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Comment by supernova87a | Hacker News Reader

Yes, but this is still only one of about 10 other factors that prevent the region or city from having enough housing, or affordable housing (and I don't mean in the public government-run housing sense).

Maybe Berkeley should also try to address the other unending issues that they keep up to prevent any meaningful change, if they really mean it:

-- Endless and convoluted environmental + city approvals processes that corrupt any transparent application for development and favor those who have money to navigate it

-- Picking and choosing special interest / special case neighborhoods or people to try to protect, to the detriment of everyone else wanting to live there

-- Rent control

-- The extremely backwards property tax policies that favor existing landowners over anyone new, young, poor (though this admittedly is California's problem, not just one city or county) and make everything else attempted bandaids -- and misguided bandaids, at that -- to fix the system.

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What is most unfair about prop 13 is that the lower tax rate can be transferred to your descendants. It's one thing to pay 10x the taxes of your neighbors, it's another thing altogether to have a class of people benefiting from lower taxes over generations!

Also, I know there are probably better ways to finance a city, but that's how we currently do it. It should be done fairly, ideally we should meet in the middle. It's fundamentally unfair that some folks pay up to 10x or more than others. I'm speaking personally, but it really bothers me that my neighbors are actually OK with this.

Also, there are lots of ways to ensure elderly/retired folks can stay in their homes. Taxes can be deferred.

> What is most unfair about prop 13 is that the lower tax rate can be transferred to your descendants

That’s mostly gone now with Prop 19. It used to be that children could inherit apartment buildings, multiple houses, commercial buildings, with no new tax assessment. Now, children can only inherit a parent’s primary residence without a new tax assessment. Even then, they can only avoid a tax increase up to the first $1m in value and only if the children live in the property. If they keep it as a rental, they lose the benefit.

The change should result in more properties being sold after inheritance, which will increase market supply and lower prices.

Oh that's right, prop 19 makes this a lot better. Thank you for the precision.

The very wealthy will avoid the tax increase by holding property in corporate entities and passing the stock to their children. Moderately wealthy people (e.g., working professionals who also own small properties) will be affected the most because they often don't do the same kind of estate planning that the very wealthy do.

Prop 13 needs to be reformed because taxes need to be fair. Taxes can be deferred for those who cannot afford to pay the full tax so they don't have to move. The benefit should be restricted to a primary residence, no vacation, investment, or commercial properties. Deferred taxes can be paid when the owner sells the house if there is enough equity. At some points victims of prop 13 will out number those that benefit from it. One can only hope people will wake up and do the right thing.

Taxes are fair under Prop 13. What's fair about making people pay more tax just because the market value of their house has increased? They will pay taxes on those gains (over a certain limit) when they sell.

How is it fair that two houses built side by side in the same year with the same floorplan might have one pay literally 10x the property tax than the other, merely because it changed hands? What's worse, the 10x house actually realized those capital gains, so the state also got that cash.

Simple, the people in the houses moved in at a different time. A house isn't just a thing you buy and sell. You live in the house, raise a family, become part of a community. My neighbor across the street bought her house 30 years ago. She's an artist and doesn't make much money. She is well known in the community. Should she be forced out of her house so that some rich tech worker can move in?

If want to cry unfair, then it would be better to aim at commercial real estate. That's a pure money business. Why should they get protection under prop 13? Make no sense at all.

You don’t force her out of her house, you simply allow her to defer the taxes until she sells or dies.

Why should some whose house went from $200k to $2M be getting a tax break?

> Why should some whose house went from $200k to $2M be getting a tax break?

Because they bought a 200K house and budgeted for taxes on a 200K house.

The paper estimate of it being worth 2M right now doesn't change anything about the house they actually live in.

So you feel the right solution is to give millionaires massive tax breaks and have middle class folks who can barely afford a house pick up the slack?

It is absurd and an anomaly. Let them stay, but when the reap a $1M+ profit on the house when they sell or die, they can pony up the tax, just like everyone else.

> So you feel the right solution is to give millionaires massive tax breaks and have middle class folks who can barely afford a house pick up the slack?

I did not say that so I don't mean that.

If a low/middle class person buy the house they can afford to pay and live in it, they don't become millionaires just because other people around them bought houses more expensively later. They're most likely still in the same career earning that same low/middle class income. They don't have any additional money to pay much higher property taxes, they are certainly not millionaires.

Tax them after sale, sure, if the property value is still high when they sell (it might not be).

Which is why you let people defer them, rather than just getting rid of them.

If they budgeted for a 200k house, that turned into a 2M house, they should be ecstatic when they sell it, the government takes the property taxes and they still get to keep more than 200k.

> A house isn't just a thing you buy and sell

Oh great I'll take one of those. Maybe two. Where do I sign up?

Don't you dare touch the holy commercial real estate that is luring in all those stupid techies who are driving up the value of my house. Oh god I hate techies, I made this neighborhood good for them, they are taking advantage of my hard work and now they dare to come here and settle down? Preposterous. Look at all the landlords kissing their asses by building expensive luxury apartments so they have a place to live in and driving up the price of housing. I bought this neighborhood without the techies and they should stay outside.

This is satire. Please do not take it seriously.

Theoretically the house that changed hands, the new owners knew what they were signing up for and could verify their budget could handle the higher taxes. Whereas the original owners, whose home value has shot up significantly since purchase way back when, may not be able to pay for the new higher taxes if they were applied in full.

> What's fair about making people pay more tax just because the market value of their house has increased?

If you believe that, then why ratchet them up just because the property is sold? If you're going to detach property taxes from the value of the property, then do it for new homeowners too.

If we are scaling property taxes with the property's value, we might as well do it for everyone and not treat people special just because they were living there longer. Other costs people deal with scale at least by local cost of living. Groceries, electricity, water service, etc. all increase year after year. Do we let people pay 1960s costs for everything else just because they happened to move to the area in 1960?

Prop 13 as it currently stands, is a wealth transfer from young, new homeowners to elderly, established homeowners.

Property values go up over time. I initially paid $8k a year and now its $14K, which is actually about right for the market. I am protected from wild increases so that I don't have to move my kids out of a neighborhood and school they've grown up in.

I agree that scaling property taxes with their values is bad. Not sure why government expenses magically double when housing value do.

Look into land value tax. The goal of property tax is not just to fund collective expenses, but also to encourage the most valuable use of the land for the collective benefit (eg. let's not waste valuable inner Bay Area land on single family homes, but instead with more dense uses like four plexes).

https://en.wikipedia.org/wiki/Land_value_tax

I guess that makes sense if your goal is to use land most efficiently. Not sure that what is most important though.

Agreed, it's a balance. I think replacing prop 13 with taxes deferable until sale would be a good step in the right direction.

The existing lock in effect of 13 would be orders of magnitude stronger. Nobody would ever sell and prices would skyrocket.

Huh? Eventually the current owners will die

Yes but there are places in the world where the house you buy when you're 30 isn't the one with your deathbed.

Ideally living people will move out and make room for the next generation when they no longer have use for 4 bedrooms in a good school district close to jobs.

Are you satisfied with the status quo in California, or do you think we can do better?

Obviously we can do better. And the best way to go about it is to end Prop 13 in it's entirety immediately.

Great. So to get that rolling, split roll obviously was a great first step, that unfortunately failed. But we should try again.

Beyond split roll, do you have ideas to 1) protect people that would be harmed by an immediate rollback of 13 and 2) build the political coalition to get it done?

1) these people hit a huge jackpot I don't care to "protect" them at all. We already have the CA tax postponment program for low income seniors anyway.

2) no. As long as California is a direct democracy the law will stay. Even Prop 15 failed so any chance of reform through the existing process is doomed. Justice Stevens echos this point here: https://www.law.cornell.edu/supct/html/90-1912.ZD.html I suppose that maybe with billions of lobbying and ad spend we could Prop 22 a repeal through but even then I doubt it.

The only way I see it happening is if the courts strike it down as unconstitutional. Equal protection is applied stronger on issues of race and Nordlinger v Hahn didn't address that. We now can see real data that Prop 13 systemically hurts minorities and I believe another challenge is warranted.

Edit: actually should have talked about "disparate impact" instead in that last part.

Thank you for the valuable info!

Reference https://harvardcrcl.org/wp-content/uploads/sites/10/2018/11/...

> If you believe that, then why ratchet them up just because the property is sold?

An argument here is that it's about budgeting and predictability.

If I choose to buy a $1M property today, I need to consider and budget for the $10K+/yr in taxes on it because I know full well that's what I'll have to pay. If that doesn't work for me, I don't have to buy it.

But someone who bought a $50K property and responsibly budgeted for the $500 in taxes on it will be severely punished through no fault of their own if that $500 becomes $10K.

People who made a $50k leveraged bet which is now worth $1M are who we're supposed to ruin our schools, parks, infrastructure and housing market for?

> People who made a $50k leveraged bet

They did not "make a leveraged bet". They bought a home to live in and watch their child grow in it.

Not everyone looks at real estate as a investment vehicle to maximize profits. It's just a home. It's not healthy for society to view homes merely as if they were shares of stock to be traded for maximum value. If you want to make leveraged bets, better to play the options market.

Oh ok great. So how do I buy one of these "just a homes"?

Find a city and neighborhood you like and are interested in setting roots there for the long haul. Find a house that you love that can be a forever home for your preferences.

Don't think of it as an investment to flip. Think of it as home. After the purchase, no need to ever look at the property value estimates again. Just live it.

Somehow you left out the whole part about actually buying the house.

Maybe your feel good spiel would make sense if price-to-rent ratios weren't the highest but that's not the case. Most of what you pay for here is a bet that values will go up. If it weren't for stupid laws like Prop 13 that only help land speculation this wouldn't be the case.

It doesn't even need to be someone who moved to the area who's grandfathered in to the cheap taxes: Families can share ownership of a property and retain it forever.

It's an insanely unfair system.

A tax on the market value of a house should go up when the market value increases.

This is double true when the value went up without any change to the structure. Structures depreciate, and become less valuable over time. When property values go up in California, it's almost entire land value that goes up. The value increase isn't from the labor of the land owner, it's just simple rentierism.

Land gets more valuable because of what one can access close to it: jobs, relationships, people, universities. All this value is socially created. This sort of wealth hoarding is hugely damaging to the economy, and all sorts of thinkers revered by people in the US have nothing but the worst possible words for it, from Adam Smith to Thomas Paine.

It is quite strange for the wealthiest members of a community to depend upon the less wealthy to fund a community, but that's what Prop 13 is all about. This situation, where the wealthy could buy their way out of taxation, is a lot of what led to the French Revolution.

> where the wealthy could buy their way out of taxation

This is literally the opposite. If you buy (a property), you'll have the taxes based on what you bought. You can't buy your way to a lower tax rate.

Every year their taxes get smaller and smaller, as the tax is, by law, sub inflationary.

The older the wealth, the lower the taxes.

You're right. Early adopters bought their way out of taxation, house appreciation made them wealthy. It's not that you start out wealthy, you get wealthy in the process and once you are wealthy you don't get taxed more. That's the effect he was describing.

> Early adopters bought their way out of taxation

I wouldn't phrase it that way because it's not what they did, even if decades down the road it turned out that way (it could well have gone the other way like it did for homeowners in Detroit years ago).

What they did was buy a home they could afford, based on monthly mortgage + taxes payments, which is the entirely reasonable and responsible thing to do.

Having the property tax balloon out of control and out of any conceivable affordable range due to actions of other people in the area, is hardly fair.

> It's one thing to pay 10x the taxes of your neighbors, it's another thing altogether to have a class of people benefiting from lower taxes over generations!

And, surprise surprise, that class is white people.

https://twitter.com/alfred_twu/status/1327821019931787264?s=...

Makes sense given that minorities were at large disadvantages to buy property in the past so mostly whites have been able to take advantage on the low tax rates. I'm surprised this isn't getting challenged in court. Nordlinger v Hahn didn't consider race.

> The extremely backwards property tax policies that favor existing landowners over anyone new, young, poor (though this admittedly is California's problem, not just one city or county) and make everything else attempted bandaids -- and misguided bandaids, at that -- to fix the system.

It's bizarre how much Prop 13 appeals to folks, even those who don't benefit from it. When you explain it to people, their initial reaction is to express worry about the millionaires who own the houses that have quintupled in value, as though they are in need of protection.

I hope someone eventually finds the right sales pitch to get rid of it: the policy distorts not only price but liquidity.

> It's bizarre how much Prop 13 appeals to folks, even those who don't benefit from it.

It should appeals to anyone who buys a house at any age.

Without Prop 13, home owners tax rates rise just because nearby businesses are successful, which is absurdly regressive.

Prop 13 appeals to and benefits people who don’t own real-estate yet, because it means that when they can do so, they know that their costs will be predictable, and they won’t be forced out of their homes by the next wave of IPOs or whatever else beyond their control (such as government money printing) pushes prices up.

Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that. If you don't want to pay them, sell the house for a huge profit and leave. If you do want to pay your fair share and continue to live there, take out a second mortgage.

We're talking about millionaires, not vulnerable victims.

> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that.

That’s not how property taxes work. You pay them whether you make money on the house or not.

You only make money on a house when you sell it.

> We're talking about millionaires, not vulnerable victims.

This makes no sense.

Buying or owning a house doesn’t make you a millionaire. Most people take out large loans to do so, and generally their net worth goes down at the point when they do so because of the costs.

Purchase prices may go up, but they also go down when the economy weakens.

I don't know why you think value doesn't exist until a transaction. Nonetheless, people are welcome to contest the price if it's wrong and they're welcome to sell the house and leave if they don't want to pay the tax.

They're actually welcome to stay and have a lien on their house: if you're living there you aren't going to have it taken away for a property tax lien. (If they will where you are, they can fix that in the same bill that repeals property tax distortions.)

> Buying or owning a house doesn’t make you a millionaire.

I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires.

> if you're living there you aren't going to have it taken away for a property tax lien.

I don't know if that is true for CA, but in some localities, you most certainly will, eventually, be evicted from your own property for a property tax lien. It will take quite some time for the court case to wind its way to completion, but eventually the Sheriff will show up one day with an eviction notice and forcibly remove you from the property.

> I don't know why you think value doesn't exist until a transaction.

Value is determined by what the market actually pays, not by someone’s model of what it would pay. That isn’t the value - that is an estimate of what someone would receive if and only if they sell at that moment. Contesting an estimate doesn’t change that.

Whenever prices fall, do you propose paying cash to homeowners to reimburse them for all of the overpaid taxes?

Forcing someone to take a loan on a volatile asset that they can’t sell without losing their home is a brutal policy.

> I'm focusing on the millions of houses in California that have went up in value by huge amounts since the last market snapshot for the tax basis whose owners are millionaires.

Ok - so you just don’t care how many other people get hurt or displaced as long as you get to take money from some millionaires?

> > Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE. It's as simple as that.

> That’s not how property taxes work. You pay them whether you make money on the house or not.

> You only make money on a house when you sell it.

You are correct in that you do not (yet) have cash in hand from the value increase of the property. So if one defines "make money" as "have cash in hand", no money is made until one sells the property.

But, what one does have in this situation is an unrealized capital gain. And if one defines "make money" to include unrealized capital gains, then the homeowner has "made money" -- they just do not yet have cash in hand.

> unrealized capital gain

Unrealized is the operative word here. It means not achieved or created.

An unrealized capital gain can become an unrealized loss. That’s because it’s not a real gain.

Leveraging unrealized gains through loans is universally recognized as a risky investment strategy.

This policy would force people to take on this risk.

Which is exactly the point I’m making.

Homeowners shouldn’t be forced to take on risky financial instruments that are tied to the performance of local businesses.

In a discussion about paying property taxes, which must be done with cash, what purpose would it serve to define unrealized capital gains as “make money”?

At a tax rate of 1.3% the jump in monthly taxes for a house valued at 400k to 1.2M is about $433 to $1300. It's not nothing but it's also backed by a house that's now worth $800,000 more - allowing them to take a second mortgage or a HELOC. In no way am I dismissing the concerns here. It probably affects some people more than others and we can talk about specific targeted exclusions. Right now, even the proposal to eliminate this for commercial buildings was rejected.

Like rent control, this is indiscriminate welfare. Qualified welfare reaches the people who need it the most.

"qualified welfare" doesn't reach people who can't navigate the bureaucracy.

Aiming it at the people who have made lots of money is the worst of all worlds.

Prop 13 benefits everyone who owns property.

It is not aimed at people who have made lots of money.

Only in the sense that food stamps benefit everyone with kids and medicaid benefits everyone with a body. Is that what you mean, you're valuing prop 13 as a potentially-out-of-the-money option / a safetynet?

The people who are actually receiving the value of the benefit for prop 13 are those who have made lots of money on their house -- the more money they've made, the more benefit they get.

My point is that just from the outset, property taxes are a tax that transfers wealth from those who own property to those who do not.

All property taxes are always a transfer from property owners to everyone else. Prop 13 or no Prop 13 this is true.

So then when we’re talking about Prop 13, we are talking about a putative transfer only between property owners - long-standing vs recent.

When I say that it’s also not a transfer, what I mean is that anyone who holds property will end up with the same relative gain over time.

This of course assumes that prices continue to rise.

If they don’t then these schemes to tax people on unrealized gains fail too.

> take a second mortgage or a HELOC

Taking a loan against an inflated asset and using it to pay cash, is a good way to risk bankruptcy if prices go down.

Not to mention exposing them to leverage if rates rise.

Sure, we could allow tax deferral on appreciation until the property is sold.

Millions of Californians are millionaires on paper because they bought their house 30 years ago and held onto it.

Millions of them are also retired or on SS and if they had to pay market value property taxes they would be not be able to. Take a huge profit and leave, for where? You've lived somewhere most of your life and should be kicked to Stockton?

For some reason I hear Tom Selleck's voice talking about reverse mortgages. There's a winner for public policy.

They would have options like

1. Move

2. Take out a loan

3. Take in a boarder

4. Refuse to pay and know they will not be evicted for their lien (this could be codified statewide if this were the real problem)

I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.

> I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.

I don’t know why anyone would think that they are.

The median valuation in Stockton would be $350K. Your poorer 1/3rd millionaires will be screwed also. Which is pretty much everyone in CA who has owned for 10 years.

I guess they can all move to trailer parks in the Mojave and make way for the real millionaires.

My "millionaire" grandma in the middle of San Francisco would literally die from those options. She is fragile due to age. Her house is familiar to her. Familiarity reduces stress, confusion, and accidents. She is close to family.

She will die soon enough. You can wait.

Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.

Had it not been for the distortion of prop 13, your grandma would have been incentivized to move long ago.

We can roll-back prop 13 going forward for properties purchased some buffer of time after the new law goes into effect, without harming your grandma.

Why force her out?

Why don’t you go somewhere where prices are cheaper and make a nice community there?

I didn't say force. I said incentivize. Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff.

If her property taxes aren't artificially constrained by prop 13, she'll see her taxes go up over time, and decide how much she values staying in the house and paying the increasing taxes, versus retiring sooner or investing her resources in other areas of her life. The market at work.

Also, ideally we wouldn't simply remove prop 13, but replace it with a better, progressive-not-regressive tax code, eg. allowing homeowners of limited means to defer portions of their property taxes until the sale of their property. This would make it easy for grandma to stay put, and be vastly more fair and healthy for society than the status quo.

> Why don’t you go somewhere where prices are cheaper and make a nice community there?

Would you rephrase this in a kinder way please?

> I didn't say force. I said incentivize.

Incentivize usually means offering something to someone to make something attractive.

That is not what you are proposing. You are proposing to take away her money by force until she can’t afford to live there.

> If her property taxes aren't artificially constrained by prop 13

Taxes that rise based on a tax inspector estimating the value of an unsold property are at least as artificial as taxing based on transactions. There is nothing ‘natural’ about property taxes. It’s a system constructed and imposed by the local government.

> she'll see her taxes go up over time

Yes, through no fault of her own, if and only if other people continue to drive up prices.

> and decide how much she values staying in the house and paying the increasing taxes

Agreed. If other people drive up the price, they’ll be able to force her out of her home.

> Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff.

A kinder way would be - why force grandma to move, when not doing so would bring all of these benefits to areas which need them more, and frankly, have better incentives in the form of currently lower costs?

Why don't you stop building more commercial real estate if you don't like it that people move to your community? For people with poor means money is everything. Lots of people come to your community and become what you call "rich" in the process because the jobs are in your community.

> My "millionaire" grandma in the middle of San Francisco would literally die from those options.

I don't see why (2) or (4) would affect her lifestyle much.

> Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.

I don't follow any of this. I don't understand why this viewpoint would mean it makes sense that people who have made tons of money should contribute less of it to their societies.

Winning by taking from others ain't the goal. When new people arrive, they should be getting the same deal from the government you are, not getting hosed because they're less established.

(Obviously your prescience is rewarded: you made tons of money on your house.)

> Winning by taking from others ain't the goal. When new people arrive, they should be getting the same deal from the government you are, not getting hosed because they're less established.

But that’s just it - they do get the same deal.

Everyone pays the same percentage of what their house cost when they buy it.

Grandma got the same deal you do.

If you buy a house now, it too will be worth more if you wait 30 years.

You just have to wait as long as grandma did. That is literally the same deal.

You literally described giving established people a better deal than ones who are less established.

> If you buy a house now, it too will be worth more if you wait 30 years.

It might be. Or I might have bought it in Redding or Vicksburg and pay tax on the market value, same as my neighbors who buy today. Prop 13 only kicks in meaningfully for people who basically won the lottery, in proportion to their gains.

To do that, it distorts the market, adding friction to what is already a market with unhealthily-high friction.

No, I literally described giving people the same deal. Grandma wasn’t ‘established’ when she moved in. She had exactly the same deal you have.

Grandma already paid her taxes and now you want to force her out of her home.

Have properties in Redding or Vicksburg not appreciated in the last 30 years?

> Prop 13 only kicks in meaningfully for people who basically won the lottery

You keep saying ‘won the lottery’, when what you mean is they bought a property in a place where properties appreciated in value.

That just sounds like a good investment decision.

And you will inherit her tax rate? Is this really the good end of the story?

#4 is essentially my favorite solution to Prop 13 (although I would accept just about anything that would get rid of it).

Basically, for residential properties, keep the existing Prop 13 tax increase logic, but apply the difference in taxes between the Prop 13 rate and the real rate as a lien against the property, to be paid when it changes hands.

That preserves the (utterly unfounded) objection of "throwing out grandma on the street", while still recouping unpaid tax. There are some complexities with the lien happening for a very long time, like that happens when the lien matches the property value, but as long the lien is strictly called in, they should be minor.

In the case of HCOL places like the Bay Area, yes, perhaps they should move somewhere cheaper. The money they would make from selling their house gives them a lot of options.

As it is today, young families are the ones buying in far out places like Tracy, Stockton, etc., and they still might pay higher property taxes than a retiree in the heart of the Bay Area. It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees.

> It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees.

That is a problem that we don’t have to solve by destroying communities through eviction.

We can build workplaces where property is affordable, and those communities can develop into attractive places to live, and their property prices will rise too.

It seems like a weird non-goal to try to create a society where there are only a few places where there is work and amenities.

The natural response to one place becoming too expensive is to invest in making more places where people can live and work.

I wouldn't call it "destroying communities through eviction", but I do agree that cramming everyone into the same small set of places is its own harmful issue and should be reconsidered as well.

High property prices are just a signal that investment is better spent elsewhere.

Trying to tax people out of homes because someone else wants them just means underinvestment in other communities.

Cupertino school district is planning to close some schools[1] because there aren't enough kids - fewer and fewer young parents can afford to live in this area.

There are multiple ways to destroy a community. Apparently, one way is to artificially cap tax on long-time residents until only old people are left.

[1] https://www.mercurynews.com/2020/09/14/cupertino-district-pl...

> fewer and fewer young parents can afford to live in this area.

That is due to wage stagnation, not prop 13.

Oh come on.

> Median household income (in 2019 dollars), 2015-2019

> Cupertino: $171,917 [1]

> USA: $62,843 [2]

[1] https://www.census.gov/quickfacts/fact/table/cupertinocityca...

[2] https://www.census.gov/quickfacts/fact/table/US/INC110219#IN...

Many people are having trouble buying property is most prosperous parts of the US.

It’s because wages haven’t grown in line with investment returns over time.

This is not controversial, and is nothing to do with Prop 13 or whether Cupertino has a higher average income than other US cities.

I don’t see how that refutes his point- maybe those young people aren’t living in Cupertino anymore?

Moving all jobs into a few cities and then extorting those who more there is how you get wage stagnation.

>There are multiple ways to destroy a community.

I am convinced that California is hell on earth. It's designed to maximize human suffering and when you tell Californians how to get rid of the heat they tell you that they like it this way and actually would like it even more if it was hotter.

"screw old people, kick them out of the city" is not a stance that wins votes.

No, it's definitely not. Thus why Prop 13 is referred to as the third rail of CA politics :)

Perhaps they should move someplace cheaper if they want. But, they shouldn't be forced to do so if they don't want to.

"Beat it grandpa; young people want to live here now..."

"Grandpa" is a millionaire, if he wants to stay he should pay what his neighbors do.

He already has.

Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money? Because my take on this is: you're millionaire so you can take care of yourself, no public money for you.

Also, no, they wouldn't have to move to Stockton, they wouldn't have to leave their home town. Sell your house for $2M, buy two condos, for $1M million each, move into one of them, rent out the other, and you're set for life, and you will still have your original $2M to pass to your grandchildren after you die. Or you can invest your $2M in ETF, and live in the rented condo, cashing $100k of capital gains profits every year.

For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them.

> Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money?

Does this apply to all people who have $2M regardless of whether it’s invested in a house?

> For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them.

It isn’t one of them.

This is a solved issue in other states. Not sure why CA struggles so much.

Just allow a homeowner to defer taxes until sale or death. When the house is eventually sold the city can get back their $800,000 in back taxes, with interest.

That’s what my Canadian province does.

People might be more amenable to solutions like that if the government provided healthcare and other such services.

They do this in other US states as well. TX is a good example.

And the govt already provides healthcare for retirees. It’s called Medicare.

And how can the govt afford to provide healthcare and such when people sitting on assets with million dollar appreciation don’t pay any tax on it?

>Take a huge profit and leave, for where?

Is supposed to be some joke? You know, if people knew they were going to get knocked out by property taxes they would have a strong incentive to prevent that from happening by simply building enough housing for themselves.

> Property tax rates rise WHEN YOU HAVE MADE MONEY ON THE HOUSE.

That's not true. You have only made money on the house when you sell it. Should we force people to sell their own houses because other people have more money than them?

I don't think "if you have enough money you can push others out" is great policy.

I literally pay 10x as much tax as my next door neighbor in a house with the same value. The schools need to be funded and the cost should be shared far more equally.

> The schools need to be funded and the cost should be shared far more equally.

You’ll get no argument for me on that one.

Property taxes are an absolutely terrible way to fund local government.

Other countries don’t do it that way, and there is no reason we should.

England for example just has a flat tax per person living in a given county or borough, with some exemptions for people who don’t have enough income.

Income taxes, sales taxes and business taxes are of course other possibilities.

Taxing economic activity on the basis that a well serviced community supports that activity is very reasonable.

Taxing wealth -- albeit in this limited form -- is fairly attractive, and especially the taxation of land (rather than improvements) is. (We should be incentivizing folks to make efficient use of land.)

> We should be incentivizing folks to make efficient use of land.

Yes - why don’t we invest in places where house prices are lower?

Stockton keeps being mentioned.

The incentives are for people to live there and for businesses to set up offices there, and amenities to be created for the people who live and work there.

Why would you be against developing areas that are not as nice right now?

>The incentives are for people to live there and for businesses to set up offices there

Clearly not, otherwise people would move there. As it turns out, network effects exist, causing jobs to be near each other and for some reason people like to be close to their jobs rather than commuting 90 minutes from Stockton.

>Why would you be against developing areas that are not as nice right now?

These aren't mutually exclusive and you know that.

> Clearly not, otherwise people would move there.

Comments elsewhere claim people are moving there since housing is cheaper there.

> As it turns out, network effects exist, causing jobs to be near each other and for some reason people like to be close to their jobs rather than commuting 90 minutes from Stockton.

That can be solved by building offices in Stockton.

Businesses expanding out of areas that are too expensive is a good thing.

Forcing people out of their homes so that businesses have access to a bigger pool of workers without needing to open more offices just seems like corporate welfare, forcing yet another externality onto both employees and the nearby community.

>Why would you be against developing areas that are not as nice right now?

> These aren't mutually exclusive and you know that.

The choice to live on one place versus another is mutually exclusive.

The argument seems to be that older people should be taxed out of homes near successful businesses so that current workers can live nearer to workplaces. (And they in turn should be taxed more so that they too move out as soon as they can).

That seems to be very much about businesses not needing to expand to areas in need of development.

> Yes - why don’t we invest in places where house prices are lower?

There is an old quote. "Why do people rob banks? Because that is where the money is." Whatever benefits of the area are why people were willing to pay higher prices. It is good for not as nice areas to develop but trying to bootstrapping a less developed area is also expensive with fewer guarantees of demand in the area. It is like trying to go max density zoning from the start in Sim City and having massive bills and no demand. "Retirement communities" are the main demand for those cheaper niches and even then they have other demands to fulfill like medical care.

> trying to bootstrapping a less developed area

Nobody is talking about bootstrapping demand in less developed areas.

Elsewhere people were talking about how people were being forced to buy houses in places like Stockton because they couldn’t afford to buy them in Cupertino.

So the demand is already there.

One complaint was that those people have to travel a long way to get to work.

One dystopian solution to this is to use taxes to confiscate property from people who live near employees, so that workers can live there temporarily.

Another way is for companies to open offices in places where their workers can afford to live, contributing to the creation of more attractive communities as they do so.

Property taxes under Prop 13 are actually a pretty good way to fund local government.

The revenue is very stable and dependable. Even in the depths of the 2009 dowturn, almost all California counties still had slightly increasing tax rolls. Assuming most municipal business is pretty stable, this would seem to be a good match.

Other states solve this in other ways. In Washington state, the overall assessment for a municipality can only go up slightly each year, but individual property assessments are not limited, so you can still have your share of the tax go up a lot if your neighborhood is assessed higher and other neighborhoods in the municipality are assessed lower.

Good point - stability of taxes is important for the govt as well as homeowners.

> Property taxes under Prop 13 are actually a pretty good way to fund local government.

No, it's not.

Which is why California local government relies on special districts funded by Mello-Roos charges (essentially property taxes that are flat per unit rather than value based, and are outside of the Prop 13 limits) and large transfers of state revenue for funding ever since Prop 13 restricted the top nominal property tax rate in California to much lower than effective property tax rates in the US as a whole rolled back valuations on existing property so that people weren't then paying full rate, and restricted the rate of increase of assessed value.

> The revenue is very stable and dependable

And very low, forcing reliance on taxes that are less stable and reliable than property taxes would be without the Prop 13 assessment increase limit, which is a net loss of stability.

Stability might be a decent argument for something like the assessment increase limit (if you ignore the distributional inequities) without the ultralow nominal rate limit, but to avoid reliance on other means you'd have to raise the nominal rate to target the desired effective rate given age and value distribution observed.

Taxing property has a massive advantage of stability and predictability for local governments. If you have a local sales tax, a neighboring jurisdiction might compete for lower tax rates; you might have a high-volume retailer close or move to the neighboring town; you might have a large business close (or get enticed to move).

I'd like my city to have a stable source of funding, so we don't have problems issuing bonds and don't have to cut school funding during a recession.

> Taxing property has a massive advantage of stability and predictability for local governments.

As pointed out by another commenter - this is exactly what Prop 13 provides.

Taxes are predictable for owners, which by definition makes them predicable for local governments too.

It is exactly a compromise - property is still taxed, but in a stable and predictable way.

So, when you said:

> Property taxes are an absolutely terrible way to fund local government. Other countries don’t do it that way, and there is no reason we should.

What did you mean? I was replying to that assertion by pointing out the benefits of taxing property as a means to fund local government.

IMO it is best to view conflicts like this in terms of trying to provide a benefit to some people, and how to pay for it.

Prop 13 is promoted as helping people of modest means (lower income, or retired) who see the value of their property go way up, thus imposing an unaffordable tax burden and forcing them to sell and move.

The cost of this benefit is currently (AIUI), higher income taxes generally, and particularly on high earners, as well as higher sales tax. If you look at state and local revenue over time you will see a shift away from property tax and towards these other taxes.

The thing to focus on is that the total amount of state revenue is going to end up about the same, laws like this just shift who pays it.

Equity is not the only concern, though Prop 13 is certainly a transfer of wealth too established, richer people from poorer, less-established ones.

Prop 13 also incentivizes people _not to move_. This adds friction to an already high-friction market: people are disincentivized to upsize/downsize, move closer to work, etc., which harms the market beyond just the fact that it's an inequitable wealth transfer.

And yet California has a buoyant real estate market.

It’s not an inequitable wealth transfer. Only people who own property pay these taxes, and all property owners benefit from Prop 13.

>Without Prop 13, home owners tax rates rise just because nearby businesses are successful, which is absurdly regressive.

Because the value of the asset they own has increased.

Prop 13 discourages people from moving and unfairly shifts the tax burden on new residents

> Because the value of the asset they own has increased.

Ok, so do you propose giving cash payments to home owners whenever there is a dip in their property price?

Also, what’s wrong with being able to call a place home and be able to live there without being driven out?

Seems like a human right since we first moved into caves.

Property taxes aren't like income taxes -- the tax rate is incredibly variable and set at at the local level when cities make their budgets. So if the city doesn't need more revenue, the tax rate can just be adjusted down to keep property tax payments the same. But if the city does need more revenue, hopefully it's because more public services are being provided, in which case, it's entirely fair that the people who live there and benefit from the increased services pay for them.

This doesn’t actually address anything in my comment.

It sounds like you are saying tax rates should have nothing to do with home values and should just be arbitrarily adjusted to make property owners pay for whatever the local government wants.

Why would they get more money when the price dips?

Property tax rates should be fair to all property owners, not favor those that got in first which is what prop13 does.

>Also, what’s wrong with being able to call a place home and be able to live there without being driven out?

Nothing, just don't make others pay for it. Prop13 has created a distorted housing market that hurts many more people than it helps

> Why would they get more money when the price dips?

Because they paid tax on a gain that wasn’t real.

> just don't make others pay for it. Prop13 has created a distorted housing market that hurts many more people than it helps

People who don’t pay property taxes aren’t paying anything at all.

As soon as you buy property, you are benefiting from prop 13 yourself.

>Because they paid tax on a gain that wasn’t real.

You pay property tax on the assessed value of a piece of property.

>As soon as you buy property, you are benefiting from prop 13 yourself.

Based on what? Newer homeowners are carrying more of the tax burden than they would have without prop 13.

> Based on what? Newer homeowners are carrying more of the tax burden than they would have without prop 13

Yes, but as soon as they buy they start to benefit from their own taxes not rising.

> Because they paid tax on a gain that wasn’t real.

Exactly. Imagine one bought GME at $10. It rose to $350+ because the market went nuts. You never sold so none of that is real to you.

And the IRS comes back saying you now must pay taxes on your GME shares based on the $350 valuation because someone else paid that much for it.

Fortunately stocks don't work that way. A home shouldn't either.

Are you advocating that tax on housing should be purely when transactions occur like during stock sales?

So no more yearly property tax?

Well that’s exactly the point - Prop 13 strikes a compromise.

It allows for yearly property tax based on what the person could afford when they bought the property.

That’s a reasonable compromise.

People still get to own and live in homes and not be driven out by the actions of others over which they have no control.

And the community gets a reliable long term revenue stream, that is relatively stable even though boom and bust cycles.

>That’s a reasonable compromise.

That's the entire discussion. This is entirely your opinion. The previous poster was cherrypicking a comparison to stocks which is what I was trying to clarify.

I feel that the solution to the issue you raise is to reform property tax in CA, not to stick with Prop 13.

Prop 13 definitely doesn't benefit people who don't own real estate because property owners have an incentive not to sell: they can keep their lower tax rate and their expensive home! This restricts supply and raises property prices.

Property prices in CA have risen because salaries and IPOs have enabled people to compete for property.

Property owners should be able to keep an affordable tax and their home, regardless of what their home cost.

Raising property taxes based on market values, is taxing people based on how much other people want their homes.

I agree that property taxes should be reformed.

Let’s not make houses even more risky and expensive to own.

Instead, let’s fund public services in other ways, so school quality isn’t dependent on the average income bracket of the neighborhood, for example.

Property owners are also artificially inflating their own home values by blocking any and all attempts to build more houses.

That’s not typically how the relationship between building and home values works over time. Places where density increases also see increases in prices for existing homeowners.

But sure - Prop 13 and new building are separate issues.

Home owners definitely believe that proximity to multitenant housing lowers property values, and vote accordingly (whether that is actually the case is up for debate, but also less relevant to voting behavior than perception).

[1] page 4: https://www.jchs.harvard.edu/sites/default/files/rr07-14_obr...

Yes, the belief is prevalent, even though mostly wrong.

My guess is that other downsides, real and imagined, make people overestimate the impact on prices.

That's not what single family zoning does. It keeps the value of the land a bit lower than it would be otherwise by preventing denser development. In most areas, a developer can get a lot more money out of a medium-density condo building or a tower than out of a house.

If that wasn't the case, developers wouldn't want to build denser buildings.

Consider how much would it cost to get a standalone house with a sizable yard on Manhattan?

I thought they meant homeowners by property owners rather than developers. While selling to a developer for density would benefit the initial sellers it would cannibalize the value of other houses by fulfilling demand.

Generally that isn’t how it works.

More density usually doesn’t come close to satisfying actual demand, but it does make the existing real estate more valuable.

It doesn't get close because of the size of the problem. If 85% of real estate is single family housing then how is a 1% increase in density supposed to solve the problem?

> but it does make the existing real estate more valuable.

No it doesn't. Existing real estate is valuable because there is a mismatch between commercial and residential real estate. By building more residential real estate you are reducing the mismatch.

There are a lot of reasons that property taxes have risen in California. Giving people free money that expires when they sell their home is one. Making building more housing mostly illegal is another. Economic prosperity among some people in the urban regions of California is certainly one too.

Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using.

Funding schools based on tiny districts is of course a poor policy, and local taxes -- be it property taxes, income taxes, corporate taxes, sales tax, fees, whatever -- shouldn't be what dictates the funding of local schools. That's really a separate question.

I’m glad you agree that Prop 13 is not the cause of rising prices.

> That's really a separate question.

Schools are just one example of a service funded by property taxes.

It’s not a separate question at all.

> Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using.

What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost.

This just makes it easier for even richer people to take existing property rather than invest in developing other places.

> What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places.

Allocating resources to the people who want it most (and presumably make the most of it) seems like a good goal to have. Wouldn't that be the most effective use of resources?

> just a measure of how much other people want the property.

Estimated property price doesn’t measure how much the existing owner wants the property.

If they don’t want to sell it, we can safely assume that they want it more than the other people do.

I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home. Imagine you spent your life eating a certain kind of shellfish, which used to be cheap, but then a foreign country started importing this shellfish in huge quantities and drove the price very high. I don't think you should feel entitled to be able to buy the product for the rest of your life at the cheaper price you were used to.

People who bought may feel more entitled to a stake than renters, but in either case it's necessary to have some kind of incentive (high property tax) to drive out people who don't want to pay the market rate for living somewhere, so that available housing slots end up being given to those people who are willing to pay the most for them.

> I don't think that having gotten lucky and bought a home somewhere when it was cheap

What makes you think it was luck?

How about people who saw the potential in a place before other people did, and contributed to its success?

How about ordinary working class families who have lived there for generations?

> should entitle you to enjoy living there forever when others are willing to pay more for the same home.

I don’t see why people with money should have the right to force people out of their homes.

> that available housing slots end up being given to those people who are willing to pay the most for them

I see, so this is about people with lots of money being able to force people out of their homes.

Why are there limited slots? Why not just invest in other places? There are many underdeveloped towns even in California, where prices are cheaper.

The market signal is that people should go and invest in those places.

Is there any other space where taxes are so inequitable as with property in California?

Why don't they move to a more equitable tax scheme based on, say, what the district requires rather than what the home was bought for? I already know the answer, because nobody would vote for it.

It is the same in Berlin, where I live. People voted for the Mietendeckel but the only group of people that benefitted from it are the long-term renters who already have all the house they need. Among the screwed: small-time landlords, new renters and new families who need bigger apartments.

> I don’t see why people with money should have the right to force people out of their homes.

Agreed. Opposition to prop13 essentially is a statement saying that whoever has more money because they hit it rich on an IPO deserves the right to kick out established residents just because they have more money.

>How about people who saw the potential in a place before other people did, and contributed to its success?

Contributed to its success by following a tax policy that encourages commercial real estate at the expense of residential real estate? Are you sure those people aren't just taking the jobs that the commercial real estate is providing hostage and are now extorting people for the privilege of living near the job?

>The market signal is that people should go and invest in those places.

No, the market literally screams into your face that you should build more housing and fix the commercial vs residential mismatch.

> I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home.

What should buying a home mean if not that? Sure, if someone else is willing to pay a lot more, they're welcome to bid on it, but it's still up to you if you want to give that up and stay put where you have roots, friends, family, kids in school, etc.

Agreed. There is some cognitive dissonance going on between the idea of the home you bought being your property—meaning you shouldn't be affected by changes in market value unless you choose to sell it—and the requirement to pay annual property taxes merely to retain what you already own. People buy homes rather than rent precisely to avoid this sort of situation, but to the tax collector everyone looks like a renter.

Exactly. A home is a home. It's not a share of stock to be sold to the highest bidder. The whole point of buying a home is to establish roots in one place and become part of the community and see your child grow up there.

> I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home.

If others are willing to pay more for the same home, then they should make the current owner of the home an offer.

There is a thing of value -- a tax subsidy -- which makes the house more valuable to the current owner than the next. That's the distorting power of Prop 13, the old owner has to give up not only the house but the tax rate.

(This is somewhat ameliorated by the fact we let people take the tax subsidy with them under many circumstances now, so people can move to a different part of the state and already pay less tax.)

A home is not a share of stock to be traded for economic benefit.

A home is a home. Where your children are born and grow up. Where you get to know the neighbors and become part of the community.

It's not an investment and should not be taxed based on the highest bidder.

That's not the way most people in the US think though.

Since you seem to think Prop 13 is beneficial, I'd be curious to hear your ideas on reforming property taxes! What would you keep or change?

One way would be to tie property rates for everyone to inflation. Not sure why just because housing prices double, that the government needs twice as much money.

Prop 13 is already limited to 2%

> Property prices in CA have risen because salaries and IPOs have enabled people to compete for property.

They have risen because nobody resists commercial development, only residential development. The reason? Commercial real estate still brings in taxes and it increases home values which also increases property taxes on homes. The insistence to only reap the benefits of commercial development without further residential development is what is causing problems in the first place.

With prop 13, the burden of paying for infrastructure and services provided to you and your neighbors falls to new generation of owners who pay 5 times in property taxes than their neighbors. This is unfair and is absurdly regressive.

Most other states regularly reassess the property of your home for taxation purposes and many have mechanisms to reduce tax liability of people living in their homes(vs renting them out) or seniors.

In california however due to prop 13, both the state and the city are forced to find different ways to pay for their costs, such as raising sales tax(which went up significantly since passing of prop 13 in 1978) or passing local bond measures to pay for schools, sewage etc.

The only people who win are those who won a lottery of being able to afford a home in CA 10/20/30 years ago.

> With prop 13, the burden of paying for infrastructure and services provided to you and your neighbors falls to new generation of owners who pay 5 times in property taxes than their neighbors.

At first yes, but over time you become one of the people who pays relatively less compared to new buyers.

Nobody won a lottery 10 , 20 or 30 years ago.

If you buy a home today, then in 10, 20, 30 years time people will be saying you won the lottery.

> At first yes, but over time you become one of the people who pays relatively less compared to new buyers.

So we should all be looking forward to the Utopia where dumpy old single family homes are selling for checks notes $15M.

I mean, you must be aware that will eventually happen because of inflation.

After 35 years, assuming 2% inflation.

(If the nominal growth was 2%/yr, prop 13 didn't help you.)

You're turning "fuck you, got mine" into a virtue.

No one is saying that if someone makes a bunch of money, they don't get the money. Your assets go up, that's yours. We're just saying that they shouldn't also have the government reducing their taxes so other people can pay them.

> You're turning "fuck you, got mine" into a virtue.

Can you explain how?

I’m not turning anything into a virtue.

I’m just stating the fact that the deal has been the same for everyone.

You seem to be trying to change the deal to make it even more onerous to own property.

> government reducing their taxes so other people can pay them

That just isn’t what you are saying. Prop 13 doesn’t reduce people’s taxes.

It only limits the rate at which they can be increased.

You want taxes on existing property owners to be increased so they can no longer afford to live there, and can be replaced by people who have more money.

>You want taxes on existing property owners to be increased so they can no longer afford to live there, and can be replaced by people who have more money.

Yes, people who want to build more housing and lower prices in the long term.

>At first yes, but over time you become one of the people who pays relatively less compared to new buyers.

Wow, if this is intended then this is a literal ponzi scheme. I always assumed that it was an unintended side effect but people are actually banking on this? That's crazy.

> With prop 13, the burden of paying for infrastructure and services provided to you and your neighbors falls to new generation of owners who pay 5 times in property taxes than their neighbors.

Not as much as you seem to think. California’s nominal property tax rates are low (also due to Prop 13), so property taxes start low when you buy and get lower over time. The things that most people pay property taxes for in other places are paid for out of other local taxes, or redistribution of state taxes (e.g., sales tax) revenue to local governments.

> Most other states regularly reassess the property of your home for taxation purposes

So does California, annually; it just limits the annual increase of the assessed value.

> Without Prop 13, home owners tax rates rise just because nearby businesses are successful, which is absurdly regressive.

No, they don't.

The tax bill rises, the tax rate does not.

> Prop 13 appeals to and benefits people who don’t own real-estate yet, because it means that when they can do so, they know that their costs will be predictable

It doesn't, though. First of all, because it makes it less likely that they will be able to (not just because of what it does to buy v. rent pricing, but also because it pushes needs that would be paid out of real estate taxes into other taxes, which means people who don't own property are less likely to be able to say to buy property, since they are paying extra other taxes to subsidized ultralow property taxes for property owners (Prop. 13, in addition to it's restrictions on assessed value increases, also limits California’s nominal maximum property tax rate to well below the national average property tax rate.)

But even if they manage to get to own real estate, it doesn't do anything to guarantee greater predictability overall, just greater predictability of the taxes associated with ownership. The financing gap it creates is closed through factors which change over time and to which homeowners are exposed.

> express worry about the millionaires who own the houses

You don't become a millionaire just because the paper value estimate of your house becomes larger.

A low-income person who scraped by to buy a modest home in a cheap area doesn't become any less low-income just because suddenly the demographics change and rich people move in. Forcing them out of their home where they have built their life just so one more rich newcomer can get in, is not fair. For example, East Palo Alto.

If the neighborhood refuses to change, then the people inside it will have to change, even if that means leaving the neighborhood.

> I hope someone eventually finds the right sales pitch to get rid of it

It's racist. Prop 13 enshrines discrimination of the past into today's tax law.

White families have lower tax rates: https://twitter.com/alfred_twu/status/1327821019931787264?s=...

> neighborhoods or people to try to protect, to the detriment of everyone else wanting to live there

Wait, you have a problem with a city government trying to serve the people who actually live in a neighborhood rather than potential new residents?

That's the whole point of a city government. To serve the people living in the city.

Did you read the origins of their zoning code? "Protecting" the city by attempting to limit Black people to certain areas. Not a great look.

A lot of zoning code is based on similar ideas, even if most people are not dumb enough to say the quiet part out loud these days.

You do still hear it on occasion: Bend, Oregon, where I live, passed a similar change a few years back, which was then superseded by Oregon's HB 2001, which effectively eliminates exclusionary zoning in our cities. At the local hearing for the Bend rule, there was a woman who was really upset that "renters" might be able to live in her neighborhood. They're dirty, messy, and "don't care about where they live", according to her testimony.

It's economic segregation, plain and simple.

I can’t say what was in that woman’s head, but neighborhoods that have a lot of rentals tend to have a different character independent of race. Homeowners have stable enough lives to have saved up a down payment, they tend to be older and have families. They also have a reason to not annoy their neighbors, because they will have to live with them for many years.

Now, younger less settled people also need places to live, and the Bay Area’s solution is to send them to Stockton or something, but not everything is about race.

> not everything is about race.

Sure, but we're not talking about "everything", we're talking about housing trends in American cities.

"Economic segregation" is what I wrote, so not just race, but keeping those with less money away from "nice" neighborhoods and their good schools.

Plenty of people who rent might buy if there were more opportunities to do so, which there would be if housing weren't such an artificially scarce good in the US.

And when you describe 'those neighborhoods', keep in mind that that's probably a policy. If all neighborhoods had a mix of people, you wouldn't have quite so much of a concentration of people who aren't as wealthy.

> Plenty of people who rent might buy if there were more opportunities to do so, which there would be if housing weren't such an artificially scarce good in the US.

America has the cheapest housing in the Developed world. SF is not cheap, but its still cheaper than big cities in Europe.

Oh, I know something about that! I own a home in Padova, Italy.

Land is mostly cheaper in the US, but Italy and most of Europe provide far more housing options, in large part because they do not impose things like single family zoning.

Padova has twice the population of the town where I live here in the US, in about the same area, and housing is cheaper.

The economy isn't great there, but that's a separate story from housing. If it were hotter, it's a place where you can simply build homes in many shapes and sizes, from small apartments to nice villas.

Part of real property TCO is taxes. I wonder how Italy stacks up agains comparable areas of other countries.

https://www.accountingbolla.com/blog/property-tax-in-italy-g...

> If all neighborhoods had a mix of people, you wouldn't have quite so much of a concentration of people who aren't as wealthy.

I don't think this is possible, or even desirable.

A huge part of a home's value is the neighborhood. How much crime is there? How good are the schools? How are the neighbors?

A "fancy" house and an "affordable" house in the same neighborhood are not going to have a large price difference. If you revert every neighborhood to the mean, then you more or less revert all property prices to the mean. Which means you have erased all the "affordable" housing options, and also reduced the QOL of the top 50% of people.

You're missing the simple factor of square footage. A 1000 sq ft unit is going to be about a quarter of the price of a 4000 sq ft one for the simple reason that otherwise the larger unit would be subdivided or vice versa. So people with less money get less space, but that doesn't mean they can't live on the same street.

Also, even to the extent that values are dominated by other factors, the intention is to increase housing availability through higher supply and lower prices. All housing becoming as expensive as upper middle class housing would be a problem, but all housing becoming as affordable as existing low income housing would be great.

This only applies to "units", not houses. A similar rule could apply to lot size, but lot size only makes up a fraction of the value of a house.

It's telling that so often, in the US, we refer to "units" in things like apartments, but it's a "single family home".

> This only applies to "units", not houses.

Your expectation is that a 1000 sq ft "house" on a quarter acre of land would cost on the order of the same amount as a 4000 sq ft "house" on a full acre of land?

I'm saying that houses and plots of land with houses on them are not trivially subdivided like apartment complexes are. It is rare to see a house directly across the street from a house that is 4x larger and on 4x as much land. But if you did, the price difference between those houses would be much less than 4x, because so much of the value of a home comes from the neighborhood.

Its the same exact reason why houses cost more in Boston than in Wyoming, but on a different scale. The value of a home is heavily influenced by its location.

I think its reasonable to expect this to be more true of houses than apartments. Someone who is buying a house and putting down roots is going to care more about "the neighborhood" than someone who plans to move on in a year or two.

> It is rare to see a house directly across the street from a house that is 4x larger and on 4x as much land.

This is unambiguously as a result of zoning. It's rare to divide a one acre plot into four quarter acre plots because it's prohibited.

> Its the same exact reason why houses cost more in Boston than in Wyoming, but on a different scale. The value of a home is heavily influenced by its location.

Nobody is disputing that. But all that means is that a quarter acre plot in Boston costs the same as a full acre plot in Wyoming. It still costs a lot less than a full acre plot in Boston, which is often the only option the existing zoning makes possible.

You could at the very least, leave it to the market, rather than using government policy mostly shaped by older, wealthier people to heap more crap on people who are in less fortunate circumstances.

Where I lived in Italy, you actually had very different homes very close by - big expensive single family units right next to 10 plexes that are far more affordable.

Frankly, I think it was healthier for my kids to go to school there with both some kids from wealthy families as well as Nigerian immigrants. Their schools here are much more homogeneous.

some neighbourhoods are nice in and of themselves, due to their geography, proximity, etc. most however are good only because of the people that reside in it.

When people of different classes ( not races ) have different opinions on what 'good' means, there is only going to be confusion.

even a good neighborhood, once it is deemed as undesirable, will lose its values, its taxes, and soon, its schools.

"Homeowners have stable enough lives to have saved up a down payment, they tend to be older and have families. They also have a reason to not annoy their neighbors, because they will have to live with them for many years."

This can be generalized - beyond the housing debate - as "having skin in the game".

As someone who has been (at various times) a short and long term renter, a landlord, and a homeowner ... it rings true to me that, generally speaking, renters invest less in their homes and their neighborhoods and have less at stake in the outcomes of those neighborhoods/communities.

That was certainly the case with me as a renter.

I don't think it's morally negative to segregate neighborhoods on the basis of renting vs. owning. The attempts to link this kind of segregation to past periods of literal racial segregation is, in my opinion, going to find less and less traction - especially as non-white stakeholders (homeowners) aspire to the same kind of skin-in-the-game cooperation with their neighbors.

> non-white stakeholders (homeowners) aspire to the same kind of skin-in-the-game cooperation with their neighbors.

What about the rampant housing discrimination in home-buying (without any enforcement) [0]? What about massive racial wealth disparates?

I think it is pretty naïve to suggest that the current backlash against having "renters" has nothing to do with race. Not more naïve than suggesting it only has to do with race, but close.

[0]: https://projects.newsday.com/long-island/real-estate-agents-...

Well, we could argue about this ad infinitum ...

Or, we could take a shortcut and ask those very people what they think and what they would like.

Which is to say, let's find some non-white stakeholders (homeowners) with skin in the game in their neighborhoods and communities and ask them what they think.

I drive through some very nice, very well ordered, single family zoned nieghborhoods in Fremont - the owners of which are predominantly non-white. The same exists in many other bay area communities.

Are those people vehemently advocating for upzoning and loss of local control ? Do those people have a strong preference for owners over renters ?

Genuinely curious ...

Can I also be a stakeholder if I'd like to live in a particular neighborhood but have been priced out by their "local control"?

Thanks for sharing that article. I agree that those who are setting different financial requirements for different races or asking for different information (like identification) before showing homes are discriminating based on race, and should be investigated. Leaving those instances aside, there are also times when directing clients to certain neighborhoods based on race may not be a bad thing. For example many minorities want to seek out a community they are comfortable with (in terms of language, access to religious services, ethnic grocery stores, or even just neighbors with similar lifestyles). This is especially true for first-generation immigrants or the elderly, for whom living in a less ethnically-accommodating neighborhood may be a difficult adjustment because they may not have shared experiences with those around them.

> it rings true to me that, generally speaking, renters invest less in their homes and their neighborhoods and have less at stake in the outcomes of those neighborhoods/communities.

Note that this isn't true in locations with actual renter's rights, like Switzerland.

How do people get any "skin in the game" if the incumbents do their utmost to impose policies that prevent that from happening?

In some cities in California, houses are "earning" more on an hourly - yes, hourly - basis than many people do:

https://www.sacbee.com/news/california/article208678414.html

That's a bit dated, pre-pandemic, but it's likely still happening in places.

I mean, the time derivative of housing prices has gotten higher during the pandemic, not lower.

In San Francisco proper, prices fell, because supply and demand are real, but those people spread out and prices are getting worse in a ton of other places, like where I live.

> In San Francisco proper, prices fell, because supply and demand are real,

Source on real estate prices in SF falling?

Not huge drops, but going down at all is pretty amazing in that area. You can Google it for the details!

There are dual problems with renters, my personal experience leads me to believe it is not the renters that are the problem in neighborhoods with high amounts of renters.

While it is true the renter does not have "skin in the game" it is also true that many landlord put in only the absolute bare minimum of resources to maintain the rental property.

For example my grandmother before she passed lived in a aging neighborhood, as the original residents passed the homes where sold off as investment properties. She generally had a good relationship with most of the renters however the owners of homes routinely refused to repair things, refused to have proper tree maintenance done, and other such problems that would not be the responsibility of the renter.

If the property is adjacent to a gentrified neighborhood but not yet pricey, the landlord can degrade service until the low income tenants leave, renovate the property, and charge new gentrified prices as well. I know of a couple buildings in the DMV area that were doing this within the last 10 years

Well in my families case it was what ever the reverse of gentrification is. As the original owners died off in that neighborhood the neighborhood got worse and worse, more crime, less value, etc etc etc

The owners of the properties were not waiting out the poor people hoping to strike it rich like you seem to be implying

Just wanted to add there's lots of factors at play besides the renters specifically

Just because the original intent may have bad doesn't mean that single family zoning in and of itself is bad. There are lots of municipalities with single family zoning. Mine does. Mine also doesn't allow any commercial property. And lots must be one acre or more. The residents want it this way. What's wrong with that?

Government enforced 1 acre lots is a good proxy for "keep the poor people out".

Also contributes massively to sprawl and thus carbon emissions because you can't have a more traditional sort of neighborhood where people might walk to the park and corner store.

Nothing against people owning a 1 acre lot if they want - that's fine! Imposing it on everyone is economic segregation.

>>Nothing against people owning a 1 acre lot if they want

Sounds like you do, you more or less accused anyone that desires a 1 acre plot of classism or wanting to "keep the poor people out", and of wanting to destroy the environment.

In reality most people that want that simply desire privacy, I for example desire that because i do not want to "walk to the corner store" or have a park at all in my neighborhood. I do not want to have "neighborhood" events, or be able to talk to my neighbor from my porch.

I want privacy, I want to be able to enjoy my hobbies which are solitary pursuits not group activities.

> Imposing it on everyone is economic segregation.

I agree but only in the sense that it should include 39 more acres. And a mule.

>>> Government enforced 1 acre lots is a good proxy for "keep the poor people out".

Uhhh not in the very least. Many of us want to live in areas that have 3-acre minimum lots because of a little thing called nature. Those who want to live crammed into micro-apartments with 1 tree for every 30 people can, but those of us who want a whole town that is more grass that pavement should NOT be accused of classism or racism.

If you really want to help poor people, figure out a system that doesn't box them into ever-decreasing concrete apartments further and further from clean air.

Cities are actually 'greener' if you look at things on a global scale, rather than just having few trees outside that a few species (deer, say) have somewhat adapted to living in the urban/wildland interface.

If everyone lived on 3 acres, you know how much truly wild land would be paved over?

Now, I strongly agree that people ought to have the right to purchase and live on a large lot if they want. Great, you earned it, have fun!

Requiring that? That's using the government to perpetuate a sprawly, carbon-intensive lifestyle that very much does exclude those who are not wealthy enough to purchase that much land. That's part of the point in many places with that kind of regulation.

>> "That's using the government..."

The majority of residents of an area using the government to control that area is the pinnacle of democracy.

>> If everyone lived on 3 acres, you know how much truly wild land would be paved over?

Actually, no there's plenty of land in America. Nothing would be paved, it would just be moved to yards (hint yards aren't paved). And if the population doesn't grow, then there's no reason America can't live like that forever.

When excluding illegal immigration, the US population is actually shrinking. There's no need to artificially box ourselves in.

7.7b people. https://www.census.gov/popclock/world

15.77b acres of habitable land. http://www.zo.utexas.edu/courses/THOC/land.html

15.77 / 7.7 = 2.04

Every human could have about 2 acres. At this level of distribution humans would essentially live in wilderness and integrate with nature. Oftentimes humans live in family groups so the actual point distribution would be uneven.

Unfortunately arable land needed to feed the humans varies by locale but tops at about .6 hectacres [0] or 1.48 acres[1]. This means that effective wilderness could be slightly less than .5 acres per human after some nominal usage for housing and utility right of ways.

0. https://ourworldindata.org/grapher/arable-land-use-per-perso...

1. https://duckduckgo.com/?q=.6+hectares+to+acres&atb=v83-1__&i...

> integrate with nature

That's false though. There are a lot of animals that do not want to be anywhere near humans, roads, houses or anything else. The presence of people wrecks it for them. Not to mention the jacked up carbon emissions if everyone had to drive around for everything because everyone is spread out.

Yes, there is some spatial optimization needed insofar as one would likely not want to be two acres in linear distance away from one’s infant. The habitable surface allocation could be thought of as virtual and fractional which would also account for point differences in relative value such as a natural spring, naturally occurring commodities like a gold mine or the human interest in subjective value like Hawaiian beachfront, all of which may change over time. Along the line of subjective preference is overall inter-human proximity in which some might choose higher or lower depending on intended lifestyle.

Human-avoiding life already has a hard time. The habitable surface estimate did not include many areas where the remaining ones exist, such as tundra, ice pack, mountains and deserts. Additionally inter-human proximity preference distribution will allow for additional area outside the aforementioned surface classifications.

> Those who want to live crammed into micro-apartments with 1 tree for every 30 people can.

We can't. That's the problem.

You can, just somewhere else.

> Many of us want to live in areas that have 3-acre minimum lots because of a little thing called nature.

This is fine to have a town like this.

But a town like this has no business being in a major metropolitan area of the US such as the Bay Area. (I'm looking at you, Atherton.)

Here's a case in point of how it's utilized in practice:

https://www.vox.com/22252625/america-racist-housing-rules-ho...

My town is fully built out, so it's not being imposed upon anyone except perhaps developers. Nobody can purchase a house and tear it down and build four in it's place. The lot is only zoned for one house.

It's being imposed on people who own land, and on potential residents who might like to live there in a more affordable option.

Some places are just not affordable. That's been true for literally thousands of years.

Central planning is not something we should be encouraging, except for cases where the market fails. It's not clear to me there's a market failure that's being corrected with single family zoning.

Central planning leads to a situation where market signals are ignored, and entrenches the status quo, rather than allowing cities (and economies in general) to change as needed. It seems highly unlikely that we've stumbled upon the "perfect" land use pattern. Why make it impossible to change from it then?

So you're agreeing, right? Have my town be free of "central planning" and set it's own course in terms of zoning.

What? How did you get that from my comment?

I'm referring to zoning as the central planning. It's central planning at a local scale, but still central planning.

Instead of letting each town set its own course, why not just let each property owner set their own course (within reasonable limits for market failures, like safety)?

My entire point is that restrictive zoning is the bureaucrats in the city governments deciding what the best use is for each plot of land, rather than letting the market decide based on demand.

Also, if we look at the Berkley case (which is what the OP is about!), there was no external force, the town made the change on its own.

What does it matter what they are based on. GP's point " To serve the people living in the city." still holds.

We're discovering that zoning is a tragedy of the commons style issue where it may sound good for any individual city, but is detrimental if everyone does it. It makes no sense to put on blinders with respect to the problems cities create just because of some notion that cities can operate in a vacuum, narrowly focused inward at the expense of good citizenship.

> A lot of zoning code is based on similar ideas, even if most people are not dumb enough to say the quiet part out loud these days.

That's the way it's always been. Here's an '80s example I ran across just the other day, and I'm actually grimly impressed by the clever video editing that puts up a WW2-era photo of mostly-white schoolkids to anchor a viewer's thinking away from "is this racist?" just as he says the worst part about "them" lol https://www.youtube.com/watch?t=973&v=jCMvOiupDLo

> "Protecting" the city by attempting to limit Black people to certain areas.

Why do you put protecting in quotes? The residents of areas typically like to be protected from demographic disruption, especially if the disrupting demographic is known to bring problems.

> Not a great look.

People are more worried about the place that they have to live, work, and raise their children than they are about your patronizing condescension.

> especially if the disrupting demographic is known to bring problems.

So racism, got it.

Call it racism, if you want. Homeowners conspiring to protect their neighborhood from people who aren't up to their standard isn't different than a country setting up an army to protect its borders from low quality foreigners.

And here I thought the purpose of the army is to defend against high quality foreigners violating our laws.

> Did you read the origins of their zoning code? "Protecting" the city by attempting to limit Black people to certain areas. Not a great look.

I've seen this claim in this discussion but without hard evidence that this was the sole or even primary motivation at the time (who would you even measure/prove that?). Regardless, it isn't the motivation today behind zoning so I am not sure why it matters what the motivation was 100 years ago. I feel like that's a weak attempt by urban activists to associate a negative label (like "racist") with zoning to trivialize the legitimate reasons people like zoning restrictions.

People want zoning so that they can retain the kind of city or neighborhood character they want to live in. There's nothing wrong with incumbents resisting change that accommodates others at their own expense. The point of local government is to serve the incumbent residents first and foremost and I don't see why the desires of newcomers to live wherever they want at whatever price point they want supersedes the quality of life that existing residents have sought out and cultivated for themselves previously. Those newcomers are certainly free to move to a part of the country with less demand than the Bay Area and make a life there.

> It's economic segregation, plain and simple.

Not really. It's segregation by people who are invested in their community versus people who may move on because they haven't put down deep roots. And even if it was economic segregation in effect or directly, so what? I, and certainly most other parents, want a safe neighborhood for our families, and higher income neighborhoods typically experience less crime. I also want better educated and more successful people in my neighborhood, because their children form the environment and society my children are exposed to and influenced by. Leaving all that aside, an influx of renters changes a city's politics, culture, and other characteristics. I've seen this first-hand in Seattle where the dramatic changes of the last 10 years have really hurt the quality of life in this city and crowded out 'old Seattle' culturally. So I see many understandable and legitimate reasons for people to want to avoid renters.

So, if you end single family zoning, you'll likely be displacing lower-economic-status minorities once again. Perpetuating the cycle. Areas with cheaper land and higher rates of renter-occupied homes will be easier for developers to target and buy up the land.

I don't think you can make an argument that you're going to repair any past harms by doing this. I think the argument that you're going to continue them if you do this is much stronger.

This is the underlying energy behind NIMBY.

Cities have many stakeholders. Residents, sure. But also businesses, workers, the homeless, the environment.

And there are tons of tradeoffs. Maybe by rezoning and not mandating single family homes, the increased population density will improve access to transit and services. It's not necessarily as cut and dried as "Rezoning is negatively perceived by current residents, therefore don't do it".

Why don't city governments spend as much as possible on current residents and build up debt that will only have to be paid by future, new residents?

Lots of pension programs are underfunded.

I don't believe that "we got here first" is the principle by which I (or many others) want to live.

Becoming myopic with the only stakeholders that matter are the current residents has similar problems with corporations that place profits above all else.

The Venn Diagram of "serving the people in a city" and "actions harmful to society" have a lot over overlap.

Are new residents not as much of a resident as existing residents?

New residents are but would be residents aren't.

"Wait, you have a problem with a city government trying to serve the people who actually live in a neighborhood rather than potential new residents?"

I am not sure if you are asking this as a rhetorical question, but if not ...

This aspect of the housing (and democracy) debate in the bay area is now framed in terms which reject local decision making ("local control") if those local decisions reinforce existing, exclusionary housing policies.

Which is to say, we like local control when it delivers results we agree with - like non-federal legalization of marijuana or so-called "sanctuary cities" but we don't like local control when it delivers results we disagree with.

Or, more succinctly:

"Democracy for me, but not for thee".

I feel the issue is that the governments are primarily protecting property owners, which are not all of the city's residents. Property owners may prefer the status quo, but there's still an effect on the citizens who rent, which shouldn't be disregarded.

How can you hate prop 13 but think rent control is good?

A believe that property owners don't deserve extra privileges but everyone deserves a place to live.

It's hard to argue against rent control because one is effectively forced to advocate for kicking the most vulnerable people out of their homes, but you can count me as deeply suspicious of anything that incentivizes people to stay in one (poor) place instead of having the economic mobility to live in any area they desire.

I read it as the commenter "hates" both. Both are listed here as factors of the housing problems in the Bay Area.

oh I think you're right, I misread

>>*-- The extremely backwards property tax policies that favor existing landowners over anyone new, young, poor (though this admittedly is California's problem, not just one city or county) and make everything else attempted bandaids -- and misguided bandaids, at that -- to fix the system*

Can you please educate me on this? What specifically is this issue? How can I educate myself on it?

California's Prop 13 caps how much an owner's property taxes can increase every year.

https://en.wikipedia.org/wiki/1978_California_Proposition_13

https://www.taxfairnessproject.org/

rent control is not the problem, the lack of new housing caused by rich people not wanting to devalue their property values is the problem

Rent control does allow renters to vote against new housing development (in the name of "preserving" a neighborhood) without having to bear the cost of increased rent.

Both are problems! Rent controlled units don't count toward the market-rate housing supply and thus raise the market rent.

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