Are High Housing Costs Restraining California's Growth?

The vast majority of states don't have anything like Prop 13. When you see ads for homes in other states they tell you the price of the home and the local tax rates.

Although I was in my late teens at the time, I do remember that this is how things were. What I also know is what happened to California real estate pricing when Prop. 13 passed; it went through the roof, immediately.

What you are effectively admitting is that pricing IS modulated by taxes. Change the tax rates, and prices will go down. Guess what that does to the value of loans in the bank portfolio? They are required to value their assets as "marked to market." When that happens, the value of their reserves drops like a stone. When that happens they cannot loan. When they cannot loan, they go broke. QED.

In Boulder County, in order to keep seniors from fleeing as taxes increased, they allowed the seniors to pay less than what they owed while in their homes.

So much for equal protection.

This was a good compromise in my mind.

Property taxes as a rent on private property is a socialist idea, originating from the likes of Henry George. The idea was to force the property into its "highest and best use." In other words, it is government control of property. So if that is where you your preferences lie, you are on the wrong forum.

How would you like to pay a Mello-Roos fee?

I did, some $34,000 when I built my house.

How fair is it that corporations can sell their properties to other corporations in such a way that the property doesn't have to be reappraised, but individual citizens like you and me can't? There is corporate owned property that has passed through various owners that is still being taxed at the rates when Prop 13 first went into effect.

My views on 14th Amendment "equal protection" for corporations are found here.

My feeling is that if corporations weren't getting the benefits they do from Prop 13 they would fight harder against all of the other nonsense that Sacramento sends their way.

A bigger bunch of whores cannot be found, but at least they have the smarts to pay for the government money can buy. Conservatives are too stingy for their own good in that regard. Campaign contributions are cheaper than taxes.

In any case, the vast majority of the benefits of Prop 13 go to corporations. The largest chunk of the small remainder of benefits goes to those homeowners who purchased their homes before or soon after its implementation. Hardly a model for free market incentives that are supposed to apply equally to all market participants.

When one buys a house, it is a long-term decision, not one to be reassessed every day, so when somebody changes that deal they drive those people outside the envelope of what they can afford. They then must make a distressed decision, which NO economist would regard represents a system that optimizes the use of capital. Economic theorists might think continuous reassessment of "highest use" optimal, but it is only with regard to those variables they choose to measure, a professional obsession that apparently clouds your judgment as well. Somehow, they forget about continuity in a community or stable upbringing for a child as part of their calculations. Yet I do not think you would doubt that there is long-term economic value in fostering those benefits to a society over the long run. That's where your model fails. That's (supposedly) why we elect representatives to account for those intangibles in political decisions involving taxation.

There are mountains here in southern California that hinder building of new homes. Plenty of existing ones but the prices are way high due to no new homes. I could buy a home in Palmdale which is up in the Mojave desert about 40 miles north of the San Fernando valley for 100k! But I want green grass and trees and not tumbleweeds.

Politicians ALWAYS raise taxes. They have been wanting to raise the property tax here since Prop 13 was passed. It was passed because the politians were driving people out of their homes with high taxes.

My relatives live in a normal single story rambler home in New Jersey. 10 years ago their property tax was $9,000 for a home they built for $43,000 in 1959!

wages in California are some of the highest in the nation
We're discussing house prices, not income.

I realize that there is a step implied there.... when you earn more you have more to spend on housing hence the bidding wars. Also California weather wise has been a desirable location for a very long time hence the bidding wars. Housing prices in California are high for multiple reasons these are two of the biggest

It may be close to a chicken/egg scenario, but I believe companies pay the high(er) wages so their employees can afford to buy homes - which (IMHO) are high because of the rules, regs, etc.

"That's (supposedly) why we elect representatives to account for those intangibles in political decisions involving taxation."

So elect city and county politicians that pledge to keep the property tax rate at 1%.

I believe that one of the reasons why Republicans are doing so poorly in California is that Prop 13 is a free ride for liberals who also hypocritically support low taxes. In some liberal states like New York and Massachusetts Republicans occasionally win lots of seats because the liberals wake up and realize they need to put a brake on taxing and spending. With Prop 13 these liberals were able to keep their taxes lower and get gay sex taught in the schools and funnel money to all their buddies in government employ.

This is the first I've heard that property tax is socialist. Taxes may be bad in general, but property taxes if collected and spent at the local level, allow for more local control than state income or sales taxes.

Prop 13 has been a major factor in moving control away from localities towards state government. Cities had no way to increase their local revenues and cried to the state to reimburse them. Now their hands are tied because of all the state support they get. I loved it when they all cried boo hoo because mean Gov. Brown took their redevelopment funds away from them, i.e. crony paybacks.

Also, I see the downside of Prop 13 with regard to less than optimal use of property. There are really crappy properties all around Los Angeles most likely because the owners can afford to allow them to rot in place because of the low taxes they are paying. If they had to pay higher taxes then they would have to put the properties to better use which would almost certainly result in the creation of jobs in fixing up the places, and jobs at the new businesses occupying the improved space.

So elect city and county politicians that pledge to keep the property tax rate at 1%.

All so that you can have a property tax? No. I live in Santa Cruz County, CA. The largest industry in this County is disability.

I believe that one of the reasons why Republicans are doing so poorly in California is that Prop 13 is a free ride for liberals who also hypocritically support low taxes.

While I agree that the initiative process, as installed by "progressive" Republican (RINO) Hiram Johnson, absolves the legislature of accountability and has protected it from being pitched, that does not mean that the hordes of shiftless mouths we feed today won't put a gun to our heads. There is no end to the amount of money they "need." As it is, Prop 13 keeps them from dipping into that bucket, and if they are told that it is to their advantage, they will, even if they are also told it will raise their rent.

This is the first I've heard that property tax is socialist.

Well then you have not been listening well during your long foray at FreeRepublic. A property tax is effectively a share in ownership, a payment to the State that will take your property should you fail to do so. Guess what that means as to who has the final say about your property?

I suggest you do a little reading. Henry George was an archetype of progressivism.

Taxes may be bad in general, but property taxes if collected and spent at the local level, allow for more local control than state income or sales taxes.

There are local sales and income taxes too you know.

Prop 13 has been a major factor in moving control away from localities towards state government. Cities had no way to increase their local revenues and cried to the state to reimburse them. Now their hands are tied because of all the state support they get.

One stop shopping for those who buy influence. OTOH, who is supposed to guarantee and protect your rights? The Feds?

Also, I see the downside of Prop 13 with regard to less than optimal use of property. There are really crappy properties all around Los Angeles most likely because the owners can afford to allow them to rot in place because of the low taxes they are paying. If they had to pay higher taxes then they would have to put the properties to better use which would almost certainly result in the creation of jobs in fixing up the places, and jobs at the new businesses occupying the improved space.

You bitch about the corruption in redevelopment in one sentence and demand it in the next. Unbelievable. You like forcing people to live the way you want eh? What a control freak.

actually the wages particularly in Silicon Valley were higher than the housing base would require from early on in an effort to make sure folks didn’t unionize. Benefits were outstanding as well. This drove prices in the Bay Area up (and we are talking late 60s early 70s) so that those who couldn’t afford the area kept moving further out (Morgan Hill and Gilroy to the south and Livermore and Davis to the east).

I am assuming you do not live in the area or have much familiarity with it because your comments reflect that

"You bitch about the corruption in redevelopment in one sentence and demand it in the next. Unbelievable. You like forcing people to live the way you want eh? What a control freak."

I have no problem if people decide to redevelop their own properties in order to increase profitability. Nothing I wrote suggests that I support government funded redevelopment. Having similar property treated equally so that market players make decisions based on profitability rather than tax avoidance is a good thing in most conservatives' books. If you want houses to be treated differently than businesses then get your representatives to create zoning districts ... which surprise surprise they already have.

You and a few others might get your panties in a bunch over property taxes, but that is not a universal concern of conservatives.

I have no desire to force people to live the way I want. I like that some people have large ranches while others are comfortable in tiny little apartments. Vive la difference!

It seems like you're the one that wants to tweak the market so that single-family home ownership is the favored option. You're the one that wants everyone to live in his/her own individual cookie cutter house. I suspect you are a Realtor or a contractor.

So, even though we're discussing average prices in the entire state, you, once again, go off subject and give me a specific area example.
Not only a specific area, but Silicon Valley no less - the extreme in everything.
And BTW, you don't have to live in area to understand its history. Sheesh, give me a break already.

I have no problem if people decide to redevelop their own properties in order to increase profitability.

On the other you do have a problem if they invest as little as possible in it because they are retaining it for speculative purposes. So you would use taxes to increase their cost of ownership and force them to do otherwise.

You and a few others might get your panties in a bunch over property taxes, but that is not a universal concern of conservatives. It seems like you're the one that wants to tweak the market so that single-family home ownership is the favored option.

You have no concept for the origins of the property tax and then fling that? Having written a well regarded book explaining how to privatize regulatory land management to create enterprises in land use encompassing everything from views to odor and noise dissipation, and as as has been documented literally thousands of posts on this forum for over 13 years discussing those principles, your comment here is beneath contempt.

Earth to fardels: the ubiquity of ignorance is not a defense of principle.

The LA area has gone through the same thing when the aerospace industry was roaring. I was giving you a typical example....and it covers why outlier areas go up in price too. California housing prices are enormous compared to most of the country and wages are much higher as well.