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Comment by rcpt | Hacker News Reader

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rcpt·

In California we have Prop 13 which is the polar opposite of the situation in NJ.

$700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Also our schools are a joke compared to NJ.

But at least taxes are low here. Wait...

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Yes. What Prop. 13 has done is taken all the tax money that would go to fund local services, and instead given it to former property owners. From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount. But the difference to the local economy is that the tax money would stay in it, while the mortgage payment effectively funds a large payout to the previous owner, who then most likely takes the money out of local circulation.

> From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount.

Not initially. When you pay off the mortgage around the time you retire and have no more steady income, it's night and day difference.

> $700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Yeah, but that’s because you live and work in a place that is ridiculously expensive by California standards. (I'm guessing SFBA.)

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