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Politics : Bill Clinton Scandal - SANITY CHECK
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To: j_b who wrote (4941)9/24/1998 12:18:00 AM
From: Zeuspaul  Read Replies (1) of 67261
 
OFF TOPIC prop 13

For those of us trying to buy, there isn't much difference between $400 and $700k - we can't afford either one. Much of the appreciation has come during the last 5 years as the technology industry has blossomed.

1978 is important because it is the year of prop 13. The real estate issue in Silicon Valley seems unique and not representative of California. Some have argued that prop 13 has caused the problem and indicated that all of California has a housing shortage because of it.

I played with some numbers and I do not see any correlation. I am familiar with the Long Beach house. It is a very average 900 SQ FT house in a large community. It is one case but I believe it is representative , at least for its price range in S California.

The house sold new for $4000 in 1945. The next fix I have is $54000 in 1978, the Year of Prop 13 and now about $165000 in 1998.

The long term appreciation rate is 7.25% to get from $4000 to $16500 over 53 years.

The 33 year rate is 8% to get from $4000 to $54000. This represents the 33 years before prop 13.

From 1978 to 1998 the rate drops to 6%. This represents the 20 years after prop 13.

If prop 13 is causing a wild appreciation it is certainly not apparent in this abbreviated analysis. Naturally tax law will affect the value of property no matter what it is. It is just not as significant as has been argued.

Things should be done on a local level to address the local housing issue.

Zeuspaul
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