Moving to California is Chic Again (Oakland: neighborhood, to buy, luxury)

[user_id]

Originally Posted by Ultrarunner

The tax incentive to stay put really only applies if property appreciates at a rate greater than Prop 13's annual inflation factor of 2%.

Inflation over the last few decades has run higher than 2% so California property taxes don't even keep up with inflation. Anyhow, California real estate as a whole has appreciated more than 2% a year.

In the LA area its not uncommon for a new home owner to pay 4~5x more taxes than someone who purchased before prop 13. That is just nuts....

[Ultrarunner]

Originally Posted by user_id

Inflation over the last few decades has run higher than 2% so California property taxes don't even keep up with inflation. Anyhow, California real estate as a whole has appreciated more than 2% a year.

In the LA area its not uncommon for a new home owner to pay 4~5x more taxes than someone who purchased before prop 13. That is just nuts....

The new home owner must see value in order to willingly purchase knowing the current rates otherwise homes would be overpriced and not sell...

Inflation is a funny thing... some things go up and others go down all in the same time frame.

Real Estate has always experienced boom and bust because it is cyclical by nature.

[Fiddlehead]

Originally Posted by Ultrarunner

The new home owner must see value in order to willingly purchase knowing the current rates otherwise homes would be overpriced and not sell...

Inflation is a funny thing... some things go up and others go down all in the same time frame.

Real Estate has always experienced boom and bust because it is cyclical by nature.

I agree, but the California real estate market still suck. It is a gold mine for the boomers, and a raw deal for just about everyone else. That has been the story for over a decade, and I see no reason to change my view. It is still overvalued in all except the worst crash areas.

[user_id]

Originally Posted by Ultrarunner

The new home owner must see value in order to willingly purchase knowing the current rates otherwise homes would be overpriced and not sell...

How does this address the tax issue? How does charging someone 4~5 times more in taxes just because they purchased a home recently rather than in the past make sense? This is just a transfer of wealth from newer residents to older ones...In terms of seeing value, home sales have been anemic since the housing bubble collapsed. Prices are still too high in many areas and government policy is keeping them up and this as well results in a transfer of wealth from younger to older residents.

As far inflation, the official numbers are weighted averages across all goods so they handle differential price increases rather well.

[Ultrarunner]

Originally Posted by user_id

How does this address the tax issue? How does charging someone 4~5 times more in taxes just because they purchased a home recently rather than in the past make sense? This is just a transfer of wealth from newer residents to older ones...In terms of seeing value, home sales have been anemic since the housing bubble collapsed. Prices are still too high in many areas and government policy is keeping them up and this as well results in a transfer of wealth from younger to older residents.

As far inflation, the official numbers are weighted averages across all goods so they handle differential price increases rather well.

In simplest terms... California property tax is based on acquisition cost plus voter approved assessments...

If a buyer is willing to pay more for real estate... the tax is commensurate with the higher price paid.

By the same token... when someone pays less for Real Estate... the tax obligation is less.

Age of the buyer has nothing to do with it... so the entire older vs younger is a moot point.

Real Estate is very cyclical... periods of boom and bust are the norm.

My advice would be to buy at a time when prices are depressed for anyone looking to maximize their tax position...

The same can be said for other products...

A co-worker bought a 1966 Mustang Convertible in 1976 for $1,000. His license fee/use tax declined for years and zeroed out at $2... The license fee is not to be confused with the registration...

The buyer paid a use tax 150 times that of the seller based on the price paid... so it is $2 verses $300.

Acquisition based tax is one of the most common methods of taxation in California.

I would like to make the case to do away with Annual Property Tax in favor of a Sales Tax... Buying a home should be just like buying a car or a new computer... the tax is paid in full at the time of purchase...

As to the decision to buy or not... this is an individual decision consumers must make based on value perceived.

The entire transfer of wealth goes many ways... why should a person with no children fund the education?

Why should someone pay into Social Security for a lifetime and not live long enough to see a single dime?

Why should those with cars have to subsidize public transit?

Why should taxpayers have to subsidize a new ballpark when they will never set foot inside it?

Why should someone that contributed nothing to the community's infrastructure be able to one day appear in that community and make full use of the roads, hospitals, public safety, schools, etc.

It is easy to fall into the trap of believing Real Estate always goes up... it doesn't.

For most, Home Ownership is only one choice from many...

As far inflation, the official numbers are NOT weighted averages across all goods.

There are two presented CPI figures, the CPI for Urban Wage Earners and Clerical Workers (CPI-W), and the CPI for all Urban Consumers (CPI-U). The most watched metric, Core CPI (with food and energy prices removed) is the CPI-U, which will usually be presented with a seasonal adjustment, as consumer patterns vary widely depending on the time of year. The current base year for the CPI is 1982, so changes will typically be provided on a percentage basis to reflect only changes to prior index levels. Numbers will also be shown as an annual run rate of growth, to give investors a sense of the near-term inflationary outlook

Read more: Economic Indicators: Consumer Price Index (CPI)

[CSD610]

Originally Posted by 18montclair

is this necessarily a good thing?

moving to calif. Is chic again | california, percent, year - business - the orange county register

who cares!!!!!!!!!!!!!

I'm glad I am who I am and do what I do and not worry needlessly about what is chic, in style, out of style, cool, sucky or otherwise deemed politically correct or essential to being the next "BIG THING".

[user_id]

Originally Posted by Ultrarunner

Age of the buyer has nothing to do with it... so the entire older vs younger is a moot point.

The taxes aren't based on age in principle, but they are certainly in practice. Length of home ownership is highly correlated with age...so no its not a moot point.

Originally Posted by Ultrarunner

My advice would be to buy at a time when prices are depressed for anyone looking to maximize their tax position...

Why? You can get your taxes adjusted downward. But this is pretty sick too...Your advice to young families is for them to wait around for a depressed market before they buy a family home?

Originally Posted by Ultrarunner

I would like to make the case to do away with Annual Property Tax in favor of a Sales Tax...

I'm sure all landlords would make that case...but this would just lower taxes on the rich and raise them on the poor/mid income folks.

But I get it, you own properties and you want low property taxes. After all how exactly does one justify property taxes that don't even keep up with inflation? You could make one simple change to prop 13 that would solve most of the problems:

- Allow annual increases of the greater of 4% or the current annual rate of inflation. If the home owner is over 65 restrict the annual increase to the rate of inflation.

This would prevent spikes in taxes but would also allow taxes over time to adjust to current values.

A property tax system that allows one person to pay $700 and another to pay $3,000 is just plain absurd.

Originally Posted by Ultrarunner

As far inflation, the official numbers are NOT weighted averages across all goods.

Huh? Of course they are...for example housing has the highest weight. Anyhow, here is the math:

United States Consumer Price Index - Wikipedia, the free encyclopedia

Its a weighted index....Averaging is done within each basket of goods.

[Dean Trails]

Originally Posted by Ultrarunner

The entire transfer of wealth goes many ways... why should a person with no children fund the education?

Why should someone pay into Social Security for a lifetime and not live long enough to see a single dime?

Why should those with cars have to subsidize public transit?

Why should taxpayers have to subsidize a new ballpark when they will never set foot inside it?

Why should someone that contributed nothing to the community's infrastructure be able to one day appear in that community and make full use of the roads, hospitals, public safety, schools, etc.

It is easy to fall into the trap of believing Real Estate always goes up... it doesn't.

For most, Home Ownership is only one choice from many...

Love your examples. Couldn't agree more. I have been irritated forever about folks with cars subsidizing public transit. If a government agency can't survive on its own merits then it has to go. I lived in areas with out mass transit and had to use a bike, scooter ot bum rides to get around. I had to make do with what i had. Oh and had to go uphill in the snow both ways to school!

[user_id]

Originally Posted by Dean Trails

Love your examples. Couldn't agree more. I have been irritated forever about folks with cars subsidizing public transit. If a government agency can't survive on its own merits then it has to go.

On its own merit? What is that suppose to mean exactly? Public transit systems aren't fully founded with fares because their benefit to the community has a lot of externalities.

As far car owners subsidizing public transit, not really, take away public transit in any major metro area and the traffic will dramatically increase. The cost to reduce the traffic back down to manageable levels will likely exceed the costs of the public transit. Now does that mean all public transit systems make sense? No...but asking public transit to survive on its own funding would actually be a subsidy to car owners. They would benefit from the traffic reduction, etc yet not pay anything towards it.

All the other examples Ultra are similar, namely that they have positive externalities for everyone. For example, even if someone doesn't have kids they still benefit from the public educational system in this country. One has to think of things in societal terms...not purely selfish terms.

Anyhow, California has a big problem with systems that transfer wealth from newer residents to older residents...and since most new residents are younger that is why you seen younger cohorts complaining the most. And their complaints are usually met with glib responses from older residents......

[nullgeo]

I doubt Ultrarunner was offering his list of subsidies as an expression of disagreement with them ... but he'll clarify that. Every one of the examples he cites is an obvious benefit to society as subsidized. Therefore justifying the subsidies.

As for transferring wealth from younger, newer workers to the aging population -- and glib responses: Yeah? So? The older generation, far from perfect in its own youth, has managed to put in its time which brings us to where we are today -- which place is where the newer generations take their shot. Younger workers are in effect "buying in" to their place in the ongoing carnival operations. If they don't like it, they can drop out. Some do. It's still possible to find a unique and uniquely satisfying lifestyle outside the box -- one that doesn't "transfer wealth" either way.

Otherwise: "pay to play". We [older generations] still own "it" till we die.

(... and, user, if you take real good care what you eat and your lifestyle choices, you, too, may get to "own it" for long enough to be a frustration to the younger-than-you generations )