California, a neo-feudal society (Los Angeles, Livermore: homes, neighborhood, buying)

[xcalgal]

I guess CA is happy that everyone using Prop 13 is leaving and they can reset all of the property taxes and rake in tons of taxes.

[UB50]

Originally Posted by Cheektowaga_Chester

Doesn't the property get reassessed on inheritance? For example, if your parents bought their home in 1962 for $18K and are paying $1000/year prop tax, they die, you inherit it, market value is $500K, don't you pay like $5500/year or something like that?

There are ways around this.

Where I live, someone bought many many homes (probably 100+) prior to the 1970s. They put all the homes in a trust. The trust still pays low low property taxes -- usually around $300 a property.

Unfortunately, commercial property is treated like non-commercial property under Prop 13. If a corporation owns property and the corporation keeps the property, it retains it's low Prop 13 tax rate. The corporation itself can be sold many times over but the property keeps the low rate.

[Ultrarunner]

Originally Posted by UB50

There are ways around this.

Where I live, someone bought many many homes (probably 100+) prior to the 1970s. They put all the homes in a trust. The trust still pays low low property taxes -- usually around $300 a property.

Unfortunately, commercial property is treated like non-commercial property under Prop 13. If a corporation owns property and the corporation keeps the property, it retains it's low Prop 13 tax rate. The corporation itself can be sold many times over but the property keeps the low rate.

Kind of...

It is the California Constitution that prohibits split tax rolls so all taxable property is treated the same.

San Francisco has been very agressive regarding corp ownership changes... but, you are right in that a well versed lawyer could structure a deal to minimize exposure.

$300 a year property tax just would not be possible in my part of California...

My parents own a 5' wide strip of land that is a utility easement and is valued at $300 a year and the tax bill is $700+... in other words the yearly property tax is more than Twice the Value of the Land and this is because there are 23 separate assessments on the tax bill.

[Lycanmaster]

As highly right-wing as Joel Kotkin presents himself, I do have sadly agree with much of what he says unfortunately...

While the beginnings of feudalism are fairly evident in California, the United States in general is becoming more and more that way.

The US is starting to resemble a Latin American country than any of the First World nations of Western Europe and Japan

[Lycanmaster]

Originally Posted by Azmordean

I would also take issue with the idea that you're a "serf" if you can't buy a home. The whole idea of "home ownership for all" is an intensely and solely American ideal based in a time of seemingly unlimited land. Those days are long gone - land, at least within reasonable commuting distance of job centers, is extremely limited. The Northeast and West coast are now more like Europe in terms of land availability and housing prices reflect that reality. Unfortunately this means home ownership may indeed be out of reach for many in the middle class. That doesn't make people serfs though. There is nothing wrong with renting; indeed, renting is the norm in much of the world and many people choose to rent. If home ownership is a priority, again, folks in the US have the luxury of moving somewhere that's a better deal. If I wasn't here for work, I'd likely make such a move myself, despite liking the Bay Area a lot.

I will say that housing prices in California are artificially high, driven by an insane lack of supply. Coastal California needs a lot less NIMBYs, a lot more transit, and a lot more density. But that's another topic of discussion.

There is a school of thought (maybe from Time Magazine) that says home ownership may not be the best solution for one's self interest in terms of flexibility in looking for employment. In other words, the more flexible you are in terms of moving to where the jobs are, the more opportunities you will have for employment in the long run.

One of major reasons for the higher un-employment rates in recent times (compared to the past) is that labor mobility has been impeded due to home owners being stuck with mortgages that are underwater...

[Ultrarunner]

Yes... but, it has not stop many from walking away and some would say that has the opposite effect because they no longer have equity to protect.

[Lycanmaster]

Originally Posted by Ultrarunner

Yes... but, it has not stop many from walking away and some would say that has the opposite effect because they no longer have equity to protect.

But then they may have to worry about their credit scores going into the crapper by doing that...

[Ultrarunner]

Originally Posted by Lycanmaster

But then they may have to worry about their credit scores going into the crapper by doing that...

There is a whole mindset on this too.

A very well to do lawyer that I know walked away from his 1.5 million dollar home right after he bought a nicer one in the same neighborhood for 900k...

I asked him about the hit to his credit and he said there are millions of us in the same situation and he was not planning on moving again anytime soon.

It would be very hard for me to do that because I believe you standby your commitments.

[BayAreaHillbilly]

Originally Posted by Lycanmaster

As highly right-wing as Joel Kotkin presents himself, I do have sadly agree with much of what he says unfortunately...

While the beginnings of feudalism are fairly evident in California, the United States in general is becoming more and more that way.

The US is starting to resemble a Latin American country than any of the First World nations of Western Europe and Japan

Kotkin is an old school JFK Democrat.

[happycrow]

It won't do a thing to my rep score to say it here, but Bay Area Hillbilly is dead on the money about Kotkin.

But when people says that this is happening to the entire US, that's not really true. Yes, the middle class is eroding, thanks to Nixon and the petrodollar among a number of other factors, but if you were to say, elsewhere in the US, "it is economically irrational for a middle-class person to try to raise a family in this region," they'd laugh at you. Posh neighborhood, rich section of town, sure. An entire region? You'd be drowned in naysayers.

Everybody understands that implicitly about coastal California. I couldn't make it on a middle-class salary (heck in SF, I couldn't afford a *room* on a middle-class salary), and I'm a skinflint. My family out there, every one an SF native, couldn't, and they're barely hanging onto the edge of the bay area, living in Livermore.