As I understand it, California uses “highest and best use,” meaning that a property located close to a major thoroughfare, capable of being used for commercial and higher-density residential, should be accurately assessed by what it would fetch as commercial land, not single-family residential. Do we have reason to believe that wasn’t the standard used here, or that any of the various exemptions applies?
I know, that’s why I was looking for examples of vacant lots, because then you know exactly what the buyer is getting. Otherwise, we’re guessing as to the condition of the property, what uses are contemplated or even possible, etc. A property being sold as a teardown, e.g., is not likely to be representative of the local housing stock, so why should its valuation be used as representative?
I don’t think anybody disputes it’s a bad thing. The argument is over whether it is a worse thing than the effects Prop 13 has had on everybody else. “Hey, I got mine, and can never be forced to sell my home for generations to come; too bad you and your family can never be able to purchase a home in my neighborhood” isn’t exactly an argument for thriving communities and economies.
What about Prop 98? It can be suspended by two-thirds vote of the legislature, meaning it acts as a floor only to the extent that the voters demand it, and according to your link has been suspended twice.
Given that I identified 3 properties out of 4 that I picked haphazardly that fit the criteria John listed, and the fact that it’s not central to the argument, I’m satisfied that John’s claim is sufficiently supported. The one property I picked that didn’t fit the fact pattern had not been reassessed after the recent sale but given the other examples I think after reassessment it would also fit John’s claim - that being that the land has a higher value than the improvements. So unless you have counter evidence, I’m satisfied the claim is accurate.
While no one has explicitly said it is a good thing that people would be forced to sell their homes, several folks have seemed rather sanguine about the prospect. Pointing to the gain being a positive thing, suggesting taking out loans, etc. And I really don’t think the effect of prop 13 is that people are never able to purchase a home in high value neighborhoods. There are plenty of sales and purchases in very expensive neighborhoods and those that can afford those higher prices can afford the associated property taxes. The people who can’t afford it are those who’s homes have appreciated at a rate much greater than their income - those people will never be able to stay in a high value neighborhood. Anywhere that becomes expensive to purchase would be gentrified very quickly.
To me, the real negative impact of prop 13 isn’t the idea that neighborhoods can become more exclusive. The biggest negative is the impact to the state’s tax base, shifting the burden away from counties and onto the state. But overall, I think the benefits of prop 13 far outweigh the negatives.
Having a constitutional amendment that mandates spending equal or higher to prior year amounts is a bad thing. Yes, it has been suspended in dire times but regardless, it is an example of government spending for the sake of spending. I understand this was a reaction to some of the cost shifting as a result of prop 13 - but when we look at the impact on the state’s ability to balance its budget I don’ think Prop 13 can be looked at in isolation.
Note that John’s cite ends in 2013, and the increase in property value has accelerated since then. I live in Alameda county, which is cheaper than Santa Clara county, and the price of my house based on both Zillow and comps has gone up about 30% in the past two years or so. I don’t think that comes from my dwelling being more attractive. I have a relatively big lot for the area, but I cut my grass with a reel mower, so not that big.
My house has tripled in value over the past 20 years, and my taxes have gone up maybe 20%.
And the latest assessed value of my house is way, way lower than the expected selling price. As John said, the value is reset by sales price. In NJ where they rebalanced tax rates every few years the assessor would do all the houses. No reason to do that in California unless prices have dropped and you can get your taxes cut.
Actually, many of the reasonably priced lots (counting these as reasonable shows I’ve lived in the Bay Area too long) are in Gilroy and Morgan Hill, a long painful 101 commute from San Jose. There are similarly reasonably priced lots in the East Bay along 580. People have been trading off affordable houses for horrid commutes for a while around here.
Many towns have little or no residential space left. The only new development near me came from them tearing down an old shopping center for maybe two dozen new houses. Since the land is so expensive, houses that go up are luxury houses, very expensive also for not all that much, which does not help affordable housing at all.
My current job is the first job I’ve had a commute under 1 hour each way and it’s life changing. I was resigned to the fact that I’d be on the road 3+ hours a day for life. There’s still plenty of housing available if you are willing to commute about an hour or so. Places in Concord or other parts of the far east bay are available and reasonable.
I am no fan of affordable housing mandates. I think they are more distortive than beneficial.
And again, what’s wrong with “raise taxes and spend more”? If the people of California have decided that they want their government to do a lot, and they’re willing to pay for it, hey, that’s their decision. You only get a problem when it’s “spend more without raising taxes”, and that’s what Prop 13 enshrines.
That seems rather myopic to focus only on the limits to property taxes. If as you say that raising taxes and spending more is acceptable, why not criticize the spending part? Prop 13 has been in place for over 30 years - it’s not like it’s a surprise the level of revenues from property taxes.
It seems incredibly strange to me that someone can increase their wealth by 10 times (say) and not have to pay a bit more in property taxes. We should really be taxing people more on their wealth than on their income, IMO (not to get into a parallel discussion, but I do think the work of Thomas Piketty applies somewhat here). In addition, the strange property tax laws in California, due to Prop 13, seem to slow new housing construction and promote people staying in their homes regardless of suitability. It’s the worst kind of economic incentive.
Then again, it helped people keep their houses when real estate values exploded beginning in the early 1970s. The population of California nearly doubled in a generation or two, but the stock of desirable places to live stayed about the same. Like most of the country we don’t handle population growth well and that’s why this happened. So prices shot through the stratosphere.
Why should anyone who’s paying down the end of their 30-year mortgage, or who owns their house free and clear, have to move to Fontucket, Berdoo County just because their West L.A. house is now worth $1M instead of the $16K they paid for it? Maybe in those cases it would be better to collect a surtax at the time of sale, since the house almost invariably will be sold at some later time.
I don’t think it’s been mentioned yet, but Prop. 13 has a loophole big enough to drive the Trump Tower through that favors corporate property holders.
The law places a moratorium on property tax increases until a property is sold; then the tax is reset to reflect the current property values.
So in the early days after the initiative was first passed, corporations that owned property (land and buildings) did this: They quickly created wholly-owned subsidiary companies, and transferred ownership of their real properties to these subsidiaries. These subsidiaries don’t conduct any other business, they exist solely for the purpose of owning these properties.
Now, when companies want to buy or sell real property, they don’t actually buy or sell the property! Rather, they buy or sell these subsidiaries that own the property. The property remains in the ownership of the same company (the subsidiary) but the subsidiary changes ownership.
In that way, since the property itself is not sold, its tax rate is not reset.
Over the years, as property values soared, corporate property owners that did this way back when are still paying property tax rates from way back when. OTOH, as private homes are sold over the years, their taxes go up. In the long run, individual owners (homeowners, basically) are footing an ever growing proportion of the total property taxes, while businesses are paying proportionally less and less.
(From an opinion-piece or news analysis that I read some years ago.)
You notice how quickly the guys who only wanted to protect private homeowners closed the loophole. Or said they would vote for a closing of the loophole.