Those buyers who don’t mind a fixer can open up additional possibilities (ignore the part about people not selling and remodeling instead!):
http://www.wsj.com/articles/californias-hot-housing-market-drives-pricey-home-facelifts-1462456812
Justin and Michelle Wilson didn’t have much of a choice when they turned a $1.58 million ugly duckling into a $3 million swan.
There were very few options in Mountain View, Calif., within their $2 million budget, and each house they liked got snapped up in a bidding war. So they settled for a dated $1.58 million beige-and-brown Tudor-style house and gave it a $600,000 makeover that took seven months. Now, the contemporary home’s facade features stucco, stone and steel as well as a striking portico.
“It makes us happy to drive up and come home,” said Mr. Wilson, a 34-year-old financial executive.
While the dynamic is playing out in a number of U.S. cities, California’s plight is particularly intense because of Proposition 13, a 1978 amendment to the state constitution. It set property taxes based on 1975 assessments and capped future property-tax increases at 2% a year.
The catch: When a home in California is sold, the property is reassessed based on its current sale price, resulting in a large tax increase for the new buyer. To avoid this tax hit, many homeowners simply stay put rather than move, which further suppresses the inventory of home listings and keeps prices high.
“Prop. 13 has a strong tendency to keep people in homes longer than they otherwise would be,” said Paul Habibi, a professor of real estate at the Ziman Center for Real Estate the University of California, Los Angeles. “If the market is rising faster than the assessed values, you have all the economic incentive to stay in place,” Mr. Habibi said.
A study released in 2005 by the National Bureau of Economic Research, a Cambridge, Mass.-based think tank, found that in California, on average, homeowners stay put for 1.4 years longer than in other states due to Proposition 13. In coastal cities, the “lock-in effect,” as the study called it, is even higher. Homeowners in Los Angeles stay put over two years longer, and San Francisco homeowners keep their homes over three years longer than homeowners in other states.
http://www.wsj.com/articles/californias-hot-housing-market-drives-pricey-home-facelifts-1462456812
That’s not a bug, it’s a feature. People who have lived and worked in So. Cal all their lives and are looking to retire shouldn’t be faced with the choice of dramatically eroding their retirement savings, or else be ousted from their home at gunpoint.
Also, if renters think rents are high now, imagine having no Prop 13. Rents everywhere in California would be prohibitively higher.
Target the older demographic and get them to move under proposition 60 or 90. Find them something at the same or lesser value in an area they like and get a piece of the action on both transactions!
I love Prop 60/90, and think everyone of age should take advantage.
Just stop this silliness about remodeling instead of moving – I don’t get paid for hammer and nails! 😆
I did, but regret selling Manhattan Beach property. Now dirt is going for 1.5 million in the “bad” part of town. We did get a great deal with five times the property space in Rolling Hills Estates. AND we now have chickens! BUT our appreciation is much lower. I can live with it and my agent was able to benefit from the transactions and many others in the surrounding areas.
Be glad you moved comfortably – it could have been worse if you waited and the Big One hit!
http://www.latimes.com/local/lanow/la-me-ln-san-andreas-fault-earthquake-20160504-story.html
I fixed your spelling and it put my photo on your comment!
If I recall correctly prop 13 allows someone who inherits property to keep the old taxes. Perhaps a better solution is an age 65 tax freeze where the owner pays a fixed tax as long as they live in the house, but the taxes go up when the property changes hands including inheritance. Do you know how many generations this handing down of max taxes can go on in Ca?
(In Tx now both school and in many counties county taxes can be frozen with an application file when you turn 65. Both the assessment and the rate are frozen.) This solves the long term resident problem (you could change the age if desired however)
Is there really a basis to the quoted home values?
“Perhaps a better solution is an age 65 tax freeze where the owner pays a fixed tax as long as they live in the house, but the taxes go up when the property changes hands including inheritance.”
Another alternative would be to schedule yourself for a brain scan, to confirm very reasonable suspicions of a head injury, since advocating pointing a gun at someone to do your bidding could be considered psychotic.
My hypothesis is based on the presumption that someone advocating for significant new taxes, when a significant number of people are paying around 60% of their gross income to the government each year in taxes, is probably due to an unrecorded head trauma.
Left untreated, I’m afraid the long term effect might be that the subject will continue to deteriorate until he/she begins to dress as Robert E. Lee, or Col Sanders, and begin referring to the civil war not as a war, but as a temporary setback, since a passion for tyranny usually begets the mindset of slavery.
Just my opinion, and I could be wrong. But I’m very confident about the idea of no new taxes.