Owners of rental property are obviously doing well. The other group making out are people who have owned property here during the times that prices have been appreciating and who sell and move out of the area; anyone who buys the property after them has to make the now-inflated mortgage payments.
And I think the question we should ask as a society is, is this how things should work? The reason property here has become so valuable, and continues to become even more valuable, doesn't have that much to do with the individual contributions of the property owners. Somebody has to own the real estate of the area, after all; from a societal standpoint it doesn't matter very much who that is. Rather, the value is being created by the local economy collectively. The reason Silicon Valley is such a great place to start a tech business is because of all the tech businesses that are already here, and all the people already working for them. Does it really make sense for property owners to receive such a large fraction of the value being created?
And let's be clear: the property owners wind up with most of it. Those of us living in the Valley, and commanding salaries that sound positively royal to the rest of America, are not actually living much (or any) better than most Americans. Most of the additional value we create by working for these high-tech companies is being siphoned off by property owners. Even if you own property in the Valley, if you bought it recently, your mortgage payments are going to cover a large check written to one of the previous owners.
Those familiar with the work of Henry George [0] will understand that I am summarizing his argument. If you live in the Bay Area, I urge you to read his work. I think the Bay Area desperately needs a land value tax system. Yes, it would change the character of the area. But that character is changing anyway. Short of forbidding newcomers from moving here -- and how would one do that? -- there's no way to stop continued urbanization. But, I understand that that's not happening anytime soon.
This brings me to good old Prop. 13. Kim-Mai Cutler [1] points out that Prop. 13 disincentivizes cities from approving residential construction, since they realize more tax revenue from commercial buildings.
Prop. 13 needs to be revised. The key change that is needed is that instead of limiting the amount of property taxes, we need to limit the tax payments only. Here's how that would work. The locality would impose whatever tax rate it saw fit, by whatever processes were in effect pre-Prop. 13. However, the homeowner's payment in a given year would be limited by the Prop. 13 formula. The locality would receive a lien on the difference, that lien not becoming due until the property is sold. This would allow localities to participate in the appreciation of property values; the windfall wouldn't all go to the property owner. Yet, it still protects those on fixed incomes from being forced out of their homes by property taxes -- the primary selling point of Prop. 13.