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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (8911)2/15/2003 4:24:11 PM
From: Lizzie TudorRead Replies (4) of 306849
 
I have to say if there is a "good reason" why home prices are so much more expensive there I have yet to discover it.

Its the property tax laws, that don't reassess as property appreciates like everywhere else in the country. This creates a large incentive for people to hold onto their homes and almost nobody who has owned a home for over 10 years ever sells. It is a drain on inventory and creates such shortages that house prices go up "because they are going up".

Eventually if the laws stay the same we will reach a sort of equilibrium as long as the laws don't allow grandfathering down to relatives and houses get reassessed when primary owners die. The law went into effect in 1978 so it has done maximum damage right about now.

I have felt for a long time that if there was anyway to get rid of proposition 13, and properties really were taxed at their assessed value... or even half of their assessed value, housing prices would collapse in many areas of California. Looking around my neighborhood (where you can see Oracle corp out the window) about half of the houses here are owned by people in their 60s, most don't live here. Its a great windfall for them but costly for everybody else, especially businesses in the area.
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