The low-inventory conditions have several contributing factors, one of which is the Prop 13 cap on property taxes. The long-time owners sure don’t want to pay what would be much-higher taxes if they move up, thus the turnover has slowed considerably:
Moving down, price-wise, to keep your old tax basis isn’t easy either. Though this graph shows that twice as many people would move if they could take their tax benefits with them, it’s not enough to get older people to sell. By the time you are 65, the chance of you selling is less than 4%, and that’s with the tax benefits transferring:
Move before you get old!
Here is the big concern – how many younger folks are coming up that are ready, willing, and able to buy your house for what you think it is worth today?
Your house comes with a stifling property-tax bill, and fewer are going for it:
The residual effects of prop 13, combined with the high federal and state income taxes paid on the profit above $500,000 will cause fewer and fewer long-timers to want to sell. Eventually, it means the inventory will be stocked with estate sales and sellers who NEED to sell.
The full report on Prop 13 is here: