Most people who buy their homes for long-term buy it to settle in their neighborhoods and have kids go to the same school, not speculate on price increases and profit from them.
Leave alone the fact that when markets are over-heated, those huge profits can only be locked into huge base prices for any other property that's selling in this peak market. Unless the step 2 after hitting those huge profits involves packing up and moving to MidWest.
>Most people who buy their homes for long-term buy it to settle in their neighborhoods and have kids go to the same school, not speculate on price increases and profit from them.
IF this is the true purpose of Proposition 13, then it would be written far differently. (Greater than 2%, no commercial real estate included, no passing on to children). People are also allowed to sell their home for more than the assessed tax value, precisely because people speculate on price increases of their homes. If that wasn't one of the primary reasons behind Proposition 13 then people would have been OK with only being able to sell their home at the assessed value.
Really though the point of Proposition 13 was to just pay less taxes, "staying in your home" doesn't really come into play. Defending it along those lines is deceptive, and propagates a false narrative.
> People are also allowed to sell their home for more than the assessed tax value, precisely because people speculate on price increases of their homes. If that wasn't one of the primary reasons behind Proposition 13 then people would have been OK with only being able to sell their home at the assessed value.
I am not sure what you're describing is correct - each time I bought a property in California the assessed tax value next year was precisely the sale price.
The process that county assessors use to determine the value of real property was established by Proposition 13. Under this system, when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price, or “acquisition value.”
Right now, Prop 13 beneficees have an assessed value of, say $300,000, on a $1,000,000 house. They can sell the house for $1,000,000.
If Prop 13 were actually about keeping people in their homes, then after taking advantage of below-market taxes for so long, they wouldn't be allowed to sell for more than a small percentage more than the tax assessed value.
But Prop 13 is not about keeping people in their homes, it's a selfish grab to not pay taxes, drive up home values, and profit on both ends.
> they wouldn't be allowed to sell for more than a small percentage more than the tax assessed value
This just has a bad smell to it - not only you're inviting corruption and avoidance into the deal (the buyer is asked to bring the check for the assessed value and a suitcase of cash to the deal), the actual revenue collected by the state would fall, and the federal government is likely to contest this setup as it stands to lose out on capital gains.
> Right now, Prop 13 beneficees have an assessed value of, say $300,000, on a $1,000,000 house.
Assuming a very healthy and robust real estate market that grows gangbusters 15% every single year and never falls, it would take 9 years for a $300,000 property to grow into $917,706. It would go over the $1,000,000 sticker during year 10.
Of course, this is assuming ever-lasting 15% valuation increase and no price correction whatsoever, but even in this ideal market the owner has lived there for 9+ years and does not fall qualify for your definition of "keeping people in their home"?
Even when he sells, the cash he has on hand is enough to (surprise!) buy a comparable house, so this crazy speculation scheme is only doable once in life.
This wouldn't solve the problem of state revenue. Of course, it would solve YOUR problem of being able to afford a house because house prices would be fixed, right? Except that there would be way too much competition because now everyone could afford house prices that were fixed to 1960s levels, and you probably still wouldn't be able to get your house.
>#1 they can sell their homes at huge profits (otherwise the taxes would not be hurting them).
I don't know... The spirit of this reminds me too much of landlords paying off tenants to move out of their rental units so that they can reprice rent controlled units to market.
You often can't afford to live In another place in the area even after reaping those profits, in both the ownership and rental situations. Sometimes, all you want to do is keep living in the place you call home.
So much wrong here.
#1 they can sell their homes at huge profits (otherwise the taxes would not be hurting them).
#2 they can support building enough housing so that prices aren't jumping so unafforably.
#3 They could have set the maximum increase at 5%, or CPI + 2%, or really anything other than 2% which is clearly a hugely bad policy.
Prop 13 is simply a way for people who got in early to prevent anybody else from enjoying California.