Talking to relatives who live out of state, Prop 13 really does protect the elderly from rising property taxes. I think you don't really see it because it has largely solved the problem of rising-propery-tax-based evictions without much fuss, so you don't really feel it in action.
One issue with Prop 13 is that it should maybe only protect property owners who live in their property as a primary residence, but currently covers commercial properties, vacation homes, etc..
Higher home prices get locked into the tax rate if the property changes hands so I'm not sure what the link is to Prop 13 creating higher prices....
> Higher home prices get locked into the tax rate if the property changes hands so I'm not sure what the link is to Prop 13 creating higher prices....
Prop 13 has several provisions, the two most important being:
1) It limits the nominal rate of ad valorem property taxation.
2) It limits the increase in the tax basis value of property except when a reset to the full assessed value is allowed for certain qualifying events (changes of ownership and certain improvements.)
The first directly increases property values by making it more attractive to own property because of lower cost of ownership and less tax risks regardless of length of ownership.
The second restricts mobility (and therefore, both supply and demand) because it discourages exchanging one property for another, because doing so increases almost always increases effective tax rates (and total tax costs for like valued properties.) Because the it affects supply more than demand (insofar as some demand comes from people moving from out of the state, who aren't affected by Prop 13 on the demand side), this also increases prices, though its main effect is to reduce market clearing volume independent of price and thereby increases price volatility.
Personally, I think people should be allowed to monopolize prime locations without having to pay a dime to anyone. It's only fair. They created the land. Before them, it didn't exist. But now that it does, it belongs to them forever and ever. Amen.
One issue with Prop 13 is that it should maybe only protect property owners who live in their property as a primary residence, but currently covers commercial properties, vacation homes, etc..
Higher home prices get locked into the tax rate if the property changes hands so I'm not sure what the link is to Prop 13 creating higher prices....