There was an excellent discussion about this issue a month or so ago by Freepers.
Proposition 13 is a major factor driving the escalating price of California real estate.
This is an unintended consequence.
It works like this:
If you hold your property you keep the benefits of low property taxes. If you sell it and move somewhere else your new property is reassessed and you are clobbered.
As a result there is a huge economic incentive for Californians who want to move within the state to stay where they are and keep their home off the market.
Therefore as long as there is any significant net in-migration of potential homebuyers (or renters who move to buying—i.e. younger Californians) then the demand for housing will greatly exceed the supply. The result is wildly escalating housing prices.
There are other factors as well (environmentalist regulations preventing and related zoning restrictions preventing new units) but this is a major impact.
So, if proposition 13 is repealed the impact on California property values will be devastating. Combine that with the current unemployment situation and we could be talking major real estate meltdown here.
This is high stakes politics. I wonder if all the players understand the consequences.
21 posted on Saturday, February 01, 2003 4:27:21 PM by cgbg
[ Post Reply | Private Reply | To 1 | View Replies | Report Abuse]
Ah, I see you covered that in this post.