Prop 13 reduces the supply of housing massively. The carrying cost for any property that was bought more than 20 years ago is negligible. This reduces the incentive to sell when you no longer need the property. This in turn raises prices by reducing supply. This likewise reduces the incentive to sell. As prices go up, the incentive to allow new construction also goes down.
Prop 13 has effectively created a vicious cycle of escalating property values.
Prop 13 has effectively created a vicious cycle of escalating property values.
Sure, but without any numbers, this is simply a just-so story. House prices in Seattle metro have shot through the roof in past 5-6 years, despite Seattle not having Prop 13 law. If house prices can demonstrably go up a lot in a place with no Prop 13-like law, but otherwise rather similar to California when it comes to attitudes towards what kind of houses are allowed to be built, it stands to reason that Prop 13 is unlikely to be main factor in dire California's housing situation.
Humans are really good at crafting narratives explaining complex and uncertain reality. However, just because something sounds superficialy plausible, doesn't mean it is true: it is usually easy to craft an alternative theory, just as plausible as the one at hand.
For example, the narrative of Prop 13 being the root of all California's housing problem very much depends on exactly how much it affects the decision making. It could be a lot, it could be a little, but without knowing exactly (or at least approximately), we're simply in the dark. Maybe it's not Prop 13, but environmental activists running amok? Maybe it's a cartel in the construction industry colluding to keep the construction prices up? Without putting numbers on these, you can't tell which of these has significant impact, and which is irrelevant.
Yes, and I haven’t seen anything suggesting that it’s Prop 13 that’s responsible for majority of the premium in California’s housing costs compared to other states. It’s not nothing, but it pales in comparison to zoning regulations and requirements for environmental traffic etc impact studies that drag on and on.
Prop 13 has effectively created a vicious cycle of escalating property values.