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Comment by rsync | Hacker News Reader

I am sympathetic to the notion that prop 13 is a massive distortion that is driving all of these problems ...

But I have a hard time reconciling that with the relative pricing in other equally desirable coastal areas that do not have prop 13 (or anything like it).

I am simplifying greatly, but in a broad sense, SF housing is as expensive as Boston housing is as expensive as NYC housing ... and certain hot-or-not inspired pic sites[1] lead me to believe that Vancouver beats all of them.

Are you suggesting that, all else being equal, if prop13 was not extant, SF housing would be markedly lower than the aforementioned areas ?

I can't imagine it would be ...

[1] http://www.crackshackormansion.com/

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I'm a life long Californian. I dislike Prop 13 and it's evil sister Prop 58 which allows children to inherit their parents property tax break along with the property. AKA my dad has a house with an assessed property tax value of about $75k, when he dies and my sister inherits it, she'll also inherit the $75k property tax valuation as well.

That said I don't think the current issues with housing in the bay area have much to do with Prop 13. It's why your schools suck. It's why the prices are high, because the carrying cost is 1% lower than you'd expect because property taxes are too low.

Real issue is the deranged FIRE based economy we have. FIRE Finance, Insurance, REal estate. Combined with low growth and income inequality. Means you have a lot of money pouring into 'hot markets' like SF, Boston, Vancouver etc. Same time there is collusion between the people that sit on the boards of large companies to suppress wages.

Or we could just move beyond property taxes as a means of funding municipalities. Trying to tie the market values of one's house to taxation, then trying to untie them from market fluctuation, is simply a poor heuristic for measuring a person's capability to pay taxes. A much better heuristic is progressive income taxes. So here's an idea: make real estate taxes more equal, more nominal, and more predictable long into the future. Then close tax loop-holes and use income taxes on state level to fund municipalities. Nice side effect is that funding could be based on need rather than how rich your neighborhood is, which would improve the equality and fairness in social services provided. And no more moving to the rich suburb because you want your kids to go to a good school.

Personally I think the market price for housing tends to reflect carrying costs. Which is take what a home buy can afford subtract taxes and insurance and that's the mortgage payment. The price is how big of a loan that will buy. So the yin and the yang, lower property taxes and the housing prices rise to compensate. The only difference is property taxes tend to pay for stuff that makes your home intrinsically more valuable. Where your mortgage payment doesn't. (Probably used to before we had national/international banking, but not today)

If you shift from property taxes to income taxes, then the total taxes come out the same, so the purchasing power of the home buyer stays approximately the same.

I am simplifying greatly, but in a broad sense, SF housing is as expensive as Boston housing

I don't think that's true even in the "broad sense". San Francisco rents may be roughly comparable to to NYC, but are significantly more than Boston: https://www.zumper.com/blog/2016/04/zumper-national-rent-rep...

It may not be true, but I think the argument would be that in the absence of Prop 13, SF rents would indeed be comparable to Boston rather than 50% higher.

I think that on a total cost basis SF is more expensive than Boston, but I think your money goes a lot further in SF than it does in Boston. The units in Boston tend to be smaller, without amenities, ancient, in need of significant repair or all of the above.

I wouldn't be surprised if like for like, Boston is indeed more expensive than SF... I just checked Redfin for properties in core of Boston (Back Bay, Beacon Hill, Downtown, etc) built since 2000 and roughly average square foot price was $1200. Did the same thing for SF (focusing on SoMa area) and it looks like it's more like $1000/sq ft...

Interesting.

Although, if housing in Boston tends to be of lower quality than SF housing, might that not put extra demand on the more recent and presumably nicer housing?

I don't know ...

I do know I have seen a lot of commentary and postings right here on HN about the prohibitive cost of housing in Boston - perhaps it is just certain desirable areas in the center, or Cambridge ...

I grew up and currently live in the Boston area and lived in CA for several years.

Different areas just have different issues, but I think in both cases they come from the same source (issues related to supply and demand). Prop 13 creates a supply problem, new housing stock needs to be built because it's not beneficial for people to move or sell their homes due to the tax lock in. That happens in some areas, but the output is sprawl, increasing people's commute times.

Boston's issues are different, and it's based more on new stock not being built due to zoning issues and the MBTA not growing fast enough to make other areas more accessible to the city as the city has grown and attracted more business.

That said the costs in San Francisco are on another level compared to Boston. San Francisco is more comparable to NYC with regards to rent.

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