Economics is all about supply and demand. The article you quote lists several reasons for high demand (all of which I agree with). On the flipside, the prop-13 driven NIMBY-ism restricts the supply. Together they result in the perfect storm of an insane market where you have to submit a picture of your family along with an essay when you bid on a house.
My theory is that prop 13 is the root of all evil. If it were repealed, and the old timers were forced to pay market rate taxes on their houses (and hence forced to sell out), it would change the voting demographics. Eventually, zoning rules and city plans would be relaxed to allow taller, higher density housing. This would gradually ease the supply side, and result in a larger supply, and hence lower prices. That's how it seems to work in many other markets.
>the old timers were forced to pay market rate taxes on their houses (and hence forced to sell out)
So, force people to move out of the neighborhoods where they've lived all their lives. I'm by no means a general gentrification opponent but arguing that people should be forced to move out of their homes so that wealthy techies can move in?
Or stated differently, make everyone pay their fair share. The current system is "I got mine, screw you" for those fortunate enough to have bought property years ago.
It's surprising to me that people can look at the millionaire SF property owners as being deserving of public subsidy in perpetuity.
Where I live tax assessments are done regularly, tempered by a maximum 10% annual increase to prevent excessive shocks to the market. It seems like a reasonable compromise that puts all people on equal terms.
Yes, exactly. That's how it works everywhere else in the country. The entire valley should not be preserved as a 1950's time capsule.
In the rest of the country, when somebody like Google or Facebook comes to town property values shoot up. Property tax assessments follow 1-5 years later. The higher assessments combined with lucrative offers from developers convince the existing owners who cannot afford to live there to move. They take their windfall and move someplace more affordable. Meanwhile, developers build higher density housing, which keeps prices, while high, from reaching insane levels. Everybody wins.
I can sympathize with a lot of prop 13 opponents. The fact that it adds friction to mobility, making it oddly more expensive to downsize than to stay in a house that is too large, is a definite problem.
However, I have no sympathy for your argument. It is essentially, "I don't like the way people are voting so we should find a way to run them out of town."
Prop 13 correctly protects against such a situation. That is a good thing.
I don't understand what you mean. Looking at the wikipedia article on Prop 13, it says:
"It also prohibited reassessment of a new base year value except for in cases of (a) change in ownership, or (b) completion of new construction."
I live in Los Angeles and we have a similar problem being a popular location in California. Basically, there are people living in their homes paying the same taxes they paid in 1978, while anyone trying to buy a similar house will owe modern taxes. So you might be paying $15,000/yr. in taxes and your next door neighbor in a comparable house is literally paying $500/yr. That makes no sense. I've owned property in other states and assessments are done every 1-5 years.
The fallout is that certain areas pay significantly lower taxes, thus contributing significantly less to the community than other areas. It's made worse by the fact that if you inherit your house from your parents (or if they gift it to you before they die), you continue paying the 1978 taxes (or whatever year they bought or built the house). That's insane and it's unfair. It has nothing to do with how people vote. If they paid their fair share, you might have a point, but they don't, unless they decide to do construction on their house. It makes for a very uneven (and I would argue unfair) market.
I bought a home. It was a responsible purchase, in line with my earnings. 30 years later, I pay the home off. I retire on a fixed income which accounts for the roughly fixed costs of my home and its upkeep.
Now a big company builds a campus next door. Home prices skyrocket. What do I do? If my property tax is bounded, I'm fine. If not, then suddenly I lose my home because my fixed income did not account for my property taxes skyrocketing.
Sure, Prop 60 accounts for that by transferring basis, but maybe I'm 54 when this occurs so it doesn't apply. Or maybe I'm not retired, but have 3 kids in the local school district and having to uproot my family because I can't afford my home is extremely disruptive.
One of the points in buying a home, rather than renting, is to guarantee that stability.
I agree that there are problems with prop 13, but fairness is a two sided coin. It is certainly not fair for my home (which I own) to suddenly become unaffordable due to external circumstances. Likewise it's not fair for a neighbor to pay double for roughly the same consumption of public services.
I don't know the solution. Possibly decoupling property tax from home values might be the answer. It certainly isn't a very good tracker for public good consumption.
I'd just add that, in many locales, property taxes largely go to fund school systems. So forcing a retiree to move because they can't afford increased property taxes is doubly unfair given that they're not getting the benefits of the higher taxes. As I said elsewhere, gentrification happens and I'd argue is largely a positive, but I'm very leery of forcing people out of property they own. And, in general, I don't think it's good for the community.
I don't see how the fact that someone might be on a fixed income makes it fair for their children to inherit the house and tax-basis from 50 years ago.
Also, I don't see why property tax increases for existing homes couldn't be capped in some way (say no more than inflation) to make this situation reasonable for people in the scenario you've laid out. But just saying, "Your taxes will never increase again as long as you stay in your home," hardly seems reasonable.
> However, I have no sympathy for your argument. It is essentially, "I don't like the way people are voting so we should find a way to run them out of town."
The argument is NOT to run them out of town. The argument is that them not feeling the pinch of high prices encourages them to vote for policies that drive housing supply down, to everyone else's detriment. This comment summarizes it better: https://news.ycombinator.com/item?id=10822124
I was trying to point out that drewg123 does make a meatier comment than the one you replied to. But your comment elsewhere (https://news.ycombinator.com/item?id=10823456) indicates that you are well aware and sympathetic to that general line of argument.
Like you, at the moment, I am not sure what a proper solution will come up to.
