There are a lot of reasons that property taxes have risen in California. Giving people free money that expires when they sell their home is one. Making building more housing mostly illegal is another. Economic prosperity among some people in the urban regions of California is certainly one too.
Property tax - especially on the land value rather than the improvements - is good. It can provide a feedback of the cost of what someone is using.
Funding schools based on tiny districts is of course a poor policy, and local taxes -- be it property taxes, income taxes, corporate taxes, sales tax, fees, whatever -- shouldn't be what dictates the funding of local schools. That's really a separate question.
> What you are calling ‘value’ in this case is just a measure of how much other people want the property. It has nothing whatsoever to do with cost. This just makes it easier for even richer people to take existing property rather than invest in developing other places.
Allocating resources to the people who want it most (and presumably make the most of it) seems like a good goal to have. Wouldn't that be the most effective use of resources?
That's not what single family zoning does. It keeps the value of the land a bit lower than it would be otherwise by preventing denser development. In most areas, a developer can get a lot more money out of a medium-density condo building or a tower than out of a house.
If that wasn't the case, developers wouldn't want to build denser buildings.
Consider how much would it cost to get a standalone house with a sizable yard on Manhattan?
I thought they meant homeowners by property owners rather than developers. While selling to a developer for density would benefit the initial sellers it would cannibalize the value of other houses by fulfilling demand.
It doesn't get close because of the size of the problem. If 85% of real estate is single family housing then how is a 1% increase in density supposed to solve the problem?
> but it does make the existing real estate more valuable.
No it doesn't. Existing real estate is valuable because there is a mismatch between commercial and residential real estate. By building more residential real estate you are reducing the mismatch.
That’s not typically how the relationship between building and home values works over time. Places where density increases also see increases in prices for existing homeowners.
But sure - Prop 13 and new building are separate issues.
Home owners definitely believe that proximity to multitenant housing lowers property values, and vote accordingly (whether that is actually the case is up for debate, but also less relevant to voting behavior than perception).
I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home. Imagine you spent your life eating a certain kind of shellfish, which used to be cheap, but then a foreign country started importing this shellfish in huge quantities and drove the price very high. I don't think you should feel entitled to be able to buy the product for the rest of your life at the cheaper price you were used to.
People who bought may feel more entitled to a stake than renters, but in either case it's necessary to have some kind of incentive (high property tax) to drive out people who don't want to pay the market rate for living somewhere, so that available housing slots end up being given to those people who are willing to pay the most for them.
Is there any other space where taxes are so inequitable as with property in California?
Why don't they move to a more equitable tax scheme based on, say, what the district requires rather than what the home was bought for? I already know the answer, because nobody would vote for it.
It is the same in Berlin, where I live. People voted for the Mietendeckel but the only group of people that benefitted from it are the long-term renters who already have all the house they need. Among the screwed: small-time landlords, new renters and new families who need bigger apartments.
>How about people who saw the potential in a place before other people did, and contributed to its success?
Contributed to its success by following a tax policy that encourages commercial real estate at the expense of residential real estate? Are you sure those people aren't just taking the jobs that the commercial real estate is providing hostage and are now extorting people for the privilege of living near the job?
>The market signal is that people should go and invest in those places.
No, the market literally screams into your face that you should build more housing and fix the commercial vs residential mismatch.
> I don’t see why people with money should have the right to force people out of their homes.
Agreed. Opposition to prop13 essentially is a statement saying that whoever has more money because they hit it rich on an IPO deserves the right to kick out established residents just because they have more money.
> I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home.
What should buying a home mean if not that? Sure, if someone else is willing to pay a lot more, they're welcome to bid on it, but it's still up to you if you want to give that up and stay put where you have roots, friends, family, kids in school, etc.
Exactly. A home is a home. It's not a share of stock to be sold to the highest bidder. The whole point of buying a home is to establish roots in one place and become part of the community and see your child grow up there.
Agreed. There is some cognitive dissonance going on between the idea of the home you bought being your property—meaning you shouldn't be affected by changes in market value unless you choose to sell it—and the requirement to pay annual property taxes merely to retain what you already own. People buy homes rather than rent precisely to avoid this sort of situation, but to the tax collector everyone looks like a renter.
> I don't think that having gotten lucky and bought a home somewhere when it was cheap should entitle you to enjoy living there forever when others are willing to pay more for the same home.
If others are willing to pay more for the same home, then they should make the current owner of the home an offer.
There is a thing of value -- a tax subsidy -- which makes the house more valuable to the current owner than the next. That's the distorting power of Prop 13, the old owner has to give up not only the house but the tax rate.
(This is somewhat ameliorated by the fact we let people take the tax subsidy with them under many circumstances now, so people can move to a different part of the state and already pay less tax.)
> Property prices in CA have risen because salaries and IPOs have enabled people to compete for property.
They have risen because nobody resists commercial development, only residential development. The reason? Commercial real estate still brings in taxes and it increases home values which also increases property taxes on homes. The insistence to only reap the benefits of commercial development without further residential development is what is causing problems in the first place.
One way would be to tie property rates for everyone to inflation. Not sure why just because housing prices double, that the government needs twice as much money.
Property owners should be able to keep an affordable tax and their home, regardless of what their home cost.
Raising property taxes based on market values, is taxing people based on how much other people want their homes.
I agree that property taxes should be reformed.
Let’s not make houses even more risky and expensive to own.
Instead, let’s fund public services in other ways, so school quality isn’t dependent on the average income bracket of the neighborhood, for example.