I lived in LA when Prop 13 was passed. It was intended (promoted) to keep long time homeowners from paying more in taxes than their monthly payment to the bank each month, which was mostly affecting folks of retirement age.
Hard to imagine they didn't omit homes that were being rented back then.
This seems pretty intuitively obvious to me - of course landlords, especially those who own for the sole purpose of investing (as opposed to someone who buys a duplex and rents the back), are going to charge what the market allows.
I think Prop 13 is a good thing for the reason it was pitched for - you don't want old people on fixed income forced to sell their homes because property values are going up rapidly. Beyond that, though, it seems like it just extends way, way too far. Why should you get a huge tax break on a second home that you use for vacation or a property that you own solely for investment?
If I'm an old person on fixed income, and my equity doubles from $1M to $2M, causing my property tax to double, I can take out a home equity loan against my house and be not only just fine on payments, but far ahead of where I was otherwise.
you take the home equity loan against, presumably, a paid off house. That loan has to be paid back. You now have a payment where none was before. If you were still paying on the property, your new payment is now larger than it was before. Seniors on a fixed income cannot absorb that.
That loan has to be serviced and a loan company will want to take on that risk. So you are saying that old people should be forced into a reverse mortgage solution? How is that helping anything other than the mortgage industry?
Huh? Your argument doesn’t debunk it. Your scheme doesn’t solve the problem, it just delays it. A person who utilizes your scheme has only secured their position temporarily by taking out a loan that they can’t possibly repay. When the cash is gone, they’re still going to have to move, and now they’ve been saddled with debt.
I'm not sure what you're trying to say. But there is a targeted program for low income seniors, the California Tax Postponement Program. It's been on the books since 1977. Many states have similar laws, eg. the NJ senior freeze.
> If I'm an old person on fixed income, and my equity doubles from $1M to $2M, causing my property tax to double, I can take out a home equity loan against my house and be not only just fine on payments
What is equity anyway ? If Bill Gates buys the house next door for 10M over asking now I need to “do something about it” ?
It does not make sense to me
Now if I “realize” the equity by taking out a loan I’m fine with the reassessment. But to be hit with an increase because people chose to do 0% downpayment loans is nuts
>you don't want old people on fixed income forced to sell their homes because property values are going up rapidly
Why not? Regular turnover is healthy for both markets and neighborhoods. These beneficiaries of rapidly appreciated properties could sell their home to a new family, and take their profits to downsize to more age-appropriate housing.
Exactly. When old people have no incentive to move out of their giant homes, there's less housing for young families, less reason to build senior housing, and home prices soar.
They do have incentives, though. Maintenance costs are higher on larger houses and tend to increase with the age of a structure. You have to clean out all those extra bedrooms that are never used or end up with a bunch of cobwebs everywhere. That second story becomes much less practical when your knees start to go.
If you want more housing, the solution is just... build more housing.
Despite being the largest state there's not a ton of room in the biggest metro areas for new housing - people are already packed like sardines between foothills, and going up into them is just begging for destruction due to wildfire.
That is just not true at all - plenty of opportunities to build up denser
And lots of land outside metro areas - that’s how cities become metros, people buy on the outskirts then they’re in the metro area connected by transit
Lol "age-appropriate housing". We used to force people to live in "appropriate housing" determined by the gov't all the time. That didn't work out too well.
Old people with no family using up 5 bedroom houses is wasteful. They should be allowed to of course, but we shouldn't be subsidizing it as prop 13 does.
Because Jarvis wanted to bleed the state as much as possible.
> I think the public school system is a cancer on this society. The only difference between the public schools and the Mafia is that the public schools steal more money.
> "you don't want old people on fixed income forced to sell their homes because property values are going up rapidly"
Yes you do. It's called downsizing and relocating. This allows for large houses near good schools and close to work to be owned by working age folks with children. Buying and selling is one of the ways the market reallocates scarce resources.
I'm having trouble getting my words out. Your view is so myopic and harsh. Communities need older folks. Older folks need communities. Having such a view, I can only assume you've never had a long time home. That you could walk in and force a person from a lifelong home because you feel there is some marginal economic improvement is simply fucked up. If the price goes up enough, they can choose to sell and relocate. Forcing that is wrong.
Just because you want it more doesn't make it right to force someone to sell something. This is the same thought pattern as the people who get angry at handicapped parking lot spaces, "how dare those handicapped people exist, I could have used that parking spot better!" (not to mention the marginal added parking spot would already be taken by the time you are prowling the lot looking for a coveted space).
Seniors and the disabled don't have to pay property taxes in California if they don't want to. The California Tax Postponement Program protects them. It's a fine policy.
The issue is that prop 13 has not caused "marginal economic" problems. It's caused absolutely fucking massive problems and is largely responsible for california being completely unaffordable if you don't already own a home there. The juice just isn't worth the squeeze here, the incentives are too distorted.
Homes are not affordable anywhere people want to live. There is no prop 13 in North Carolina, and people are being priced out of our area. Same is true in Montana.
Rents are not higher because prop 13, but taxes collected are lower. High rents and high cost of homes is a supply and demand problem. Move out to Adalanto or Victorville, CA and you can buy a nice house for under $400k. If you and a partner make $50k each, you can do it. That's is not unlike we did. We got priced out of California and had to move.
The best they can say is that Oakland has 3k undeveloped lots that could be houses. The claim is prop 13 allows them to hold onto what would otherwise be someone's purchased home. That wont even house 1% of Oakland. You could magically put houses there and the market price for housing wouldn't change.
Being angry with prop 13 feels like being angry at handicapped parking spaces being unused. If the spot were not only for handicapped people, you still wouldn't have found parking there because someone else would have already taken it.
I don't necessarily disagree with you on the downsizing part - in general, I think it's a positive thing if people are using housing appropriate to their situation. I think you're totally wrong on the relocating bit - if you've lived in SF in a two bedroom condo for your whole life, you shouldn't be forced to sell it and move to a two bedroom condo in Bakersfield just because of property taxes.
>you don't want old people on fixed income forced to sell their homes because property values are going up rapidly
>Yes you do. It's called downsizing and relocating.
You have to understand how hard this makes it to engage honestly with your post. All useful conversation requires a minimal foundation of trust/honesty/charity - i.e. that both parties honestly want the best overall outcome for everybody, and the disagreement is only about what that compromise looks like and how to get it. When you write like this about people, it makes you sound like you don't give a shit about them.
I don't know exactly what the answer is. If a rental property has a long term renter, I don't want to see that tenant have their rent increased by huge amounts year over year. I'm a life long conservative, but I see huge value in making sure landlords can't kick out well behaved, paying on time tenants. I also believe that landlords should be severely limited in the amount they can increase rent at renewal time.
This is what local rent control laws are for. And probably much better for it to be decided locally than at the "one size fits all of the Californias" Sacramento would inevitably come up with.
The answer is just more housing, and at least it's starting to look like CA is making strides in that direction. The best protection for renters is a market where there's abundant supply - landlords will be severely limited in house much they can increase rent if a big rent increase means they're out of line with the market and can't get tenants.
It wasn't really pitched for low income seniors. The California Tax Postponement Program solves that and predates Prop 13. Other states have similar targeted laws, eg. the NJ "senior freeze".
Jarvis was going for a "tax revolt" to punish the state. That's why Prop 13 covers all property and not just primary residence
Obviously, landlords are price takers, charging the maximum anyone will pay to rent their unit. The question is whether prop 13 increases supply in the medium to long run which would lead to lower rents. Unfortunately California NIMBYism makes that impossible.
Question: If the goal is to increase supply and lower rent in the long run, would you consider social housing, that is the state build housing in large numbers specifically to rent them?
For me this seems like a more straightforward way and likelier to succeed in its intention without unforeseen consequences, as opposed to landlord subsidies.
This worked well on Vienna, but government run housing has a very bad rep in this country that imo will make it hard to pull this off. NIMBYism is the biggest obstacle here anyway and it’s largely being pushed by the government which also concerns me. In the end as long as more housing I being built I’ll be happy
I think it works in a different way. The newer properties have to compete with older properties that charge less because they pay less taxes. If you increased real estate taxes, it should be obvious that rents would increase. It’s basic economics. However, you should not expect a rent price difference especially at the quoted price for property based on the underlying tax differential.
But Prop 13 DID go away. Two years ago when Californians voted for Prop 19. (Prop 19 won by a 1% margin). Now we're seeing people kicked out of their homes... whole apartment buildings being evicted.... rental homes going OFF the rental market. Yes, it's happening.
Oh, and btw... long-standing corporations are STILL enjoying the benefits of prop 13, since their property never changes hands, unlike residential properties. When that issue was on the ballot a few years ago, big businesses dumped a lot of money into marketing to convince us little voters that if businesses' property taxes went up -- all of us would be hurt. So us Calif. voters gave them a pass.
But now, with Prop 19, which big real estate company mucky mucks poured millions of $$ into marketing (they want to sell more properties), the working class and retired folks are getting kicked in the teeth, losing their homes.
That tax program for seniors, to defer prop. tax.... it only lasts each year until it runs out of money. So I don't think that's a sure fire solution for a lot of seniors.
I don't like Prop 13 either but the logic in this article is outright flawed. Their claim is that if prop 13 reduced rents, you would see lower rents in single family homes owned for longer periods compared to new owners.
That's... completely meaningless and not even remotely close to how prices in a free market work. If you invested your life savings into a house would you lower the rent just because you got a good deal on fixing the roof?
I think what the author is pointing out is that the cost of tax is detached from the price of rent in similar houses in similar locations.
That is, he is pointing out that in the highly regulated market of housing (not even close to a free market) that Prop 13 does not help renters and instead favors long-standing owners mightily.
1) The newspaper quoted at the beginning doesn't seem to be talking specifically about a tax savings. It's not quite clear, but the snippet implies to me this is some single one time event thing.
2) Given that < 30 year holdings follow the assessments pretty closely, and > 30 year holdings don't, is it possible there are other perhaps larger concerns that affect rental prices of 30+ year old buildings? Roof replacements, HVAC replacements, plumbing fixes, bringing electrical up to code for those things. I would expect that sort of thing acts as a much stronger driver on the cost of rent than the taxes overall once you get to 30+ years old. Yes newly transferred properties might be older as well, but the article doesn't say whether they're comparing age of property too.
3) In the concrete example they give, how much does location make a difference? I don't know much about LA, but I've heard of Sunset Blvd, and the high rent example is a block away from Sunset, where as the other property isn't, but it is located pretty close to a highway with all the traffic noise that entails.
4) Related to location, what about amenities? The higher rent property also appears to have a useable yard, be in the middle of a residential area and appears to be a single unit, where as the one that is used as matching the tax assessments appears by the tax records to be split into 3 units (one multi bedroom and two studios?), and is thus actually 300 sqft smaller than the higher rent property, with no usable yard space and the property itself appears to be just off a commercial zone (the Home Depot across the street)
5) It would be nice to see this analysis done in any of the other HCOL locations in the country without Prop 13 to see how the rents compare.
61 comments
[ 4.4 ms ] story [ 96.3 ms ] threadHard to imagine they didn't omit homes that were being rented back then.
I think Prop 13 is a good thing for the reason it was pitched for - you don't want old people on fixed income forced to sell their homes because property values are going up rapidly. Beyond that, though, it seems like it just extends way, way too far. Why should you get a huge tax break on a second home that you use for vacation or a property that you own solely for investment?
This argument was also a lie.
https://www.prop13.wtf/2023/05/08/california-tax-postponemen...
Huh? Your argument doesn’t debunk it. Your scheme doesn’t solve the problem, it just delays it. A person who utilizes your scheme has only secured their position temporarily by taking out a loan that they can’t possibly repay. When the cash is gone, they’re still going to have to move, and now they’ve been saddled with debt.
Until we have a way to make homeowners immortal I think a temporary fix is just fine.
Prop 13 is wholly unnecessary.
What is equity anyway ? If Bill Gates buys the house next door for 10M over asking now I need to “do something about it” ?
It does not make sense to me
Now if I “realize” the equity by taking out a loan I’m fine with the reassessment. But to be hit with an increase because people chose to do 0% downpayment loans is nuts
Why not? Regular turnover is healthy for both markets and neighborhoods. These beneficiaries of rapidly appreciated properties could sell their home to a new family, and take their profits to downsize to more age-appropriate housing.
If you want more housing, the solution is just... build more housing.
And lots of land outside metro areas - that’s how cities become metros, people buy on the outskirts then they’re in the metro area connected by transit
> I think the public school system is a cancer on this society. The only difference between the public schools and the Mafia is that the public schools steal more money.
https://prop13.wtf/2023/06/18/howard-jarvis-bestof.html#howa...
Yes you do. It's called downsizing and relocating. This allows for large houses near good schools and close to work to be owned by working age folks with children. Buying and selling is one of the ways the market reallocates scarce resources.
Just because you want it more doesn't make it right to force someone to sell something. This is the same thought pattern as the people who get angry at handicapped parking lot spaces, "how dare those handicapped people exist, I could have used that parking spot better!" (not to mention the marginal added parking spot would already be taken by the time you are prowling the lot looking for a coveted space).
Rents are not higher because prop 13, but taxes collected are lower. High rents and high cost of homes is a supply and demand problem. Move out to Adalanto or Victorville, CA and you can buy a nice house for under $400k. If you and a partner make $50k each, you can do it. That's is not unlike we did. We got priced out of California and had to move.
This is an anti prop 13 article with some numbers: https://projects.scpr.org/prop-13/stories/housing-shortage/
The best they can say is that Oakland has 3k undeveloped lots that could be houses. The claim is prop 13 allows them to hold onto what would otherwise be someone's purchased home. That wont even house 1% of Oakland. You could magically put houses there and the market price for housing wouldn't change.
Being angry with prop 13 feels like being angry at handicapped parking spaces being unused. If the spot were not only for handicapped people, you still wouldn't have found parking there because someone else would have already taken it.
>Yes you do. It's called downsizing and relocating.
You have to understand how hard this makes it to engage honestly with your post. All useful conversation requires a minimal foundation of trust/honesty/charity - i.e. that both parties honestly want the best overall outcome for everybody, and the disagreement is only about what that compromise looks like and how to get it. When you write like this about people, it makes you sound like you don't give a shit about them.
Jarvis was going for a "tax revolt" to punish the state. That's why Prop 13 covers all property and not just primary residence
For me this seems like a more straightforward way and likelier to succeed in its intention without unforeseen consequences, as opposed to landlord subsidies.
In reality the market sets the rental price
tenants won’t pay more because your taxes are higher - tenants set the price with the money they are willing to spend on housing
Give it up and move on. Prop 13 is not going away.
But now, with Prop 19, which big real estate company mucky mucks poured millions of $$ into marketing (they want to sell more properties), the working class and retired folks are getting kicked in the teeth, losing their homes.
That tax program for seniors, to defer prop. tax.... it only lasts each year until it runs out of money. So I don't think that's a sure fire solution for a lot of seniors.
That's... completely meaningless and not even remotely close to how prices in a free market work. If you invested your life savings into a house would you lower the rent just because you got a good deal on fixing the roof?
That is, he is pointing out that in the highly regulated market of housing (not even close to a free market) that Prop 13 does not help renters and instead favors long-standing owners mightily.
1) The newspaper quoted at the beginning doesn't seem to be talking specifically about a tax savings. It's not quite clear, but the snippet implies to me this is some single one time event thing.
2) Given that < 30 year holdings follow the assessments pretty closely, and > 30 year holdings don't, is it possible there are other perhaps larger concerns that affect rental prices of 30+ year old buildings? Roof replacements, HVAC replacements, plumbing fixes, bringing electrical up to code for those things. I would expect that sort of thing acts as a much stronger driver on the cost of rent than the taxes overall once you get to 30+ years old. Yes newly transferred properties might be older as well, but the article doesn't say whether they're comparing age of property too.
3) In the concrete example they give, how much does location make a difference? I don't know much about LA, but I've heard of Sunset Blvd, and the high rent example is a block away from Sunset, where as the other property isn't, but it is located pretty close to a highway with all the traffic noise that entails.
4) Related to location, what about amenities? The higher rent property also appears to have a useable yard, be in the middle of a residential area and appears to be a single unit, where as the one that is used as matching the tax assessments appears by the tax records to be split into 3 units (one multi bedroom and two studios?), and is thus actually 300 sqft smaller than the higher rent property, with no usable yard space and the property itself appears to be just off a commercial zone (the Home Depot across the street)
5) It would be nice to see this analysis done in any of the other HCOL locations in the country without Prop 13 to see how the rents compare.