July 7, 2008

Daniel Petelin speaks out

Daniel Petelin and the $1.8 million dollar house in Redwood City [Burbed.com]
I’m Daniel Petelin — and I would like to clarify a few facts mentioned in the above comments. First of all, I have lived in the house on Palomar for 60 years — although I have lived briefly in Monterey, Sacramento and San Francisco. It is part of my Russian culture to value home life and I am proud to stay that I have lived in my parent’s beautiful home so long. The mortgage I have is due to earthquake damage to the home that has been repaired. I also have contributed monies to the repair and maintenance of the home, consequently I have no regrets that Prop 13 let’s the house pass to the children. It should be that way since I always helped out with the family obligations. In addition, I am recovering from a mini-stroke — that is why I can’t work full-time. Consequently I may consider a reverse mortgage or lease the house. In any case, I have worked hard to honor my parents wishes that the home continue to be in the Petelin Family. I know in my heart my parents wanted me to have this home and pass it on to the next generation.

Assuming this is the real Daniel Peterlin (and I believe it is) – I now feel bad for calling out someone who has had a stroke. :(

Burbed wishes you well.

Comments (50) -- Posted by: burbed @ 11:17 pm

50 Responses to “Daniel Petelin speaks out”

  1. madhaus Says:

    Welcome to Burbed, Daniel. You bring up my least favorite real estate term here — Prop 13. Oh, do I hate Prop 13. Hate it, hate it, hate it. And I’m a homeowner. I get lower taxes too, but I still hate it.

    So. You’re asking for special treatment because, well, why? Are you saying that you deserve low taxes just because your parents used to live there? Because you’re ill? Because you made a promise and it’s up to us to fund it?

    The state is broke, counties are broke, cities are broke and schools are really broke. Our school system, formerly #1, is now #47. Prop 13 is a big reason why. Continuing super low taxes down to a second generation is an worse idea than the original premise of Prop 13. The only thing even worse than that is that corporations also get covered by Prop 13.

    Now, why should you be taxed at an arbitrarily low assessment, but I have to pay 40% of my home’s value, and someone buying into my neighborhood now would pay 100%? Because you grew up there? Everybody grows up somewhere. Because you helped maintain it? What, you helped your family because you expected a tax adjustment out of the deal, funded by non-family members? You only maintained the house because your parents lived there? If you didn’t have a tax break, you’d choose to let it fall down?

    I am truly sorry about your health issues, Daniel. A reverse mortgage sounds like a good idea for you. Maybe if the state didn’t have Prop 13 limiting income, you might have had some help with your health issues paid for by the government, such as home aides or subsidized treatment. You see, Prop 13 is hurting you too. And if there is another generation of Petelins in your house, well, your property tax may stay low but so will their school funding. You weren’t planning on their learning much, were you?

    I really dislike Prop 13 because low property taxes are destroying our school system and the state’s infrastructure. Because these aren’t properly funded anymore, some of our cities have sewage pipe explosions in people’s houses.

    Sincerely,
    Homeowner Against Prop 13

  2. Eat Your Heart Out Says:

    madhaus Says:
    July 8th, 2008 at 12:35 am

    “I really dislike Prop 13 because low property taxes are destroying our school system and the state’s infrastructure.”

    F*ck YOU. I have NO KIDS. I don’t care about schools and do not want to pay ANYTHING towards them. “The state is broke, counties are broke, cities are broke and schools are really broke. Our school system, formerly #1, is now #47. Prop 13 is a big reason why.” GOOD, SOLID THINKING! I want stupid children-adult drones (and illiterate illegal messycans of all ages) to continue the scam and pay taxes. Imbecilles like you over time have voted the doomed infrastructure. Want Blame? Sneak up on a mirror if you dare and take a good look…

    Thankfully the dishonest and digraceful elected officials know that Prop 13 is a deadly third rail and will never be reversed or their political careers end instantly.

    Back to your cubicle moron. How was the Prius ride in today?

    Long LIVE Proposition 13! The Senior Lobby RULES.

    Eat Your Heart Out, It’s GOOD for me

  3. Hellboy Says:

    EYHO, now that’s what I call anger. You’re either a tosser or a nutter. This state has been consuming more than it takes in for a time now and has been using cheap debt to get by. Cheap debt doesn’t last forever and we will all have to pay in one form or another. They should at least repeal prop 13 for corporations.

  4. nomadic Says:

    Wow, madhaus, you don’t pull any punches do you? Not that I disagree with anything you said. ;-)

    EYHO, I shouldn’t justify your post with a response, but as someone else who does not have kids I can still see the value in good schools. I don’t mind paying FAIR taxes to provide them. It’s my neighbors who pay at least $5k per year LESS taxes and have kids in school who irritate me. Just because I bought my place later.

  5. buckborden Says:

    As long as the Prop. 13 free ride continues for SOME PEOPLE–especially those who voted for it in 1978 and are still in their houses–nothing will change. Also, elected officials who refuse to challenge bad laws out of fear of not being re-elected, have zero character and integrity. That is why we are in the mess we are in. Voters are fools, too. We get what we deserve, and school funding is just another symptom of a decaying society.

  6. eichler Says:

    It should be fun next year if house prices keep dropping. All the people that pay market rate taxes will ask for a reassessment and all the new sales will result in significantly less increase than the county is used. What will happen if property tax revenue drops 5%?

  7. Ctrl-Z Says:

    EYHO is a troll, so I’m not going to respond specifically, but it amazes me that some people really do think that the schools don’t affect them because they don’t have kids. What do they think is going to happen when an entire generation is unable to compete for jobs in the global marketplace? You can either pay a little for schools now, or you can pay a lot for unemployment benefits later; there is no third option.

    Moving on… Prop 13 discussions tend to devolve into discussions of who “deserves” a tax break and who doesn’t. I’m not here to judge Daniel or anyone else. Prop 13 should be repealed because 1) it shorts the state much needed tax dollars 2) it’s extremely regressive (witness Daniel the millionaire getting a tax break) and 3) it causes an inefficient use of resources. It’s sad that certain people (mostly elderly) will be incentivized to move, but we can’t serve their wants at the expense of the needs of families with children.

  8. rick Says:

    A troll is an understatement for this guy. :)

    It is not just the people who voted in ’78 now, it is their children (aka Daniel) and their grand children, and also all the businesses that had real estate for some time. Forever and ever.

    Should we have a new tax break for people who had a recent stroke? I thought there is a medical expense deduction, dependent care credit, etc. But just for Daniel, I think we need a stroke credit, maybe $1.3 million.

  9. burbed Says:

    Back to your cubicle moron. How was the Prius ride in today?

    Wow…. that’s the strangest combination of insults I’ve ever heard.

  10. Frank Jewett Says:

    How would the senior lobby like it if there were fewer police on the streets and fewer firemen to pick them up off the floor? Seniors consume services, too.

  11. WalnutCreekMafia Says:

    Frank, give it up. There is no rationalizing with the senior lobby, in their minds they deserve everything because they “worked so hard” for it.

  12. WalnutCreekMafia Says:

    Ctrl-Z, hate to be callous but old people moving would return a sense of normalcy to this area. One of the main reasons old people move to places like FL and AZ is because it is cheaper. Here they are incented to stay.

    I’ve lived in many places (NYC, NC, FL, TX, MI, OR), and you know what strikes me about this area. How old the population is, I don’t have census figures to back it up but it just seems like there are a lot of older people here, even in the suburbs. It’s odd.

  13. pianist Says:

    I say EYHO is a nutter troll (pun intended) on this site. BTW, what’s a tosser?

  14. RealEstater Says:

    Ctrl-Z, Rick,

    The troll here is Madhaus. Look at how he incited such angry comments.

    Madhaus,

    If you really want to pay extra taxes, perhaps you can donate the money to help the “homeless”.

  15. WillowGlenner Says:

    This prop 13 debate keeps getting miscast as a kid/schools issue. It has nothing to do with schools and kids. It has to do with greedy seniors who are taxing their kids out of existance. This is happening in all aspects of taxation/society not just 13. Look at social security and medicare, how much did the current olders pay for those services, NOTHING thats how much. Its a free ride for them that they think they “deserve” because they are old. To add insult to injury, the US was at its MOST UNPRODUCTIVE when this current crop of seniors was in their peak earning years- the 70s.

    The role of older vs younger family member has been completely reversed. Those under about 55 need to hoist some tough love on this crop of seniors, we need to start to revise 13 and make these non contributors pay at least SOMETHING or leave the state, and we need to raise the retirement age for all benefits to 72, and we need to turn medicare into a catastrophic coverage policy. Stuff like that needs to be done and its obviously coming but not a moment too soon if you ask me. To quote the grandfather on the Simpsons- “I’m OLD GIMME GIMME”!!

  16. WillowGlenner Says:

    Frank, not only do seniors consume more services than everbody else, they VOTE to underfund anything that doesn’t benefit them directly, even though they are clear beneficiaries to the wealth created here that they (for the most part) did not create or contribute to. When I lived in San Mateo there were dozens of ballots to improve the CSM campus which is the beautiful place that has needed upgrading for years. Here we are in the middle of silicon friggin valley and CSM is starved to the point of 40 year old linoleum on the floor of the computer center. Every person under about 55 in the county voted FOR those school bond measures but the elderly would go out in force and vote against *all* funding measures for everything except emergency services which they overutilize.

    Sorry if this is so harsh but I have about had it with greedy geezers. 13 is just the icing on the cake for a group that has overentitled themselves for decades. Now granny threatens to bankrupt this country with the medicare drug plan with a set of benefits that no regular working person gets or expects anymore. Time for granny to pay her own way.

  17. bob Says:

    The age remark is pretty much right-on. The youngest city in the US is Atlanta.The median age in that city is 32 years old. The median for the Bay Area is pushing 40. Alameda, where I live has an avg age of 48. Most other East Bay burbs are the same or even older. This number increases almost yearly, in step with the current age, which indicates that the majority of persons aged 25-32 do not stay. the 25-32 age group is the most highly prized in terms of growing a new economy. If the BA loses this demographic, then it’ll kill the economy eventually.

  18. nomadic Says:

    Wow, this degraded into an age war quickly. Glad I’m a relative youngster and can run faster than the geezers who’ll be coming after you guys. :-)

    I was with Ctrl-Z until “we can’t serve their wants at the expense of the needs of families with children.” I say, screw ‘em all equally. I’m not old; I don’t have kids. I think everyone should pay a fair share to support ALL necessary public services (schools, fire, police and not much more).

  19. sonarrat 94619 Says:

    I’m 25. I don’t care if those old folks are getting a free ride, and I’ll be pissed as hell if Prop 13 gets repealed and takes my chance at the same comfort with it. Our generation is already going to lose the Social Security benefits we pay for. And people would deny us the same benefits as the older generations have enjoyed for decades, at a time when our ability to break into the market at all is nil and millions of new homeowners are going into foreclosure. That’s a grievous insult.

  20. Ctrl-Z Says:

    WalnutCreekMafia (12) and nomadic (18) seem to have misinterpreted me. I’m totally with you guys; no subsidies for anyone. Let the market sort it out. If old people have to move, tough. I was just saying that I think the natural free-market consequences of repealing Prop 13 would be better usage of resources (i.e.- old person move out of large house and growing family moves in).

    RE (14) – define “extra”. Asking citizens to pay for the services they use in realtime, instead of with deficit spending, is not “extra taxes”.

  21. bob Says:

    at a time when our ability to break into the market at all is nil and millions of new homeowners are going into foreclosure. That’s a grievous insult.

    Well, guess what was one of the chief reasons property prices got so out of whack in the first place? Prop 13. Perhaps if it wasn’t around, people like yourself could simply buy and make normal payments on a regular salary like the rest of the country.

  22. burbed Says:

    sonarrat’s opinion is the reason why Prop 13 will never be repealed. Everyone wants this benefit, even though they’ll have less and less of it, and everything around them gets worse.

  23. bob Says:

    Prop 13 is a perfect example why California’s infrastructure ” mysteriously” degrades decade after decade. I think someone else mentioned this, but when you live in a state that gives citizens the ability to proposition each and every law, naturally those with the most voting power will always win. Seeing as California’s population is getting older and older, the cycle is self-destructing.

  24. pianist Says:

    No help from all of you fellow bloggers today! I finally googled “tosser” and I have to say EYHO could have been, well, angrily tossing away while writing reply #2.

  25. burbed Says:

    Actually, I’m not as convinced that Prop 13 is the root cause for the bubble in California. If that were the case, there wouldn’t have been a bubble in FL, NV, AZ, etc.

    That said, it certainly is a factor.

  26. cardinal2007 Says:

    One question would be how many people actually live in their own homes, and are not going to leave until they die, doing reverse mortgages to pay for their retirement. The issue kind of gets brushed off, but if there is a significant number of people that do this, and are around the same age, when they die, either the heirs will have to pay off the RM with a mortgage, or they will have to sell the property. Either way I am guessing in many cases people will just sell the property because the Bay Area is too expensive for them, and they live elsewhere, and have a home elsewhere. If too many of those properties start appearing on the market 10 – 20 years from now, that will stagnate the market.

    I think the current seniors would want to get as much as they can out of their expensive properties before they die, which would leave a lot of housing wealth to the banks, not anybody else. But that is just a theory, I’ve never seen statistics on it, just anectodes that indicate that seniors are not planning to leave as large an inheritance as those before them.

  27. bob Says:

    I agree,
    There are many other factors contributing to the bubble. But it is interesting to note that of all the states, CA seems to have the most regular occurrence of housing bubbles out of all the other states.

    If you trace the last three major California bubbles- late 70′s, mid to late 80′s, and the latest and most prolonged- the 1997-2007 bubble, these seem to start their pattern almost immediately after the passage of Prop 13. These bubbles seem to occur with greater regularity after the measure, and tend to get more grotesque each cycle, typically forcing one class out of the state with each occurrence.

    The simple explanation, though ugly sounding, could be that the combination of wealth and population growth creates a shift in the economic demographic. Where Prop 13 comes into play is because by the fact that it basically gives older people no incentive to move and thus limit the supply of homes to a degree. Ironically, once the boom was well underway, there was suddenly no shortage of supply as many of these older residents decided to sell and move to retirement land (Oregon). But the damage was already done and speculation soon took up the slack by overbuying the supply, which as we see now is the major reason why prices are decreasing.

    Anyhow, I seriously doubt prop 13 will ever be repealed. That is unless Californians start taking a serious look at how the housing stock can be ramped up in production to offset the lack of supply.

  28. madhaus Says:

    I think Prop 13 has distorted the housing prices of the bubble, but it didn’t create them all on its own.

    Hey, where did Daniel go?

  29. madhaus Says:

    bob, the bubble did not begin with Prop 13 (which passed in 1978). The 70s bubble was caused by inflation (remember the inflation), and since real estate is an excellent inflation hedge, home prices shot up. The argument that resonated with people in the Prop 13 campaign was over “old folks being taxed out of their homes.” The home values went up very quickly, so did the taxes, and for people on fixed income, ba-da-bing!

    Yet Prop 13 was not written as tax relief for low-income seniors. It was written as tax relief for anyone who stayed put, including corporations. No one should be surprised at the results. The short-sighted people who support it, given what it’s done to this state, absolutely tick me off.

    I would seriously consider circulating a proposition that would nullify any amendment that requires a bigger voting percentage to repeal it than what it actually passed by. Did you know Prop 13 has language in it requiring a 2/3 vote to repeal it? That, along with Prop 90 (I think?) — the one that requires bonds to get a 2/3 vote to pass — would be GONE.

  30. sonarrat 94619 Says:

    “Anyhow, I seriously doubt prop 13 will ever be repealed. That is unless Californians start taking a serious look at how the housing stock can be ramped up in production to offset the lack of supply.”

    With the disdain most of us have for modern building standards and their dull, cookie-cutter communities in places like Mountain House and Patterson, I have to think there is a real resistance to new housing. And for good reason. Those extravagant houses on postage stamps will be worth less than 1950′s bungalows on larger lots in very short order.

  31. nomadic Says:

    burbed, I’m sure there are more than a couple of other states with Prop 13-type laws as well. Michigan has one that was included in Proposal A in 1994. It limits assessment increases to the inflation rate or 5%, whichever is LESS. The other part of Prop A was a 50% increase in sales tax, however, which recouped some of the revenue loss. And their sales tax is still a relatively low 6%.

  32. Pralay Says:

    It’s very unfortunate to see that so many older people did not save up for their retirements and banking on their home values for it.

  33. cardinal2007 Says:

    Sales taxes and income taxes are pretty high here in CA. If anything it seems like a very tax happy state, except for prop 13.

    It seems to mostly like taxing the middle class that can’t afford to buy anything. I’m paying marginally 9.3% on my income, and another 8.25% if I choose to use the money I make to buy stuff.

  34. nomadic Says:

    Hey, maybe bob’s on to something… /:) The taxes here suck. Let’s move. Now if only New Mexico had jobs… seems like a decent place otherwise.

  35. WalnutCreekMafia Says:

    Ctrl-Z, I think you misintrepeted me, I agree with you :)

    Prop13 had a noble intent, prevented lawmakers from using property taxes as a debit card. It is just so disconnected from reality it is scary.

    For me the biggest factors in the price of housing are as follows, in no order

    1. Prop 13, obviously
    2. Open Space Laws, if you greatly restrict the supply of land prevents supply
    3. the permit process, good lord don’t even know where to begin here

  36. Frank Jewett Says:

    Richard Calhoun tracked twenty years of SCC sales. If you ignore hot and cold markets and factor in growth, what do you get? You might expect to see something like a horizontal line indicating normal sales over time. In fact what you will see is that sales have fallen by 50% compared to growth, I.E. the same total number of sales despite twice as many houses. Prop 13 is undeniably influencing people to stay put.

    Whether that is a good thing or a bad thing can be debated. It seems to me that if you remove half of the houses from the marketplace, the other half will appreciate faster, driving inflation which in turn devalues money set aside for retirement, except for home equity, which seniors aren’t cashing in anyway.

  37. Renter4 Says:

    That’s a grievous insult.

    I don’t think Prop 13 is going to be repealed, but these kinds of insults are going to continue. We are an aging country. My generation (and yours) can’t expect to get what the boomers had. They grew up and matured in easy circumstances that have not been replicated. Not only that, but our population growth has slowed. We’re going to have to support more non-productive people with fewer resources.

    I don’t expect to retire on a pension at 55, I don’t expect to get social security (unless I’m financially unlucky), and I don’t expect to have prescription coverage in my old age. Unless we open up immigration more, there won’t be enough working people to pay for those things when we’re old.

  38. Renter4 Says:

    But there’ll be lots of cheap housing. Eventually.

  39. sonarrat 94619 Says:

    But there’ll be lots of cheap housing. Eventually.

    Most of the boomers had kids. Remember, Prop 13 has familial transfer rights. Not going to happen.

  40. Pralay Says:

    Most of the boomers had kids. Remember, Prop 13 has familial transfer rights. Not going to happen.
    ——–

    Provided kids are living in bay area. If not, they are going to sell eventually.

  41. burbed Says:

    Are they? Why wouldn’t they just hire a property manager and rent the dump out? Especially with the low tax basis, the profit opportunity is huge.

    That’s the basis of capitalism.

  42. Pralay Says:

    In that case there will be oversupply of rental properties which is going to cause rental price drop. As a result, “there’ll be lots of cheap housing, eventually” (point made in #38).

  43. cardinal2007 Says:

    If a RE investor like WG can upgrade, market, and manage a rental property better than an absentee landlord + manager then RE investor would value the property more than the owner, in which case he/she can probably offer enough money to purchase it.

    Considering that houses in many neighborhoods around here rent for 4.7% of value, if they are somewhat current, obviously less if they need upgrades. The rental market is interesting in that regard in that for old properties upgrades can increase rent returns a lot, while upgrades on ok new looking property like granite countertops, and hardwood floors are not really that valuable.

    Either way, the owners will have to assume any debt, and if there is a RM for example finance it out somehow, then deal with returns of 3-5% on the value of the house. Most likely have to upgrade some stuff before renting out in order to get maximized returns, and have someone manage the place while they are living half way across the country, most people will probably balk at all this. Go for the quick cash, and buy a house where they live, especially if they have siblings, which I think most people have.

  44. rick Says:

    Pralay,
    Why their kids want to sell? It is not like they will all have a stroke. They are paying less tax than a state with 50% less in housing price and 50% more space.

  45. madhaus Says:

    Lots of kids sell their parents’ homes, despite the low taxes. They don’t want to get into the rental biz (even with a positive flow), they want all the cash up front. Keeping an older home up (if your parents had it 30-40 years it will need a lot of maintenance) can be a lot of work and expense.

  46. Pralay Says:

    Why their kids want to sell?
    ———–

    I don’t know. But my friends bought homes from children when homeowners died. Mainly because they don’t live in this area. In addition I guess (an wild guess) there are other issues like multiple children. It could be more convenient to sell the home and divide the money upfront (and use it for buying bigger home in their local areas).

  47. burbed Says:

    I actually have only rarely heard of California-borne children leaving the state for elsewhere.

    Most live at home with their parents, or eventually inherit the house their parents had.

    It’s like living for free.

  48. madhaus Says:

    Several homes in this neighborhood have come up for sale because the owner is too old (or died). I actually spoke to one owner’s kids once because we talked about buying directly from them; one had moved to Colorado, the other lived in San Jose, neither wanted the house.

    Maybe it depends on where you live?

  49. sonarrat Says:

    The house I’m trying to buy came onto the market originally because the owner died. Her survivors fixed it up and sold it for a handsome profit. Then the bank foreclosed on them. But that’s hardly the norm.

    PS – the appraisal came in today. It was $11,500 below my bid. Why? Because the bank lowered the list price on the MLS while they already had my bid on hand, trying to drum up more bidding. Backfire! Now they have to take another five-digit hit.

  50. Bay Area Demographics - are young people all leaving California? [Burbed.com] Says:

    [...] Area Demographics – are young people all leaving California? Daniel Petelin speaks out [Burbed.com] bob Says: July 8th, 2008 at 11:06 [...]


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