“If three siblings inherit a $1.5 million house from their parents, and only one of them wants to keep it, she will have to buy out the other siblings’ share for $1 million, which reflects the high cost of housing in the Bay Area,” Alisjahbana said. “It’s often not possible to buy out the siblings’ shares, so in this situation it’s common to sell the house.”
My heart really goes out to the unfortunate people who inherit $500,000. Compared to those of us who inherit $0, their situation is so tragic.
The person is often inheriting their childhood home. But they should have to sell the family home to a transplant techie, pay tens, or hundreds of thousands of dollars in taxes to a rent-seeking government, leave and move to Bakersfield to something?
If you want housing to be affordable, build housing until it is instead of trying to prop up pseudo feudualistic practices around hereditary land ownership to paper over the gross distinction of the housing market.
That a person doesn't have a right to live where they'd like? This gets trotted out every time some might've been Californian complains about high housing costs.
Or is it that inheritance should be taxed? Debatable I suppose but hardly 'wild'.
The only problem I can see with the scenario is that the value on a 'fixer-upper 1950s ranch' is so high that the tax on it is beyond what an 'average working class' fellow or fellowette can reasonably expect to afford.
And even that is pretty hard to find. Even if you assume a worst-case scenario, where a small tract house is now worth $3mil, the standard California property tax on that would be $37,500/yr, or 3,125/mo. That's well below market rent for such a property in any area where a home like that would sell for $3mil. Either live in it, and be happy that you get a below-market Single-Family Home, or rent it out, and easily cover the property taxes and maintenance from the rental income, creating a robust passive income stream. Or sell it! In all these situations, the inheritor is better off, even well off. :D
They stand to inherit it because their parents worked hard their entire lives and invested an obscene amount in a desirable market. They probably made significant sacrifices to do this. Many of our families were here long before real estate started getting out of hand and contributed to building the economic machine that makes California so desirable today.
Newcomers absolutely deserve to pay higher rent and mortgage rates to live in the same place. They always had the freedom to invest in their own state or country.
Native Californians were victims of genocide and are a completely different and special case than people who bought houses in California in the 70s and 80s.