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Comment by poof131 | Hacker News Reader

Housing in the Bay Area (and California) is going to continue to get worse due to Prop 13. It destroys liquidity in the housing market. Elderly people can’t downsize since their taxes would rise dramatically, thus the abundance of retired couples in multi-bedroom houses and young families in apartments. People with multiple homes are incentivized to rent and never sell since they are receiving a government subsidy through below market tax rates. Until Prop 13 is dealt with California will continue to be the leader in inequality with a landed gentry extracting more than their share from the state. The density of tech only exacerbates the problem in the Bay Area, but it is a California problem.

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It's not true at all that the elderly cannot downsize. There is a loophole in all of this specifically designed for them:

http://www.assessor.saccounty.net/LowerMyTaxes/BaseYearValue...

The lack of indexing of capital gains taxation is a far bigger factor. As it is, a would-be seller faces losing * over a third* of the paper profit above 250K, and the cost basis doesn't reflect inflation.

If you're leaving the Bay Area, you're going to a far less expensive property, plus a dozen or so counties accept transfers of Jarvis-Gann protections anyway. But the tax hit is the crippling factor.

I'm not familiar with the YIMBY stance on Prop 13, but as an advocacy group that endorses local measures, you could join and promote propositions that would eliminate 13 - and have a real effect as our voter guide is sent to tens of thousands of bay area residents.

I generally approve of Yimbi, but eliminating prop 13 is not something they have the influence or the scale to accomplish on their own, or even to lead in a credible way - not even close. California is very large, and prop13 is very popular with a majority of the state’s population. It would take a landslide political change at the state level to revert it, and an alliance of diverse political interests unlike anything that exists in California today (to my knowledge).

True. But you could say exactly the same thing about any advocacy group.

Its a big country. Its a big state.

You’re right of course. I just think reverting prop13 is important enough, and difficult enough, to warrant creating or joining an organization solely dedicated to that one issue. I feel like pro-housing Californians tend to tuck it into a tactical bullet point, instead of appreciating it for the root cause that it is.

By the way, Prop 13 was a response to what was happening as a result of property values dramatically rising. It was an effect, not the cause, so repealing it isn’t likely to reverse the increase in property values.

It will increase liquidity though and thus assist in creating a more efficient market.

I agree with you, but I'd also like to point out that property tax per se is a political decision that was made at some point. Lots of places do just fine with no recurring property tax whatsoever.

[edit]: Anybody care to explain (or speculate) why this is being downvoted?

Until you have an alternative to people on fixed income being forced to move from the homes they own because they literally were priced out of the neighborhood, I will defend Prop 13 with words, money and actions. You will never convince me or people like me that it’s okay that my family buying a house in the neighborhood should by itself force our neighbors to have their costs go up. Not only do I not want that, you’d find it also wouldn’t lead to very good relationships.

Prop 13 was not created in a vacuum, it exists to solve a very real problem. And don’t forget, the young people that mostly don’t feel this problem don’t vote nearly as much as the older people for whom this problem is most keenly evident.

The solution would be to build more housing to keep prices low - somethung which homeowners would support if prop 13 weren’t a thing.

They have plenty of other reasons to support it. The people that don’t support it for the most part are the large scale landlords who are happy with the run up in rents.

Large scale landlords actually want to invest in more property. E.g. the apartment building I reside in was built only a few years ago by a publicly traded REIT.

It is nativist homeowners that oppose new building because it reduces home appreciation and brings traffic and ethnically different people to the neighborhood / city.

The solution is to means test property taxes. To keep lower-income residents in their homes, we discount their property tax from the standard rate.

If you're wealthy and can afford to pay a market rate property tax, then you pay it.

It seems like gp’s proposal is to eliminate Prop 13 literally so that people will be forced to move out or that the threat of being forced to move out will cause them to man the barricades and demand more housing to lower property values (good luck with that).

If the point is simply to raise income for the state, that’s an interesting discussion that we can chat about. But the topic is housing availability and I don’t see how this proposal would affect that with real means testing. People who can afford it won’t move and landlords will simply pass the costs on to renters.

That would be impossible to manage in practice. It would be too easy to game such a system, for example by doing a fake sale to a low-income relative.

Would you support repealing Prop 13 for non-owner-occupied or commercial properties?

What’s that going to do? People with market rate rents will see them go up x% and people in rent controlled apartments will simply get more pressure to move so the landlord can convert the unit to market rate.

> What’s that going to do?

It will remove the immoral handout landlords have gotten themselves in the name of the residents facing unexpected increase in property taxes.

Do you vote?

What if those pesky younger people did vote? What if they outvoted all of these older NextDoor-Angry people?

Sure I vote. “Pesky” younger people are welcome to vote for repealing Prop 13 if that’s what they want. I won’t, at least not if it has the effects described here.

Allow deferral of excess property tax payments until the property is sold. Simple as that.

Furthermore, landlords shouldn't be able to raise rent faster than their property taxes go up.

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