Prop 19

[NorCalAthlete]

"Up to $1M" - have you guys even looked at the market? Even with prices sliding a bit, if you go on Redfin / Zillow and look at the bay area with no filters and then just drop the max price to $1M you're gonna see basically 9/10 of the dots on the peninsula disappear. What's left will be 1 bed / 1 bath condos selling for $850k.

Slight exaggeration but not really.

San Mateo county on Redfin shows 640 homes for sale with no filters. Setting the price to $1M max drops that to 230. Filtering by 2 beds instead of no filter drops it to 102.

And quite a few of those are trailer homes.

 

[kuksul08]

Then there is nothing you can do. Plan to sell if you can't afford the new tax.

If your parents change their mind, you can look at moving the property into a trust where you will never be the true owner. If you are the sole trustee, it should not be a problem.

Yeah.. looks that way.

Still can't see why anyone voted yes on this. No one wins except realtors and the state.

 

[kuksul08]

"Up to $1M" - have you guys even looked at the market? Even with prices sliding a bit, if you go on Redfin / Zillow and look at the bay area with no filters and then just drop the max price to $1M you're gonna see basically 9/10 of the dots on the peninsula disappear. What's left will be 1 bed / 1 bath condos selling for $850k.

Slight exaggeration but not really.

San Mateo county on Redfin shows 640 homes for sale with no filters. Setting the price to $1M max drops that to 230. Filtering by 2 beds instead of no filter drops it to 102.

And quite a few of those are trailer homes.

It's wild isn't it? I have a feeling a lot of people are "house poor" currently. They bought or inherited a house when prices were low, and now they are 10-20X as valuable but people are making the same income when adjusted for inflation.

So people feel locked into their house because selling would mean either significant higher property taxes or having to move into something much smaller or out of state. This prop will essentially force that on the next generation and cause a big shift in who can own homes and who is forced to rent. It might be perceived as opening up the market to prospective buyers and increasing supply, but prices will still be very high. I think this trend towards renting culture is destructive to communities because no one gives a shit or has any sense of ownership. Anyway, just some thoughts. I wish I had a solution that didn't include abandoning this state, but it becomes harder and harder to live here unless you're super well off.

 

[Eldritch]

Yeah.. looks that way.

Still can't see why anyone voted yes on this. No one wins except realtors and the state.

Don't be silly, existing property owners continue to win as their assets continue to skyrocket to crazed levels and builders continue to win as the supply remains choked off so they can demand labor rares twice what is charged in a State that lets you build freely like Texas or South Dakota.

The only folks that lose are renters without much liquid money and this state wants all those people to live in the servant class on public assistance.

Don't worry, we'll get there.

 

[m0t0_ryder]

Yeah.. looks that way.

Still can't see why anyone voted yes on this. No one wins except realtors and the state.

Like the guy said in the video I linked.
It was advertised ($$$$) as a win for the voters so they voted yes.
Instead of reading the ballot measure and voting with some insight.

Like I said in my first reply.
This will kill prop 13 within one generation.
Because even if the prop 13 protection is transportable to the owners next residence (in state), it ends there. No more hand me downs.
Realtors gotta love it.


To go nerd and cover the bases...
Ferengi Rules of Acquisition...

6 Never allow family to stand in the way of opportunity.
39 Don't tell customers more than they need to know.
74 Knowledge equals profit.
272 Always inspect the merchandise before making a deal.

And the two best relegated to government...

95 Expand or die.
97 Enough... is never enough.

 

[UDRider]

Let's say house worth 1.5M, and is inherited from parents who bought it long time ago, and it's paid off. Someone who is inheriting it won't have mortgage, first 1M is exempt. So that leaves 500k for property tax. Assuming 2.5% property tax that's 12.5k a year in property tax. If someone can't afford that, they certainly can't afford to even rent in Bay Area. Sounds like they still coming out a head.

 

[Killroy1999]

Assuming 2.5% property tax that's ....

Property tax is is 1.27% * assessed value. YRMV. Some are fees, some are %. Its very convoluted.

 

[UDRider]

Property tax is is 1.27% * assessed value. YRMV. Some are fees, some are %. Its very convoluted.

I over inflated just in case to account for all the local stuff that gets tacked on every year for the children.

 

[kuksul08]

Let's say house worth 1.5M, and is inherited from parents who bought it long time ago, and it's paid off. Someone who is inheriting it won't have mortgage, first 1M is exempt. So that leaves 500k for property tax. Assuming 2.5% property tax that's 12.5k a year in property tax. If someone can't afford that, they certainly can't afford to even rent in Bay Area. Sounds like they still coming out a head.

That's true. I think I just have a thing against property tax in general. We already get taxed on our income, sales, vehicles (reg), gifts, gas, etc, etc. And then you pay a tax even if you own something outright.

Property tax is is 1.27% * assessed value. YRMV. Some are fees, some are %. Its very convoluted.

I wish laws weren't so convoluted. It makes it confusing for people who don't have time to really investigate and learn, and usually allows some weird loopholes for massive corporations or the super rich.

 

[kuksul08]

Don't be silly, existing property owners continue to win as their assets continue to skyrocket to crazed levels and builders continue to win as the supply remains choked off so they can demand labor rares twice what is charged in a State that lets you build freely like Texas or South Dakota.

The only folks that lose are renters without much liquid money and this state wants all those people to live in the servant class on public assistance.

Don't worry, we'll get there.

My point above was that yes, renters continue to lose, which is a terrible situation. But they still lose with these changes.

Where will we get?

 

[Eldritch]

My point above was that yes, renters continue to lose, which is a terrible situation. But they still lose with these changes.

Where will we get?

You just get expanded San Francisco syndrome. Essentially you have a high paid Working Class that is comfortable bordering on wealthy, and the only other people who are not in that wealth class are a servant class who survive only on public assistance.

There is a huge divide in between and no middle. This is what happens when you use government restrictions in market growth to falsely inflate the value of products with very limited availability. Same thing in New York, but it took longer because the City didn't restrict Development as much when it was booming, they built up as much as they could, so working class neighborhoods lasted longer.

 

[sasquatch]

Man... realtors association lobbied 50 million dollars to make this happen. Says a lot right there what the intentions are.

On one hand - I am happy that this will incentivize people to sell multiple homes they inherited rather than renting them out at exorbitant prices, continuing the renter culture (which is a hugely negative thing for society IMO). However it has negatives in terms of keeping a home in the family. It sounds like there is an exclusion if the children/grandchildren make the home their primary residence up to $1M but still.

The realtors want this because generational rentals keep too many houses off the market. My rental in Santa Cruz is priced $1000 a month below market and rented by a wonderful family because my taxes are $12,000 less a year then my neighbors because I used Prop 13 and Prop 58 when I purchased the house from my wife's parents.
Now if I had kids, and wanted to leave it to them, they would be fine with Prop 19, IF they were going to live in it. The current "market" price of the property less the $1M exclusion if they lived in it would still be less then the current tax assessment. But, if they did not want to live in it, and wanted to keep it as a rental the tax assessment would balloon to $1.2M.

The prop 13 and Prop 58 incarcerate of tax assessment makes multi generational rentals possible with low tax rates.
Prop 19 breaks that and will mean more houses are sold

 

[scootergmc]

Prop 19 breaks that and will mean more houses are sold

Yep... That's one big reason, and values will drop too.

 

[GAJ]

My point above was that yes, renters continue to lose, which is a terrible situation. But they still lose with these changes.

That seems to be lost on everyone here and this recent opinion piece in the local rag nails it.

https://www.pressdemocrat.com/artic...rs-will-pay-a-steep-price-for-proposition-19/

Folks like to believe landlords are EVIL but in reality many of us keep the average rents down.

We have three rental homes with a current market value of $1.5 million that the average rent is $1370/month which I intend to keep very close to that for the time we continue to hold them.

Market rent is an average of $2575 for those three free standing homes in excellent condition.

When we pass away those homes will go to my daughter who will be able to maintain lowish rents but likely 20 percent higher than we can so renters would lose.

She might be motivated to just sell at that point as they have no kids, they'll likely be in their 60s and why have the hassle.

This is why the realtors were for it; more commissions as rentals are sold.

 

[ctwo]

That seems to be lost on everyone here and this recent opinion piece in the local rag nails it.

https://www.pressdemocrat.com/artic...rs-will-pay-a-steep-price-for-proposition-19/

Folks like to believe landlords are EVIL but in reality many of us keep the average rents down.

We have three rental homes with a current market value of $1.5 million that the average rent is $1370/month which I intend to keep very close to that for the time we continue to hold them.

Market rent is an average of $2575 for those three free standing homes in excellent condition.

When we pass away those homes will go to my daughter who will be able to maintain lowish rents but likely 20 percent higher than we can so renters would lose.

She might be motivated to just sell at that point as they have no kids, they'll likely be in their 60s and why have the hassle.

This is why the realtors were for it; more commissions as rentals are sold.

Tax on a $1.5M assessment is just under $2000/mo. Sell it, gains tax is well over $600k. Win Win.

 

[GAJ]

Tax on a $1.5M assessment is just under $2000/mo. Sell it, gains tax is well over $600k. Win Win.

I like my tenants and we are doing them a service which, oddly, I find more rewarding than the money I'd get from selling. :wtf

I even contemplated leaving one house in our Will to my "almost like a sister" tenant who worked for me for 20 years and my very liberal daughter said, "um, no!" :laughing

Not very "giving" from a couple who make Bernie Sanders look like a conservative.

 

[Killroy1999]

But, if they did not want to live in it, and wanted to keep it as a rental the tax assessment would balloon to $1.2M.

Is that a big problem? Getting a house left to you is very privileged. It would probably rent out with plenty of cash flow even after taxes, and other expenses.

 

[180yzfr1]

Is that a big problem? Getting a house left to you is very privileged. It would probably rent out with plenty of cash flow even after taxes, and other expenses.

Takes a lot of money to maintain a house

 

[Killroy1999]

Tax on a $1.5M assessment is just under $2000/mo. Sell it, gains tax is well over $600k. Win Win.

I looked at a Santa Clara tax bill in more detail. If the home was assessed at $1.5M then the monthly tax bill would be ~$1500. Typically the assessed value is well below when the property just sold at. That is a lot of tax fore a relatively average home in the Bay Area.

Takes a lot of money to maintain a house

I'm well aware. If you have a house with a mortgage that is about a decade old, then it's much easier in this area to cashflow on a rental property.

 

[SVJ]

Is that a big problem? Getting a house left to you is very privileged. It would probably rent out with plenty of cash flow even after taxes, and other expenses.

Privileged? :rolleyes Sounds like wonderful parent that would just kick their kid down the road instead of trying to make life better for them. Some people have more than others. That's life.

Yes, some people in the bay area like my neighbor were very lucky to buy homes for 15K that are worth 1.2M now... I am not a sore loser or jealous though, so it doesn't bother me. I'm happy for his kid. He's a hard working guy that has a place to live now that he otherwise couldn't afford. Being displaced from your home that you grew up in because of taxes is a horrible way to foster a sense of community. Like, hey- thanks for keeping this place nice- now get the fuck out boomer, the tech bros decided you can't afford to live here anymore.

It seems like most people in the bay area only care about taking from others to make life more "fair" for everyone. Hey, I wasn't born to a "rich" family- boo hoo. I don't get it. :afm199