San Diego Home Buying = joke (property tax, homeowner, expense)

[BRinSM]

the mode is the number in a range that occurs the most amount of times.

[sdurbanite]

Originally Posted by Sassberto

"Overpriced" seems to me to be a synonym for "it's not worth it to me", which is a wholly subjective decision. Whether or not it's worth it to you is irrelevant to it being worth it to me.

That is so true!

Originally Posted by JohnAlt

To me overpriced means a poor investment, which I think describes San Diego County's overall real estate market at this time.

It has nothing to do with whether or not I or any individual can afford the prices.

When we bought our less than 1,000 square foot home back in 2000 for around $330,000, many thought it was overpriced then. During the peak it was valued in the low-mid $600,000. Fast forward to 2008, and to me, it was anything but a bad investment.

[tande1n5]

Originally Posted by Sassberto

"Overpriced" seems to me to be a synonym for "it's not worth it to me", which is a wholly subjective decision. Whether or not it's worth it to you is irrelevant to it being worth it to me.

That's life in the big city (pun intended) or large metro to me. Certain amenities and lifestyle features (good and bad) come of it, and it's 100 percent subjective.

I have some friends back in Northern CA that I grew up with that have gone the rural route, and when I tell them of anything bad about life in the city, it only reaffirms their desire not to live there, whereas the upsides only get a blank look. Clearly, city headaches override city amenities to them. To me, it's a combination of being born in a big city and thus used to it (SF), and the fact that there are amenities in the city that I could not get elsewhere, and although when I retire I may very well like to escape from it all and get a nice big plot of land... for now, as a young single guy in his twenties, the downsides couldn't outweigh the ups.

Homeowning in San Diego is not a joke to me. This isn't Kalamazoo, or even Sacramento, and thus I oughtn't to expect it. The market demands what it demands. As long as the price isn't a gouge relevant to the market, it's theoretically a fair price at the given time... Investment quality? Sure, but that's a whole other topic, and one isn't entitled to a good return just because they own a home... but for the many folks in SD that are sitting on twice or three times the equity compared to when they bought, it's been anything but a joke. And thus goes the up/down cycle of capitalism.

[goozer]

Originally Posted by sav858

Something to think about though is our property taxes don't double when homes prices do. I remember reading an article from the Washington Times or Post during the peak of the boom in DC about homeowners property taxes doubling in just 2-3 years along with the value of their homes.

Good point. But if I remember correctly, it is only existing homeowners who are protected from skyrocketing property taxes. If someone buys a house tomorrow, my understanding is that the property taxes get stepped up to market rates. Thus, you could have a homeowner who has lived in a house for 25 years and who pays $2,000 in annual property taxes. If he sells tomorrow, the buyer could be facing $8,000 in property taxes on the same house.

[SD Lender]

Goozer, you are correct, California Proposition 13 provides for a maximum 2% increase in property taxes annually. You can have 2 identical houses next door to each other and one owner will have $500 annual tax and the other $10,000 annual tax.

The annual tax is 1% of the purchase price (not counting special assessments which can be significant and vary by location) as long as the property transfer was done in the ballpark of fair market value.

If you value declines steeply from your purchase price, you can get reassessed to current market value, but if your value increases steeply from your purchase price it cannot increase more than 2% per year.

I think it is a very fair system, I'm surprised more states have not adopted it.

[cmdreset]

You're kidding, right? Proposition 13 is about as regressive a tax on youth as you can imagine. If the idea of property tax is to pay for local services, then a reasonably fair system is to charge people based on their current property values, since residents presumably benefit similarly from those taxes. Even if the long time residents no longer have children in public schools (a major use of taxes) they still indirectly benefit from this since areas with good public schools have a better quality of life (including higher property values for reverse mortgages or when you sell.)

Prop 13 is one of the reasons that California public schools rate at or near the bottom in the country. Yes, that's right, California has pathetic public schools.

It's all part of the "*********, I got mine" mentality out here.

Originally Posted by SD Lender

Goozer, you are correct, California Proposition 13 provides for a maximum 2% increase in property taxes annually. You can have 2 identical houses next door to each other and one owner will have $500 annual tax and the other $10,000 annual tax.

The annual tax is 1% of the purchase price (not counting special assessments which can be significant and vary by location) as long as the property transfer was done in the ballpark of fair market value.

If you value declines steeply from your purchase price, you can get reassessed to current market value, but if your value increases steeply from your purchase price it cannot increase more than 2% per year.

I think it is a very fair system, I'm surprised more states have not adopted it.

[kettlepot]

Originally Posted by cmdreset

You're kidding, right? Proposition 13 is about as regressive a tax on youth as you can imagine. If the idea of property tax is to pay for local services, then a reasonably fair system is to charge people based on their current property values, since residents presumably benefit similarly from those taxes. Even if the long time residents no longer have children in public schools (a major use of taxes) they still indirectly benefit from this since areas with good public schools have a better quality of life (including higher property values for reverse mortgages or when you sell.)

Prop 13 is one of the reasons that California public schools rate at or near the bottom in the country. Yes, that's right, California has pathetic public schools.

It's all part of the "*********, I got mine" mentality out here.

Having to pay tax on the current market value would require homeowners to pay tax on an unrealized gain. Let's say you got a large multi-year contract for which you were to receive a substantial bonus upon completion. Would it be fair to have to pay income tax on that bonus when you signed the contract rather than later when you actually received it? So with paying tax on a current market valuation causes a property owner to pay tax on value which they have not received. This is particularly problematic in California where valuations fluctuate a great deal.

However, I don't disagree that Prop 13 has its flaws. It locks people into houses that they might otherwise want to sell, and it causes people in similar houses to pay wildly different tax assessments.

But one thing Proposition 13 isn't responsible for is the poor performance of California's schools. What's wrong with CA schools isn't something more money will fix. Catholic schools have been doing a better job with substantially less money for decades. The problems are caused more by the attitudes of parents towards education, the language skills of the students, the modern teaching methods taught in teacher's colleges. and the overall lack of discipline in many schools today.

[tigerclaws]

Originally Posted by cmdreset

You're kidding, right? Proposition 13 is about as regressive a tax on youth as you can imagine. If the idea of property tax is to pay for local services, then a reasonably fair system is to charge people based on their current property values, since residents presumably benefit similarly from those taxes. Even if the long time residents no longer have children in public schools (a major use of taxes) they still indirectly benefit from this since areas with good public schools have a better quality of life (including higher property values for reverse mortgages or when you sell.)

Prop 13 is one of the reasons that California public schools rate at or near the bottom in the country. Yes, that's right, California has pathetic public schools.

It's all part of the "*********, I got mine" mentality out here.

Prop 13 is I think fair because it calculates tax based on the amount you paid for the property. If the property appreciates 100% in one year does not mean the owner's income appreciates in the same way. How do you expect the owner of the property to shell out the difference?

I think what is missing is the concept of capital gains tax that should be somehow channeled into the property tax system. I also believe that parent of school going children should shell out more for their children's education and not expect their neighbors to shell out money for their kids education via property tax or whatever. The whole concept of financing the education of children with public money doesn't make sense. Most public school should be semi-pvt. IMO.

[cmdreset]

How fair is it that the new person on the block has to shell out more (sometimes astronomically so) property tax for exactly the same services? It protects current homeowners at the expense of newcomers, mostly the young.

Originally Posted by tigerclaws

Prop 13 is I think fair because it calculates tax based on the amount you paid for the property. If the property appreciates 100% in one year does not mean the owner's income appreciates in the same way. How do you expect the owner of the property to shell out the difference?

I think what is missing is the concept of capital gains tax that should be somehow channeled into the property tax system. I also believe that parent of school going children should shell out more for their children's education and not expect their neighbors to shell out money for their kids education via property tax or whatever. The whole concept of financing the education of children with public money doesn't make sense. Most public school should be semi-pvt. IMO.

[cmdreset]

I agree to an extent that more money won't necessarily help, but comparing private Catholic schools and public schools is apples and oranges. Public schools MUST educate every student, including those with disabilities and language barriers. If there was more money to go back to the system I remember as a kid where students who needed extra help are educated separately (rather than "mainstreaming" or some other euphanism that means teaching to the lowest common denominator in a disruptive environment) then you will see better overall public schools in California in particular.

Originally Posted by kettlepot

Having to pay tax on the current market value would require homeowners to pay tax on an unrealized gain. Let's say you got a large multi-year contract for which you were to receive a substantial bonus upon completion. Would it be fair to have to pay income tax on that bonus when you signed the contract rather than later when you actually received it? So with paying tax on a current market valuation causes a property owner to pay tax on value which they have not received. This is particularly problematic in California where valuations fluctuate a great deal.

However, I don't disagree that Prop 13 has its flaws. It locks people into houses that they might otherwise want to sell, and it causes people in similar houses to pay wildly different tax assessments.

But one thing Proposition 13 isn't responsible for is the poor performance of California's schools. What's wrong with CA schools isn't something more money will fix. Catholic schools have been doing a better job with substantially less money for decades. The problems are caused more by the attitudes of parents towards education, the language skills of the students, the modern teaching methods taught in teacher's colleges. and the overall lack of discipline in many schools today.