch.

3. I know there are significant cost-basis advantage here, in additional to all the wealth just inherited, but I don't know enough about it yet.

I'm surprised that's surprising. I always figured most people rely on grandparents for at least occasional childcare.

Free babysitter? :)

Free meal maker and shirt ironer.