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Comment by bufordsharkley | Hacker News Reader

The "technically correct" way to fix this would be to remove the investment potential of housing by taxing away land value (the grand old panacea of the Land Value Tax[0]).

I think this is a good idea, but it's a disruptive one, and one unlikely to happen soon. But in the meantime, we might as well fix the policy that's in direct contradiction to this ideal:

1) Repeal prop 13. Full stop.

2) Intervene with exclusionary zoning on a state level. Zoning is, after all, a state power that is entrusted to cities. (Jerry Brown is already doing good work in this department[1])

3) Implement split-level property taxes a la Pennsylvania. There's work that demonstrates that this partial LVT had real benefits for Pittsburgh when it was under effect: [2]

[0] https://en.wikipedia.org/wiki/Land_value_tax [1] http://www.latimes.com/politics/la-pol-sac-jerry-brown-housi... [2] https://www.lincolninst.edu/subcenters/property-valuation-an...

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The thing about getting rid of prop 13 is you'd price out a lot of residents that bought a long time ago for something they don't have a whole lot of control over. If you thought that gentrification is bad now, churn in residents would got through the roof. Not to mention that you wouldn't solve the issue of shorter-term investments in land, or investments that include new constructions.

Honestly, the real issue in the bay area is there isn't enough housing, period. To solve this, build more housing, or build more infrastructure to enable people to live further away, or both. However, residents in the bay area have always been opposed to things like that.

We shouldn't just repeal it. You abuse it's existence and the appeal to drive investment in property. Have the repeal not affect existing housing... and not affect housing built for some short period afterwards. In places where developers have sway with local government or have carte blanc from counties to build, there will be immense efforts, because the benefits to the property owner will be huge, meaning they can charge a premium. And after 5 years or whatever is appropriate, you will have removed the penalty in tax revenue cities take with residential and residential services. Maybe add a provision for city councils to more easily approve bond measures to fund housing development, and kick start building properties where value will go up.

You could simply revert people to market rate taxes over a decade, 10% a year.

s/residents/home owners have always been opposed to that. Renters would be thrilled about it, but home owners love seeing their home values skyrocket. Multiply this if they've been in the area for a while, and again if they're currently renting out their place(s).

A lower-end but not ghetto apartment in SJ is around $2200 for a 700sqft 1bedroom. This would not be in a place walking distance to a train station or to a downtown area. The mortgage on a 4 bedroom 1200sqft house valued at 800k (i.e. What most people would call a normal average single-family home) would be about $2800/month (assuming you had the 125k or so down payment). You can then rent 3 of the 4 bedrooms and end up making money on the house you live in vs flushing >$2k a month.

This is why normal people can't get ahead out here and end up moving away. The way things are is massively skewed toward home owners and property investors. Building more apartments won't necessarily help, since all the apartments built after the rent-control cut off are getting renovated or demolished to be replaced with brand new units which are "luxury" ($2800/month and up for a 1br).

Apartment places almost always have units available where I've looked. It's not like you can't find a place out here, just not a place for under about $2k a month. Apartment places would much rather rent out 85% of their units at exorbitant prices vs 100% at half that. I don't believe that adding more housing (which won't be under rent control and will undoubtedly be "luxury" housing) will lower average rents. I don't know what it would take to get the Bay Area back to rents in the $1000/month for a 1br range. I'm not even sure that it's realistic anymore.

Does anyone have a link to or know of a place built in the past 15 years in Santa Clara, Cupertino, Palo Alto, Mountain View, San Jose, Saratoga, Los Gatos, etc with units under $2k a month? My pessimistic side just thinks that adding more new apartments will just drop the price on the high end, so that $3k/month loft in the glass tower in downtown SJ might only be $2800 next 11-month lease term, or maybe only go up by 12% a year instead of 18%.

We need to do something drastic if this is to be again under control, but I suspect that due to the very large sums of money involved, the entrench interests are attempting to prevent that by whatever means necessary, and we're basically screwed until this bubble bursts, if that even happens this time.

> The thing about getting rid of prop 13 is you'd price out a lot of residents that bought a long time ago for something they don't have a whole lot of control over.

One thing to consider is that the removal of Prop 13 would drive prices down, so in the tax burden wouldn't be as high as it would be, when compared to today's market rate of housing.

> If you thought that gentrification is bad now...

It's important to note that gentrification only happens to poor/disenfranchised neighborhoods, whereas the burden of removing Prop 13 would fall upon all, including the affluent. This is an important measure for fairness.

> To solve this, build more housing, or build more infrastructure to enable people to live further away, or both. However, residents in the bay area have always been opposed to things like that.

Largely because policy like Prop 13 shields them from the consequences, which has led people to remain in the same property interminably (even when they may wish to move), and to push for restrictive zoning policy.

Repealing prop 13 would provide the cash needed to build more housing and infrastructure.

Landowners in SF are going to hate any effort to deal with the housing crisis because they profit so handsomely from it. They'll fight any attempt to fix it tooth and nail - with lobbying, bribery, public relations, etc. That's what the Howard Jarvis Taxpayer's Foundation and prop 13 was all about in the first place.

Really, the only solution to that is to single out the leeches and demonize them until they stop. There's no way they will ever be on our side and there's no way they will stop fighting while they still have the power to protect their entitlements.

One of my biggest issues with Prop 13 is that it suggests that you should have a claim a municipal government in perpetuity. Huge amounts of the value of land in towns and cities comes from the services provided by the city government, and I think Prop 13 pretends this couldn't possibly be true.

I also think it would be an absurd argument to make. If those people had no desire for services, they would have bought/built houses well North of the bay area, or South of San Francisco in some place like moss landing. And I don't think it's worth preserving that delusion at the cost of perverse incentives, waning tax revenue, and a massively illiquid housing market.

Granted, this is not all that's needed to fix the problem (even moreso in CA, which has some really bad barriers), but I don't think moving in the wrong direction will get us where we need to be.

Given that a full repeal may be difficult politically, I wonder if Prop 13 could be limited to owner-occupied houses.

Seems like that would hold true to its original purpose of not taxing someone out of their home, make investment in property somewhat less appealing, and provide a more predictable funding source for schools.

Prop 13's effects for primary-resident housing have been less problematic than its effects for commercial land and purely speculative real estate, but it isn't good-- if we allow this subsidy strictly for housing, we'll still run out of developable land (just not quite as quickly.)

Too, the policy that reassesses the site upon re-sale takes away mobility for Bay Area residents-- this lock-in is extremely destructive for the housing stock (not to mention transportation), and will continue as long as Prop 13 exists in any form.

The idea that "being taxed out of your home" is a bad thing is extremely overblown (remember that any person to suffer this malady is suffering from overly valuable land). Rather than the heavily distortionary effects of Prop 13, better approaches would be:

* Building more. That's what the folks who suffered high property taxes in the 1970s should have done. The property tax burden for each housing unit would be driven down.

* Community land trusts offer the possibility of stability for residents who want to be completely removed from the rises and falls in housing value.

* For the "poor widow" situation, a direct subsidy on an as-needed basis (food stamps for property taxes, as it were) is a better solution than what Prop 13 does.

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