December 30, 2012

Prop 13, Meet Fork?

121230-prop13-forkWell, maybe a seafood fork.  A possible seafood fork.  Size extra-small.  In 2014.  Maybe.

The third rail of real estate may be getting some modifications, thanks to the new obstruction-proof California Legislature.  Now that both houses have 2/3 Democratic Party members, they could raise taxes without a single Republican vote of support.  But to modify Proposition 13, only an initiative passed by California voters will do.  The difference is that Legislators are now discussing these changes openly, sensing the era of tax cuts is also due for Fork Facetime.

California Democrats signal they want to reform Proposition 13

By Steven Harmon, San Jose Mercury News
Posted: 12/29/2012 01:00:00 PM PST, Updated: 12/29/2012 05:41:17 PM PST

121230-prop13-chartsSACRAMENTO — The third rail of California politics may not be as deadly as once thought.

Three and a half decades after the passage of Proposition 13 shook the political landscape in California and sparked a taxpayer revolt across America, voters appear to be warming up to the idea of reforming the initiative as long as protections for homeowners stay intact.

And the apparent sea change in public attitudes, combined with the two-thirds majorities Democrats now hold in both chambers of the Legislature, has emboldened some politicians to take aim at the iconic measure.

“It is time for a fix, because Proposition 13 is broken,” said Assemblyman Tom Ammiano, D-San Francisco, who plans to introduce a bill next year aimed at forcing businesses to pay higher property taxes.

The landmark 1978 measure rolled back property taxes and capped yearly increases until a property is sold, but critics say one of its unintended consequences was shifting more of the Golden State’s property tax burden from businesses to homeowners.

121230-prop13-repealThis isn’t the first time we’ve noted the havoc wreaked by Prop 13, and we’re hardly the only ones doing so.

Reforms being discussed include a “split roll” where commercial property is handled differently from residential, and lowering the threshhold for parcel taxes from 66 2/3 to 55 percent.  58 percent of Californians polled supported the split roll concept, where commercial property would be reassessed every 6 or 12 months.  Residential property would continue with assessment at time of sale with a 2% maximum annual increase.  However, 60 percent of those polled still “support” Prop 13.

In addition, Assemblyman Tom Ammiano wishes to address a loophole where corporate-owned property isn’t even reassessed when sold, because more than 50% of ownership must change hands.  Corporations simply constructed shell entities to avoid the 50% trigger despite buying and selling their entire interest in real properties.  For exaple, the E&J Gallo Company bought the 1765 acre Louis M Martini vineyards by having 12 family members buy individual shares, each under the 50 percent trigger.  The property remains assessed at the original low value because of this maneuver.

121230-prop13-timeEven Google, a relatively new corporation, benefits from the complex dance of real estate partnerships, trusts, holding companies, and leases.  Some of their buildings sit on land owned by the pre-Prop 13 owner and his family trust, via a ground lease.  The 13.7 acre tract was assessed at $789,635 in 2009 and would have been worth $41 million without a single structure on it.  State law prevents land reassessment if a lease of over 35 years exists.  The buildings on the land were assessed at $38 million.

Before Prop 13 passed, business and residential property produced about the same share of state revenues, but now residential property generates 70 percent of property taxes.  California has also bid adieu to its excellent state colleges and universities, as well as its various public school systems, since property taxes helped fund the former and were primary support of the latter.

Feel free to grouse about money-grubbing state officials or the unfairness of our tax code.

Comments (13) -- Posted by: madhaus @ 5:06 am






October 23, 2011

Prop 13: Insidious Budget Cancer or Fiscal Terrorist Threat?

Well, that certainly got your attention.  I’d like to direct you to an excellent, dare I say seminal piece of reporting on the elephant in the California real estate room: Proposition 13.  I’ll quote a few grafs here, but I really would like you to read the entire piece.

California Diminished by 1978 Tax Revolt Shows U.S. in Decline

By Christopher Palmeri, Bloomberg/Businessweek
October 17, 2011, 12:23 AM EDT

Oct. 17 (Bloomberg) — California voters approved Proposition 13 to rein in property taxes that had doubled in 10 years. More than three decades later, that rebellion has mortgaged the state’s future, saddling it with the nation’s highest debt and lowest credit rating.

The measure led to reductions that dropped per-student school spending from seventh to 29th nationally, prompted cities to pursue sprawling retail development to compensate for lost revenue, and pushed the state into budget gridlock, including a $705 million revenue shortfall announced Oct. 10, by requiring two-thirds approval for any tax increase.

“Proposition 13 set up an unfair and dysfunctional two- tiered system of property taxes,” said Kevin Starr, a history professor at the University of Southern California and the author of a series of books on the state. “It choked off a source of revenue, and the lack of that revenue has brought California to the edge.”

The measure, approved in 1978, was the inspiration for an antitax movement that has taken hold of the public discourse in Washington and in state legislatures throughout the country. It caps real estate levies at 1 percent of a property’s most-recent sale price. Before it passed, local governments could raise revenue as they saw fit.

imageHere’s a few more colorful quotes from this story:

  • “You couldn’t invent a crazier system,” [Santa Clara County Assessor Larry] Stone said in a telephone interview.
  • “It’s had a profound impact on multiple levels,” said Jean Ross, executive director of the California Budget Project, a nonpartisan research group in Sacramento. “The one that’s underestimated is the shift in decision-making from the local level to the state. All of our public systems have been affected by our seemingly perpetual budget crises.”
  • “Prop. 13 has had the unintended effect of favoring commercial property owners at the expense of homeowners,” [Los Angeles Mayor Antonio] Villaraigosa said Aug. 16 at the Sacramento Press Club. “Let’s apply Prop. 13’s protections to homeowners and homeowners alone.”
  • “This is a nightmare,” said Mohammad Islam, San Bernardino’s assistant superintendent who has worked in school finance for 22 years. “It’s impossible what the state is doing to us.”

Yet despite all California’s budget woes (as described by Michael Lewis in Vanity Fair), there is no organized movement toward either doing away with, or even modifying Proposition 13 to a homeowners-only tax adjustment.  While presented as a way to keep senior citizens from losing their homes to skyrocketing property taxes, Prop 13 has become a windfall for commercial and corporate property owners instead.

imageMeanwhile, California’s public school system has declined from seventh in per-pupil spending to 29th according to this article. If you go by this NEA report, it’s 36th. According to this article from KQED, it’s 42nd.  Or 43rd.  Or 46th.  More importantly, education quality has dropped as well.  California ranks 46th of 51 (50 states plus District of Columbia) on test scores in 2003.  This more recent ranking had California come in 30th (but this appears to be a different series of grades).

That NEA report said we’re #3 in prison spending per capita, though!  Woot!

Now, if you don’t think an educated citizenry is an important goal, then you can tell me to shut up already about school funding.  But I suspect most knowledge workers (such as Silicon Valley engineers or San Francisco creative class members) would want our schools to return to their previous high quality, and that means starving them is not in our interest.

image

Let’s hear from someone else who doesn’t agree with that.  Furthermore, this is someone who writes a San Francisco real estate blog.  Here is his complete takedown of that 2600 word Bloomberg piece.  Ready?

Prop 13 Isn’t Squeezing Anything

Bill Quick, San Francisco Real Estate Blog

The political big spenders absolutely hate Prop 13, because it cut off their unlimited access to the piggy bank of private property taxation.

The truth is, our spending on essentials like education, public safety, and other bottom-line items is not being constricted by Prop 13. It is being choked off by the propensity of governments at both the local and state levels to spend money on tens of thousands of pet projects and pet constituencies, rather than paying for services that voters feel are the most basic. We’re not broke because our state “salary” (taxes) is too low, it’s because we spend way too much on non-essential fripperies.

Wow, I’m speechless from that relentless chain of brilliant logic!  And to be fair, when I called Quick on his heavy use of facts and supporting evidence, he did respond with this:

imageEnjoyed your sarcasm! I’ll be looking forward to your piece supporting runaway property taxes and booting retired boomers into the street, too. Of course, California’s housing economy is in such great shape that property tax hikes should be just the ticket for rocketing us to even greater heights!

Right.  Because interest rates and inflation are exactly the same as they were in 1978, and property tax assessments are rising faster than college costs.  Then there’s this:

Here’s a bunch of stats on California’s tax and business climate. Short takeaway: We’re in awful shape, with one of the highest overall tax burdens in America.

imageThe bunch of stats are from the Tax Foundation, so I looked into just who they are and what their real motives are.  They’re funded by high-minded humanitarians such as the Koch Foundation (as in Koch Brothers) and ExxonMobil. They obviously have your interests in mind rather than those grabby one percenters!  Would you expect anything less from a group founded by the CEOs of General Motors and Standard Oil other than whether grannies are getting taxed out of their Cayman Island Corporations and have to bunk in their Swiss bank deposits?

Paul Krugman (a know-nothing economist who won a stupid Nobel) accused this group of committing “deliberate fraud” in their evaluation of Obama’s jobs proposal.  This isn’t the first time he’s questioned their methodology, either. But let’s drink to “the tax is too damned high” Kool-aid that the Tax Foundation is pouring.

It’s a lot cheaper than actually fixing things.

Comments (64) -- Posted by: madhaus @ 5:05 am

May 14, 2011

Another Dude Who Wants to Die in His House

Here’s a piece from a blog that covers many things San Francisco, but not necessarily real estate.  What caught my eye was a few familiar themes.

OWNING A HOME IN SAN FRANCISCO

POSTED BY: BAGHDAD ON: MAY 11 2011 • CATEGORIZED IN: LIFE IN SAN FRANCISCO

There’s been lots of articles in the paper recently about owning a home being a bad thing. I was always scratching my head about this until I realized I’m one of the few people left that was born and raised in San Francisco and is STILL HERE. Most of the people you’ll find in San Francisco are lucky to have lived here for twenty years at most, so it’s time I gave you a little history lesson about San Francisco real estate.

Now for most people here they don’t remember the time when a house was affordable because they aren’t, well, old like me. I was born in 1962 and my parents had bought their four bedroom house in the Sunset in 1954 for a whopping $18,300. Yes, you saw that right, there isn’t a couple of extra zeros on that number. The builders, McKewan Construction were asking $23,500 and my parents underbid the asking price and got it. The early 50′s was a buyer’s market.

Head on over and check it out, it’s not a very long piece but manages to hit most of the Heavy Hitters of the Real Bay Area:

  • Prop 13 is awesome, because
  • You should have bought 35 years ago
  • My parents were smart about real estate
  • It’s Special Here, and if you don’t see this
  • You’re Not From Around Here
  • I Intend to Die in This House

And this dude is younger than I am.  He sounds like my grandfather:

I used to hate the crotchety old guys who would sit out in front of their houses in a lounge chair watering their lawns talking about why, I remember back when we… fill in the snide comment of your choice. I want to be that guy when I’m in my 70′s.

Comments (31) -- Posted by: madhaus @ 5:54 am

May 13, 2010

smartest person in Cupertino

It’s search engine result Thursday!

Recently someone found this site by searching for: smartest person in Cupertino

Personally, I think it is this person:

image

Why?

Because this person had the foresight to buy the house early enough, such that his annual property tax is just $2700 per year, while his new neighbors pay $12,000 per year.

Does anyone have access to other records to find out who the real smartest person in Cupertino is?

Comments (7) -- Posted by: burbed @ 5:37 am

February 21, 2010

Solution to California’s Budget Woes: Tax Renters

Let’s face it, California’s budget is a mess.

It’s revenues are mostly from income, which means that in bad times a vicious cycle develops (layoffs->lower tax revenue->government layoffs->reduced consumption->layoffs->etc).

It’s expenses are locked in by voter initiatives. Now, as we know, California has the smartest people in the world – and that’s why voters pass propositions that result in situations where schools are required to have after school programs like teaching juggling and sushi rolling, while cutting teachers for basic programs. Innovative!

But there’s hope. Because California, especially the Bay Area, has the smartest people in the world, there’s a lot of innovation. Like the highly innovative Prop 13 – which enables companies to pay less property taxes than some homeowners, and enables some homeowners to pay 1/10 the property taxes than their neighbors. Coming up with a tax scheme that only impacts families in the future and immigrants to the state, while creating a landed-class, is definitely the kind of out of the box thinking that the state is famous for.

So now, let me share with you this fantastic proposed solution to California’s budget woes from the Mercury News’ message forums:

Tuesday, 2/02/2010 – 9:32 a.m. PST — Why don’t they just start taxing renters?
dlawrence

Renters are using the same services as homeowners, so why don’t they just pass a renter’s tax?  Maybe that would get a lot of the lazy people off their butts and get them to buy a house and really be a part of their community – rather than just a transient drain on their neighborhood until they move on to some other short-term situation.  There are so many renters out there that there must be a way to monetize them.  Maybe pass a residency tax that affects everyone, but if you’re already paying property tax, you get exempted from the new residency tax.  Then, force landlords to get a SSN from all renters and make sure the IRS has their address – just to make sure that the illegals don’t get away without contributing to their society the way homeowners have been doing for years.

Oh my god! This is an even better idea than the tuition tax, and other taxes on children, floated on this site earlier! Why aren’t we taxing lazy renters?

But wait, there’s more!

Tuesday, 2/02/2010 – 6:55 p.m. PST — Stay in school, then
dlawrence

Take a walk through most communities that are rental-majorities.  Sure the majority of renters would love to participate in ownership but *news flash* they’re uneducated or undereducated for this region.  Maybe if they started applying themselves and showing some initiative, then they’d start making the kind of money it takes to own something.  Also, *news flash* if you can’t afford a house in this market and you want one, you’re definitely in the wrong place.  Move to the hills of Tennessee or something.  Houses here are afforable now, and available to anyone who has a good education and is willing to invest in a long-term future and not live month-to-month.

Is it really a privilege to own property? Didn’t the homeowners pay taxes on the money that they earned to buy that property (think double-taxation)?  Aren’t most of them under water on their mortgages (you don’t need to think about that one)?  Doesn’t it take money to maintain that property to what the community and renters deem appropriate levels (think code enforcement)?  Don’t homeowners need to maintain insurance in case some dumb_ss falls on their doorstep (think lawyers)?  Maybe with your logic, there should be a tax placed on getting sick – because that’s about as much of a privilege as what you’re alluding to.  No, ownership is a right if you have the initiative and guts to do it – and nobody should tax a right.

Renting is a privilege more than ownership. Renters use up a huge chunk of community services and they don’t pay squat for it – and then they get to deduct a portion of their taxes because the landlord already paid property taxes that they’re benefitting from.  That’s just stupid.

Seriously. Mountain View’s a great example – it’s very affordable now, yet 50%+ plus of the population still rents. Those people should be deported!

But wait, there’s more!

Tuesday, 2/02/2010 – 6:40 p.m. PST — HomeyDogg doesn’t even know what clue means
dlawrence

First of all, I’m not a ‘sir’, but I suppose a predjudiced person such as yourself might assume I’m a ‘sir’ because I made what you feel are good arguments.  I shudder to think what you would have called me if I had made no sense.

Just because you are a renter, and probably paying less in rent than the property owner is paying in property taxes for your little unit, doesn’t mean it’s right or fair.  Watch the news – most property owners are completely screwed in this economy and the renters are reaping all the rewards of their hard-earned investment.  The property owner is just trying to make ends meet and usually being taken advantage of by the deadbeat renters out there who could care less what happens to their community because they’ll just be moving out once they miss enough rent payments, do enough damage to burn through their security deposit, or have too many bill collectors or bounty hunters stalking them at their residence.  Grow up.

Indeed. Did you know that in the California Constitution it guarantees that landlords will have profits? Oh wait… it doesn’t? WE NEED A PROPOSITION FOR THAT, STAT!

(BTW, most major landlords have their tax rates set in 1978… so… uh…)

But wait, there’s more!

Tuesday, 2/02/2010 – 10:12 a.m. PST — I don’t think that’s
dlawrence

I don’t think that’s completely true – I know of a lot of landlords that had their property taxes go up year-over-year yet they had to reduce rents because of the poor economy.  If their taxes went up, yet the renters are paying less, then something that was ‘factored in’ all of a sudden got ‘factored out’.  Since most rental real estate is a money losing proposition, and rents are still a heck of a lot lower than the relative cost of ownership, renters are getting a great deal.  They should be taxed to help ‘spread the wealth’ and pay their fair share of the services they’re using.  Everyone knows that renters have more police calls per capita than homeowners, and crime rat
es are higher in predominantly renter-heavy neighborhoods than owner-occupied neighborhoods, so why not tax them to pay for the services they’re using?  Homeowners have been paying huge amount of tax and carrying the burden of public services forever – yet many of those services go to people who don’t own a home and pay property taxes.  Why is that fair?  I say tax them and the problem will be solved.

Also, if they’re getting a ‘renter’s credit’ then how is that fair?  Get rid of the renter’s credit and make them pay their fair share.

Finally – this gets to the heart of how we can solve California’s budget woes: tax the poor.

If we tax the rich, they’ll leave! Local stores like French Laundry will layoff thousands. But if we tax the poor, they’ll leave! And then we won’t have poor people to support, or to look at!

Win-win!

Uh oh… there’s a dissenting view on the site:

Tuesday, 2/02/2010 – 10:25 a.m. PST — Sick of Prop 13!
JBeez

My neighbors bought their house 30 years ago during a time when home values were more in line with salaries. Now, they are only paying $1700 a year in taxes receiving a pention and sucking from Social Security that I may never see! How are they contributing to our schools and other programs? I pay close to $20,000 a year in my property tax and I live right next door with a similar house. How is that fair? They are taking from our community and giving nothing back! When are we going to change Prop 13 so we can STOP taking from our children? What is wrong with CA? STOP prop 13!!! Even if we only increased their taxes by 3% this state would be in a better situation!

Three words: Socialism Loving Nazi.

It gets worse…

Tuesday, 2/02/2010 – 3:17 p.m. PST — And another thing on Prop 13
JBeez

Thank you “your daddy” and shame on you Fat Granny for making such an uneducated comment about “rich yuppies” paying too much for homes!  That is the most rediculous thing I have heard!  We are living here because we are entrepreneuers and if it weren’t for us, you wouldn’t have some of the programs that we do!  Also, as “your daddy” stated, why can’t I live in the area I grew up?  I want my kids to grow up in a nice area so I had to pay this price!  Do you realize Fat Granny and all you other people who are for prop 13 that in 1978, before prop 13 we had a surplus!  Since then, we have had to cut public services, raise other taxes (CA sales tax is amoungst the highest in the nation!), drop school funding (we went from #5 in the nation to #40 in 1985 and is still dropping), road maintenance is down and because you empty nesters wont move we now have ugly tract homes covering our east foothills to make room for new homebuyers!  You see… property taxes are how we pay for things where we live.  Because of Prop 13 limited the sales tax to 1% of the assessed value of each property; and  limited annual increases in assessed values to the lesser of 2% or the increase in the cost of living for the year, with the exception that upon the sale of a property, the assessment would be updated to the transaction price. The effects of this have been a huge impact on the well-being of Californians.  If you can’t understand what I am saying, let me explain… THAT CAUSED HOUSE PRICES TO SOAR! Not rich yuppies paying too much for homes.

Even Warren Buffett commented on the iniquities and inequities of this system and pointed out how he bought a home in CA in the early 70′s with a current market value of $4M and was only paying $2,200 a year in taxes but bought another home in that same neighborhood for half the value in the mid 90′s and was paying $14,000 a year.  His point you ask?  The tax rate on the second house — same neighborhood, same owner, same ability to pay — is roughly 10 times the rate on the first house.  The emphasis is on “the same ability to pay”!!

This might be too hard for you to understand Fat Granny so maybe you should just go eat a dougnut!

This Socialism Loving Nazi is using facts as if they’re the truth. And he has typos.

Everyone knows that facts come from the gut. And only arguments with typos are valid.

Let’s call him on it:

Tuesday, 2/02/2010 – 7:32 p.m. PST — Are you really an entrepreneuer?
dlawrence

“Entrepreneuers” like you should be ashamed of yourself – and I hope your endeavors don’t include anything related to proper spelling, or we’ll all be in a “rediculous” situation, at least those “amoungst” us who have anything to do with what your endeavors produce.  Maybe you own a “dougnut” shop and it just doesn’t matter…

Maybe you are a rich yuppie like you portend in your writing – and studies have clearly shown that most rich yuppies are stupid, so your spelling might therefore be part of your genetic disability.  In that case I’m sorry for pointing it out.  Or, maybe you just got outgrown by this area and you’re so mad that you can’t keep up with it that your brain has stopped working.

BOOYAH. You got owned! Studies show that young people are stupid.

It’s clear what the next steps are:

1. California needs to pass a proposition to tax renters and to guarantee that landlords will have increasing profits every year.

2. California needs to pass a proposition to tax poor people. Let’s drive’em out of the state for good.

3. California needs to pass a proposition to limit voting to people who own houses and are 55 years old+,

Are you with this plan? Or are you with the terrorists?

Comments (241) -- Posted by: burbed @ 5:35 am

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

June 23, 2008

Support Prop 13: Broken sewage pipes swamp San Mateo Houses

Resident wages pungent battle – Examiner.com

When 75-year-old Naomi Silverstein climbed out of bed late one night last October, she was shocked that she stepped into raw sewage.

A city sewer had backed up, and flooded her home with sludge, she said. The damage was so great that all the floors had to be replaced and walls repainted.

Her home was repaired in December, but it happened again one month later. She was standing in the shower when she heard the sewage burbling through her pipes. She ran through the house, ready to gather towels to protect her new floors. Then she looked out her window: Excrement was floating in her flooded yard.

Silverstein filed a claim this spring with the city of San Mateo to reimburse her cleanup expenses. She said she the flooding was caused by the city’s broken sewage main lines near her home on Gillis Drive. City officials rejected the claim, saying the problem was on her end. But she argues none of it would ever have happened had the city’s sewer line not flooded during the rains, and she has now filed a lawsuit against the city. In the meantime, she has taken a part-time job as an office assistant to make ends meet.

[snip]
» 20 to 25 per year: Claims received by the city about sewage backups into homes

» 30 to 40: Percent of those claims where the city accepts responsibility

» 236: Miles of sewers in San Mateo

» $2 million to $2.5 million: Amount devoted to maintaining the lines annually

» 37 million: Total cost of recommended sewer fixes

» $12 million: Amount the city is planning to spend on priority fixes

Source: City of San Mateo

Burbed reader Madhaus submitted this find. I figured it would be a good way to start off the week. This, to me, is an example of why we need to support Prop 13 more than ever. If it weren’t for Prop 13, many of these homeowners would be drowning in high property tax, and would be unable to afford paying to clean up these bursting sewage pipes. How awful would that be!

So keep on Supporting Prop 13, Californians. Otherwise, people will be unable to afford to fix problems caused by decaying infrastructure.

Comments (80) -- Posted by: burbed @ 4:51 am

May 12, 2006

Congratulations to Salinas, Santa Cruz, and Santa Rosa!

The Least Affordable Place to Live? Try Salinas – New York Times
IN 2005, the least-affordable place in the country to live, measured by the percentage of income devoted to mortgage payments, was Salinas, Calif.

The second was the Santa Cruz-Watsonville area of California.

The third? Santa Rosa-Petaluma, Calif.

In fact, California has the distinction of having the 11 least-affordable metropolitan areas in the country. One would need to go all the way down to 12th place — and across the country to the New York region’s northern suburbs — to find a non-California metropolitan area on the least-affordable list of 2005.

Congratulations! And why is California so unaffordable? Is it because it’s the most special place on earth?

Another quintessentially California issue is Proposition 13, the 1978 measure that slashed property taxes by more than 50 percent and ignited a national property tax revolution.

The measure, which was supposed to facilitate home buying, has backfired to some extent; local governments prefer that land be used for retailing rather than housing because they collect more from sales taxes than from property taxes.

“Proposition 13 is a big stop sign saying ‘no housing needed,’ ” said Peter Dreier, professor of public policy at Occidental College in Los Angeles and an author of “Place Matters: Metropolitics for the 21st Century” (University Press of Kansas, 2001). “Every municipality is engaged in a bidding war for retail — they’re battling for Wal-Mart, to keep the libraries open.”

It is unlikely that will change, Professor Dreier and others say, calling Proposition 13 “the third rail of government — it’s untouchable.”

Maybe they can build dual purpose Best Buy’s – stores during the day, houses at night. Then, instead of having a Best Buy every 5 miles (East Palo Alto, Mountain View, Sunnyvale) – we could have one every block. Everyone wins!

Click here to post a comment -- Posted by: burbed @ 5:00 am

April 30, 2006

The new American Dream: Eternal Debt

My mortgage broker friend swears to me that this is normal – that not ever paying off a mortgage is the new hotness and that it is what everyone else is doing. I guess keeping up with the Joneses means eternal servitude to Wells Fargo.

ContraCostaTimes.com | 04/30/2006 | Homeownership a struggle for many
Homeownership’s advantages, such as tax credits and rising home values, mean people can increase their loan value and have extra cash on hand for other expenses.

“In some way, you say that’s someone owns a home they can’t really afford, but it’s an investment, it’s making money for them,” Lawson said. “It’s a big asset, it’s a big chunk of money that keeps going up every year.”

For some consumers, homeownership is as likely an option as winning the lottery.

“In California, the starter home market has really disappeared,” said Tamara Draut, author of “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead.”

Younger adults are struggling to make ends meet, Draut said, because many have student loans and start with low wages, which make it hard for them to save and build wealth.

“Definitely, this generation has resigned itself to live in debt to live in a middle-class lifestyle,” she said. Many consumers are comfortable with debt, but too much debt leaves people vulnerable, living paycheck to paycheck.

Some homeowners take advantage of rising property values to take on more debt and use the influx of cash to pay other debts, such as credit cards.

“The market keeps bailing people out of trouble,” Lawson said. “Because people don’t really get in too bad of position, they never really learn the lesson, and a year later they turn around and get themselves in the exact same spot.”

[snip]

Deborah Bennett considers herself lucky — she bought her home in Pleasanton years ago, and her career as a computer scientist has provided steady, well-paid work.

The 59-year-old said she goes on the vacations she wants and buys what she wants.

“I feel sorry for the people who (are) just coming in,” Bennett said. “I have lived here since ’68.”

This isn’t surprising though – the California real estate is designed to as a massive transfer of wealth (meaning: future earnings) to the previous generation. Case in point? Prop 13.

(Thanks to Marin Real Estate Bubble for this find.)

Comments (3) -- Posted by: burbed @ 2:42 pm

March 22, 2006

Getting busted for -GOING- to school… Residency Verification

So recently, all Sunnyvale (and possibly Cupertino) residents got a flyer from the Fremont Union High School District highlighting this:

Ah yes… in most places, you get busted for cutting school. In the Bay Area, you’re supposed to drop a dime on those who are going to the wrong school.

Considering that the median condo in Santa Clara is $500,000, and that the median home is $723,500 these days… isn’t it kind of strange that parents are pulling all sorts of shenanigans to get their kids into a better school?

Sure… maybe you bought a house in a cheaper neighborhood… like… only $600,000. At that price shouldn’t you get a school that you’re proud of? Instead of sneaking your kids somewhere else?

And why the crackdown anyway? The median home price of Sunnyvale-Cupertino ranges from $655,000-$920,000.

This explains it:

financialcrisis.png

Of course! The local community where median home prices ranges from $655,000-$920,000 is having a financial crisis. Better budget an additional $15,000 a year to send your kids to private K-12!

Only in California.

Thank you Proposition 13.

Update 4/18: Some people have linked to this saying that this is due to illegal immigration. My sources say that it is not necessarily the case – that even citizens do it. Let’s say you own a house in East Palo Alto – wouldn’t you rather your child go to… say Gunn instead?

Comments (1) -- Posted by: burbed @ 5:00 am