How do people afford to buy a house here? (Los Angeles: new house, buyer)

[CapRate]

Originally Posted by Dhult

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.

I agree with everything you're saying, with the exception of properties keeping the tax benefits between generations. I believe that because there is a transfer in ownership there should be a new assessment in value. I could see an exception for minors having that amount deferred until they hit 18.

And this is coming from someone that stands to inherent significant amount of RE in CA.

[landsend]

Originally Posted by Dhult

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.

I was actually reading and appreciating your perspective until you lost me by saying "up yours!".

Really??

[landsend]

Originally Posted by Dhult

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.

Hey buddy, I'm just posting what my neighbors (from PV) happen to tell me on a frequent basis. The tax basis is a huge for them. Nothing illegal about taking advantage of a rule that favors you.

Nobody's taking anyone's home...you scared or something?

[CA4Now]

Originally Posted by Dhult

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%.

True. Many people have no idea why Prop 13 passed in the first place (the "taxpayer revolt"). What needs to be changed is Prop 13's loopholes in regard to commercial property, not residential property.
Eliminate Prop 13 tax breaks for Real Estate Investors

[jm1982]

Originally Posted by CA4Now

True. Many people have no idea why Prop 13 passed in the first place (the "taxpayer revolt"). What needs to be changed is Prop 13's loopholes in regard to commercial property, not residential property.
Eliminate Prop 13 tax breaks for Real Estate Investors

I'm wondering if this would also lead to less commercial properties just sitting vacant
Amazing how much vacant commercial property there is especially in parts of the city .
Higher tax would motivate them to develop or sell to someone that will .

I was just walking around on Sherman way on reseda . You probably could of shown people pictures and they might think its Detroit , not LA.
Also reseda theatre has been empty 25 years or more , and still sitting boarded up ..
The city appears to own it now , but why does it still sit?

http://www.crala.net/internet-site/P...seda/about.cfm

[CapRate]

Originally Posted by jm1982

I'm wondering if this would also lead to less commercial properties just sitting vacant
Amazing how much vacant commercial property there is especially in parts of the city .
Higher tax would motivate them to develop or sell to someone that will .

How is higher taxes going to motivate someone to develop more? That makes absolutely no sense. The reason why there is vacancy is because those areas are over built and there isn't enough demand to absorb more deliveries. If you increase the property tax then the developer is going to put that information into a pro forma and see that he has to charge more rent in order to get his required ROI. Which in turn makes demand have to be even higher for it to pencil out.

Originally Posted by jm1982

I was just walking around on Sherman way on reseda . You probably could of shown people pictures and they might think its Detroit , not LA.
Also reseda theatre has been empty 25 years or more , and still sitting boarded up ..
The city appears to own it now , but why does it still sit?

About the Project Area

Because nobody has bought it (i.e. there is not demand for that product).


Vacancy rate for retail is ~5% while office is ~ 13%

If you are interested in these guys have free market reports.

http://www.charlesdunn.com/flyers/sc...rketreport.pdf

http://www.charlesdunn.com/wp-conten...rt-2Q-2013.pdf


I am not arguing for or against prop 13 being applicable to commercial property. However, I can tell you that removing it sure won't magically increase development nor will it drastically reduce rental rates in apartments.

[iama30something]

Originally Posted by J.Thomas

Hey OP did you buy a home??

Yes, I bought a 2 bed / 1 ba, 900 sq ft. condo in Santa Monica for $445k in April.

[jm1982]

Originally Posted by CapRate

How is higher taxes going to motivate someone to develop more? That makes absolutely no sense. The reason why there is vacancy is because those areas are over built and there isn't enough demand to absorb more deliveries. If you increase the property tax then the developer is going to put that information into a pro forma and see that he has to charge more rent in order to get his required ROI. Which in turn makes demand have to be even higher for it to pencil out.



Because nobody has bought it (i.e. there is not demand for that product).


Vacancy rate for retail is ~5% while office is ~ 13%

If you are interested in these guys have free market reports.

http://www.charlesdunn.com/flyers/sc...rketreport.pdf

http://www.charlesdunn.com/wp-conten...rt-2Q-2013.pdf


I am not arguing for or against prop 13 being applicable to commercial property. However, I can tell you that removing it sure won't magically increase development nor will it drastically reduce rental rates in apartments.

I believe it would increase development because people would be less likely to just hold onto a building if the taxes were much higher. The taxes would be coming directly out of their pocket. Or if the building isn't vacant they can still make money renting to a low rent paying tenant...because their taxes are lower.

It's not crazy to think that people would commercial landlords would be motivated to sell if their taxes went up. Just like it's not crazy to think that a lot of retired homeowners would be motivated to sell if their taxes went up a lot.

When someone buys a commercial building at market price they will often want to value add or force equity and improve the provide to get higher rents.

Thanks for posting the links.

[CapRate]

Originally Posted by jm1982

I believe it would increase development because people would be less likely to just hold onto a building if the taxes were much higher. The taxes would be coming directly out of their pocket. Or if the building isn't vacant they can still make money renting to a low rent paying tenant...because their taxes are lower.

It's not crazy to think that people would commercial landlords would be motivated to sell if their taxes went up. Just like it's not crazy to think that a lot of retired homeowners would be motivated to sell if their taxes went up a lot.

When someone buys a commercial building at market price they will often want to value add or force equity and improve the provide to get higher rents.

Thanks for posting the links.

In commercial real estate it's the lease that is worth a significant portion of a property's value. So a vacant dilapidated building in serious need of repair might only be worth the value of the land.

Let's look at this scenario I just pulled up from loopnet:


LoopNet - Multi Tenant Retail, GREAT CORNER LOCATION, Neighborhood Center, 221 - 223 N Verdugo Road, Glendale, CA

http://x.lnimg.com/attachments/DD6F2...030998A2CB.pdf


Key information

Sale Price (asking) 1,465,000
~3450 s.f.
5 Tenants
$6300/ mo rent $1.83/ft.
$75,600 / year

cap rate = 5.16%


Now, let's say you buy this deal today. Your property tax will be ~ 1% of the sale price so $14,650 per year and that will go up 2% per year.


Now, let's say 5 years from now you have mismanaged the property and it has gone completely vacant.

The property tax is now $16,175 under Prop 13. And the owner still has to pay for that PLUS his mortgage or it will be taken by the municipality or the bank.


Ok so in 5 years your resolution passes and now properties are somehow now going to be taxed at fair market value. Besides the issue of who determines this value, or who pays for it let's look at it objectively.

The value of the property is now significantly less because there is no income stream attached. Nobody in their right mind would pay 1.5M dollars for a vacant dilapidated building in Glendale, much less the "assessed" value of $1,617,500 (due to the 2% a year increases).


Now, what is the discount you get for an abandoned building? I don't know, but I would assume at least 25% off so it should be valued at ~$1,250,000 or so.

Now the tax is only $12,5000 / year. Less than if it had simply gone up due to Prop 13!

[coolbeans2000]

Originally Posted by L_Pasini

I just read an interesting article but not sure if I should post a link here. Maybe not. But if you're thinking of buying now, stop. Summer is not a good time to buy a house. Wait and save more money.

Hope this helps.

please post that link!!