Prop 13 reform to be on 2020 ballot (El Segundo: buyer, live in, costs)

[1AngryTaxPayer]

Originally Posted by alliance

What is the purpose of this post?

They are probably living with Mom and can't afford their own place. Quite a bit of that today. I wonder if they understand commercial vs residential.

[1AngryTaxPayer]

Originally Posted by mirage98de

This will absolutely crash property values. It scares me as I stand to lose an enormous sum of money.

My neighborhood is full of people who own houses valued at $800k plus, but only paying $3500-$4500 per year in property tax, while I pay around $8300 because I rolled the dice and bought in early 2018. I seriously doubt many of them can afford an extra $400/month expense. There was one month last summer that was extremely hot and people in my city were getting $500 electric bills...based on the chaos and public outcry that ensued, it seemed quite obvious that many people don’t have the extra cash.

Many of them must have significant equity in their homes (or no mortgage at all), so they won’t get foreclosed on. They will either sell the house for cheap or take out a mortgage to cover property taxes. But I think there would be enough people dumping their houses to crash values.

Libs will cheer this as a great success making housing affordable once again. By then statewide rent control will be firmly in place, so the natural outcome of skyrocketing rents isn’t gonna happen either. Will be strange times for sure...

There is only a finite amount of space to build on without rezoning. It won't have much impact on anything near the beaches. The biggest reason? Developers will leave and no new housing will drive it right back up quickly. Right now they are buying existing single family homes and/or empty large lots to build luxury condos and apartments. Without prop 13 what is the incentive?

[expatCA]

Originally Posted by NoMoreSnowForMe

Never happen.

But, if you want to try and estimate the next crash, just look at the past crashes and how often they occurred. I've lived through several. The next one is coming soon. But, I wouldn't sell just yet, unless absolutely necessary, although, I wouldn't expect prices to rise anymore.

A downturn or flattening is normal over time, a recession is not. The worst I have seen is a drop of up to 20%, more in less desirable areas and less in desirable areas, not the type of drop on the last recession. Where I live now prices are going up, so what is happening in parts of CA is not representative of the US as a whole. Many ares are stagnant, but that is normal for them, many going up like in say Austin TX, and a few going down like in farm country where people are leaving as their kids have and they are getting old and need to be in a city.


If we had a recession like the last one, only the rich and investors would be able to buy in most cases.

[ClydeAJones]

No need to comment on speculation. The OP doesn't even know if repealing Prop 13 on commercial property will pass.

Until it happens, it hasn't. Admittedly, I'm not the least bit concerned. The major metropolitan areas will still be just as popular. And as long as there are jobs, people have to live somewhere. I suspect my tenants will be paying the Lion's share if Prop 13 was ever repealed for residential. Of course, even renters were smart enough not to cut off their own noses when Prop 13 initially passed. As crazy as people can be voting in tax increases, I doubt anyone wants their rent to go up substantially since it's one of the biggest expenses and will hit them much more in the pocketbook than things like a gas tax. And even with the cute rent control cap, at 5% a year, that rent can easily be increased over $1k in just 4 years and about $2k in a about 7 years. No problem.

[expatCA]

Originally Posted by ClydeAJones

No need to comment on speculation. The OP doesn't even know if repealing Prop 13 on commercial property will pass.

Until it happens, it hasn't. Admittedly, I'm not the least bit concerned. The major metropolitan areas will still be just as popular. And as long as there are jobs, people have to live somewhere. I suspect my tenants will be paying the Lion's share if Prop 13 was ever repealed for residential. Of course, even renters were smart enough not to cut off their own noses when Prop 13 initially passed. As crazy as people can be voting in tax increases, I doubt anyone wants their rent to go up substantially since it's one of the biggest expenses and will hit them much more in the pocketbook than things like a gas tax. And even with the cute rent control cap, at 5% a year, that rent can easily be increased over $1k in just 4 years and about $2k in a about 7 years. No problem.

So true.

[Csonka]

My guess, they will grandfather everyone in and then phase it out beginning at a certain year

Pretty sure it will cause chaos in the residential markets in the process, but maybe if the phase-in is over 10 years or something things won't be so nuts

[bad debt]

Originally Posted by Woody01

I'm talking residential here......I suspect it's days are over. Commercial protection will be gone next year and it's inevitable that they come after the huge source of tax money that property taxes represent.

Not running a poll, I would just like everyone's opinion on this...... if it is coming and one waits too long to sell, property values could/would drop, I'm figuring. That is if the increase is dramatic. I have heard possible estimates of a 400% increase. I would imagine that once it is gone, the first few increases would be mild, just to not start a sell-off.....but with Newsome.......

Opinions?

Personally I would rather have have prop 13 protection removed from commercial real estate and income taxes reduced on corporations / individuals. I.e. if the prop 13 protection is removed for commercial property and it is expected to raise $10 billion per year in annual revenue for the municipalities, then the corporate and personal income tax rates should be lowered by such an amount to offset $10 billion per year in tax revenue. The problem is of course is two fold: 1) these are two different entities collection the revenue (counties collect property tax and the state collects income tax) and 2) I can't see politicians ever giving up tax revenue.

Now, what I actually see happening in the next 10 years.

1) Split roll for commercial property -- Highly Likely (over 70%)
2) Prop 58 and 103 (prop 13 protection passed down to children / grandchildren) -- Moderately likely (50%)
3) Prop 13 for current home owners -- Unlikely (less than 25%). If it is changed then I would imagine property taxes will be frozen on primary residents if the owner is over a certain age (probably 55).
4) Prop 60/90 for owners over 55 to transfer tax basis upon sale -- No chance assuming Prop 13 holds (less than 5%)

[bad debt]

Originally Posted by 1AngryTaxPayer

There is only a finite amount of space to build on without rezoning. It won't have much impact on anything near the beaches. The biggest reason? Developers will leave and no new housing will drive it right back up quickly. Right now they are buying existing single family homes and/or empty large lots to build luxury condos and apartments. Without prop 13 what is the incentive?

Uhhh no. It will be a bonanza for developers actually because all of the people that can no longer afford their new property taxes will be forced to sell. Which means there will be all sorts of great properties on the market that haven't been sold in decades.

[expatCA]

Originally Posted by bad debt

Uhhh no. It will be a bonanza for developers actually because all of the people that can no longer afford their new property taxes will be forced to sell. Which means there will be all sorts of great properties on the market that haven't been sold in decades.

Keep in mind how many homes have sold in the last few years and any removal of Prop 13 will have minimal impact on them. Then if homes go on the market a bit under current costs they will sell like hot cakes as ... SFH to people who want one. Some will be torn down and a buildup will occur, but not enough and ... they will still be expensive. Check the prices on the ones being built now. Removing Prop 13 would hurt many and help no one except as you said, the rich and developers, not any buyers.


Remember the State can't change it, it takes 2/3 of the voters to change it. Ain't likely at all.

[expatCA]

Originally Posted by bad debt

Personally I would rather have have prop 13 protection removed from commercial real estate and income taxes reduced on corporations / individuals. I.e. if the prop 13 protection is removed for commercial property and it is expected to raise $10 billion per year in annual revenue for the municipalities, then the corporate and personal income tax rates should be lowered by such an amount to offset $10 billion per year in tax revenue. The problem is of course is two fold: 1) these are two different entities collection the revenue (counties collect property tax and the state collects income tax) and 2) I can't see politicians ever giving up tax revenue.

Now, what I actually see happening in the next 10 years.

1) Split roll for commercial property -- Highly Likely (over 70%)
2) Prop 58 and 103 (prop 13 protection passed down to children / grandchildren) -- Moderately likely (50%)
3) Prop 13 for current home owners -- Unlikely (less than 25%). If it is changed then I would imagine property taxes will be frozen on primary residents if the owner is over a certain age (probably 55).
4) Prop 60/90 for owners over 55 to transfer tax basis upon sale -- No chance assuming Prop 13 holds (less than 5%)

While I do not have any real problem with this, it will cost everyone. The increase in taxes will be passed on to customers by the businesses, so you will be paying the tax.


No one will lower taxes in CA, as you note.