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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (8912)	2/15/2003 6:51:55 PM
From: portage	Read Replies (3) \| Respond to of 306849

Lizzie, the way I usually see the argument framed is that people fear all property taxes would go to the highest level currently being paid if prop. 13 were revoked. That and the fear that granny loses her home. You're right that grandfathering the windfall to relatives would be a mistake and just prolong the inequity. That the transference of the low rates to others isn't allowed is probably the saving grace of a stupid proposition. Still, this is but one piece of the puzzle, not the whole reason for the housing costs here. A very common sense solution would be to adjust tax rates so that they do not increase the overall intake from the current level, but raise the rates on those getting ridiculously low assessments and lower them on the new, incredibly high assessments, so that it's more fairly administered across the board. Then cap the annual increases for all, as we do now. They say this would force people out of their homes. Well, what about those who will never be able to afford a home here now ? The long time owners with low taxes could sell their house at a huge profit, take the tax free gains, and downsize as they get older. They've been free riding on the backs of newer buyers for quite awhile now. I'd much rather be the senior who has to decide to sell my paid-off house, walk away with huge tax free capital gains, and move to a smaller place paid for all in cash, than the 20-somethings looking at $500-$600,000 starter houses plus higher assessments now. Not likely to happen, though. Long time homeowners have too much voting clout. By the way, California just passed a new law in January to facilitate the removal of roadblocks to building in-law units on existing properties. Cities are starting to review it, and will re-write some zoning codes to implement, but in different ways that work within the cities' overall codes, I presume. I talked to a local planner about it, said they're just starting to review, and would be awhile before they undertake specific changes to address this. I think it's a step in the right direction though.

To: Lizzie Tudor who wrote (8912)	2/15/2003 8:16:54 PM
From: Conan	Read Replies (2) \| Respond to of 306849

Lizzie, I was talking to a friend in Sacramento this week about the problems with the state budget. (This person works for the State). She thinks the solution is to modify or overturn Prop 13. She told me if you look at a ranking of property tax burdens by state California has the lowest property taxes of the 50 states. My main concern about this is that I am sure the state would want to go right from last to first place in terms of the property tax burden in order to solve their budget deficit problems. I personally would prefer to see tobacco taxes, sales taxes, and VLF go up than see property taxes go up. Prop 13 may be unfair to new buyers (including me) but if you own for the long run you do quite well. Conan

To: Lizzie Tudor who wrote (8912)	2/17/2003 11:00:13 AM
From: GraceZ	Read Replies (3) \| Respond to of 306849

Interesting assessment, anything that effectively reduces supply below marginal demand would raise prices as long as there is an expectation of rising prices. Also, someone who has owned a house for some time has a much lower mortgage payment or no mortgage payment, that in of itself is enough to get you to stay put in an environment where house prices are rising. You don't think you can afford something better even if you take out your existing equity. I know several who couldn't afford to buy the houses they owned because the sale price would be so far above where they bought them. You think if you take out your equity you can, but it also puts you back at the beginning of the amortization schedule. I don't know about you, but I'm getting to the age where I want to see the end of mortgage payments. The first five years of a thirty year is almost entirely interest. My 20 year was a bit better, but I'm almost at the halfway point timewise and I'm still not paying half principle yet on the payment. When I start complaining about losing the big interest deduction I'll know I've finally gotten there. In some of the pricier neighborhoods here there is a supply demand situation where you practically have to read the obits to find a house for sale. It is this lack of turnover that drives up the prices and the expectation of higher prices, making people hold onto their houses. What is funny here is that a neighborhood with rising prices can be spitting distance away from one with stable or stagnating prices. School district lines can make the difference or being in a neighborhood with a desirable name or covenants. The difference here is that a couple million will buy you a lot of house and a lot of property. I've seen some 2 million dollar properties in CA that I could only say were entirely ordinary, if not downright ugly. Don't get me started on the differences between the 600k ones. I know in other parts of the country where local government wishes to reduce development they have tried the "tax the newcomer" technique. My brother-in-law bought a new 800k house in PA where the estimated taxes were 12k and as soon as he went to settlement the taxes jumped to 20k. The real estate agent based the estimate on similar existing homes and didn't factor in the much higher assessment given to new homes in that county. Several lawyers later.....he still pays those taxes but he did get some give back on the sale price from the seller. Which leads me to believe what Elroy said about higher taxes and development fees reducing prices not raising them. What would the yearly property tax be on a half million dollar new house? On the same price that was grandfathered by prop 13?