How do people afford to buy a house here? (Glendale: transfer, buying)

[jm1982]

Originally Posted by Curbed Enthusiasm

Then make Prop. 13 a means based test. Nobody is advocating for throwing little old ladies onto the streets because their homes of many years have dramatically appreciated. But, when millionaires living in multi-million dollar houses benefit from such a tremendous tax break, it hardly seems like an equitable application of the law.

And on the rent side , there are lots of well off people that have had decades to build their careers that are living in rent controlled apartments . This is not just an la thing but occurs in NYC , SF and other places too.

[CapRate]

Originally Posted by Curbed Enthusiasm

Then make Prop. 13 a means based test. Nobody is advocating for throwing little old ladies onto the streets because their homes of many years have dramatically appreciated. But, when millionaires living in multi-million dollar houses benefit from such a tremendous tax break, it hardly seems like an equitable application of the law.

It Is equitable in the current form. It applies to everybody exactly the same. You're asking for something that is NOT equitable.

I agree that having it continue generationally is a bad thing, but the original prop 13 was clearly voted by a majority of CA residents. Good luck trying to get people to over turn that now.

Low property taxes is one of the few things CA has going for it, I'm sure with this new tax hike you're proposing there won't be any reduction on income or sales tax right? Because the rich guys can afford it.

[landsend]

Originally Posted by bobsnow

Wow. Thats extremely screwed up. Im guessing that there is zero chance that Prop 13 will ever change?

Prop 13 was long considered the "third rail" of California politics (in other words, don't mess with it if you wanna get elected).

I wouldn't say zero chance but bringing awareness is a start. Many people I talk to are clueless about the winners and losers of this legislation.

[landsend]

Originally Posted by Curbed Enthusiasm

Here's some Prop. 13 ridiculousness for you. https://www.redfin.com/CA/Beverly-Hi...0/home/6824303

This is the estate of the late singer/songwriter Rod McKeoun. He purchased his rambling Beverly Hills estate in 1970 for the then-princely sum of $290,000. The home is currently listed for $14.5 million.

In 2014, the property tax bill was $9,805, with a taxable value of $742K.

And people wonder why CA schools have gone from best to worst... and why some people feel that the rich get unnecessary tax breaks.

Interesting find. I've seen many, many examples of property tax bills that are pennies relative to the current value of homes (also on redfin).

So the rhetorical question is, why would anyone want to sell their million dollar home if they only pay a thousand per year in property tax? There you have it, one of the major, overlooked factors in the constrained housing supply.

And the reason why this hypothetical million dollar house is that high is partially because everyone else on the block has been reaping their prop 13 tax breaks for years and are equally unlikely to list their homes. Reduce supply while demand remains constant and prices go up.

[landsend]

Originally Posted by ihatedcu

Why do you feel its wrong? Can we Californians get a little break from taxes?

I agree that we need a break from taxes but..

if it weren't for prop 13 I'm guessing that LA property values wouldn't be nearly as high as they are now. property taxes are calculated as a percentage of home value. without prop 13 my guess is that tax bases will be much lower.

there's your break for taxes, evenly across the board rather than concentrated to some lucky landowners.

[landsend]

Originally Posted by CapRate

Because they selfishly only think about themselves and how it affects their purchase of current homes, not old retirees. They have no problem throwing old widows out of the homes they've lived in for 30 years.

It's not about selfishness, it's about market distortion. Like most legislation, Prop 13 has its winners and losers.

Without prop 13 LA home values wouldn't be this high, and since property taxes are calculated based on home values, there will be evenly lower taxes across the board (since prop 13 inflated current home values). Right now newer buyers pay an extremely high tax to live in condos while older owners, which may include some of the widows you mention, pay a tiny fraction of that.

instead of one guy paying 10k and the other paying 1k, wouldn't it be less selfish if both paid somewhere in the middle?

[landsend]

Originally Posted by CapRate

It Is equitable in the current form. It applies to everybody exactly the same. You're asking for something that is NOT equitable.

I agree that having it continue generationally is a bad thing, but the original prop 13 was clearly voted by a majority of CA residents. Good luck trying to get people to over turn that now.

Low property taxes is one of the few things CA has going for it, I'm sure with this new tax hike you're proposing there won't be any reduction on income or sales tax right? Because the rich guys can afford it.

Also, consider the property tax rates across LA. say..instead of everyone paying 1.15% (for example) of their home value, how about something like 0.7% across the board if we get repeal prop 13? same aggregate pool of tax revenue without favoring the rich guys, who are the real beneficiaries of prop 13.

Prop 13 was clearly voted in a bygone era of rampant inflation. This rule is sorely outdated and needs to change, however far into the future that may be.

[landsend]

Originally Posted by jm1982

And on the rent side , there are lots of well off people that have had decades to build their careers that are living in rent controlled apartments . This is not just an la thing but occurs in NYC , SF and other places too.

In Palos Verdes, it's a common sight seeing wealthy homeowners pass on their single family home to their children to preserve the low tax basis, then move into a subsidized senior housing complex down the street. And the south bay area has plenty of subsidized senior housing and continue to build more.

[Dhult]

Originally Posted by landsend

Los Angeles was considered a global city back when housing prices were relatively "normal" before the housing bubble.

I think a commonly overlooked factor in the high prices is proposition 13. Folks back in the 70's and 80's purchased their LA homes at very low prices because mortgage rates were very high (in the teens). The gradual lowering of mortgage rates to our current 4% for a 30 year fixed fueled the escalation in prices.

Back to proposition 13. This law was passed in 1978 and limited property tax increases to a maximum of 2% per year. So a lot of older homeowners in LA now pay property taxes far below the market rate (some owners pay $700 per year for a 800k house) because the annual increases were based on their initial purchase prices (it's common for owners to have purchased for less than $50k back in the 70's). They even bequeathed those properties to their heirs after they passed, preserving the tax savings.

This ultra low property tax became a disincentive for homeowners to sell. Imagine if those homeowners were suddenly forced to pay market rates for property tax? their bill will jump from say.. $700 to $9,000 (what current buyers would pay). They will strongly consider putting their homes up for sale.

I don't think LA has gotten much wealthier (if at all) since 30 years ago but the property tax laws mixed with much lower mortgage rates caused shortage.

proposition 13 was originally marketed as a means to protect older homeowners on fixed incomes, but those older homeowners have benefited (and continue to benefit) immensely at the expense of working people today.

Yeah, that would be great! Force people out of their homes. $700? Hardly. Mine was purchased n 1972 for under $30,000. Even with Prop 13 mine and others I know property taxes is nowhere near $700. At least triple that, bud. It still rises by 1%.

Yes, lets move the conversation from why anyone should have to pay $9-14K in taxes to lets make more people pay that much. How many elderly owners have children in school or using the roads more now that they are old?

These people benefited? You know how hard it was to come up with 30K in 1972? My family worked their asses off. We looked at a house and property as a HOME as most people did at the time. Not as a investment, as the transient population of today does.

At the expense of the workers today? Up yours! Did you work for my home? It's my home and forcing people out by making it to expensive for them to maintain it is your solution?

Originally marketed? No it's still the same. Rising costs of living and death still turns property over when older people need to make a change but it allows us to still live in our homes until we make that change. Not being forced out. Most states have exemptions for the primary residence. Elderly exemptions come in many forms across this nation.

If I want to leave my property to my son and he wants to continue living in the FAMILY HOME I don't think he should be forced out either for something that is already paid for.

[Dhult]

Originally Posted by landsend

In Palos Verdes, it's a common sight seeing wealthy homeowners pass on their single family home to their children to preserve the low tax basis, then move into a subsidized senior housing complex down the street. And the south bay area has plenty of subsidized senior housing and continue to build more.

Oh yeah. That's why they do it. Only to preserve the low tax basis. Not because they worked hard for something to leave their children. Nope, that can't be it. They don't look at it as their home to pass to their children. Just the damn tax basis and if we can take that away from them, Heck, we can take their house too. So little whining me wouldn't feel so bad.