Home prices UP nearly 2% nationally…..once again frustrating crash predictors.

[JeffKeryk]

Does the house do more now that its worth 2M vs $330K?

If you were to sell your house would you be able to buy a place down the street for less? I doubt it.

I assume your $5K tax bill is due to homestead / tax cap. How much would tax bill be for a new owner. My guess - 1% so about $20K? How much has your home-owners insurance increased. Those are all part of the reason that rent is so much.

Also, $5K a month or $60K a year is super cheap for a rental under those conditions. Most landlords would lose money unless they had purchased years ago. Taxes and insurance by itself would eat up half that $60K. The remaining $30K means a 1.5% return on capital. T-bills still pay 4.33%.

So the fact your house is now $2M is sort of worthless to you, unless you plan to move to South Carolina .

My house is probably the cheapest on the block and I live in the poor part of our town. If I sold it, I would live in one of our other homes.
Yes, property taxes are based on purchase price and can only modify slightly. Jarvis-Gann Act.

Insurance is pretty low; remember the house ain't worth much. It's the land.
Our house is worth a ton to me monthly because I pay no mortgage, rent, etc. My energy bills are Uber cheap due to solar; I even fuel the Tesla which saves $150 per month in gasoline.

My investment in this house was not so much to make money; rather it was a hedge against living cost inflation. Being homeless sets your priorities (at least mine); I never wanted to be homeless again. If everything else went south at least I had a roof over my head.

That is worth a lot.

 

[alarmguy]

Housing price collapse didn’t happen yet.
Just because homeowners lower prices from their unrealistic high asking price doesn’t it mean the housing prices are collapsing.

It just means homeowners perception of rising prices have flattened
This is great news for those who want house prices to stabilize as well as asking prices get lowered

 

[JeffKeryk]

Housing price collapse didn’t happen yet.
Just because homeowners lower prices from their unrealistic high asking price doesn’t it mean the housing prices are collapsing.

It just means homeowners perception of rising prices have flattened
This is great news for those who want house prices to stabilize as well as asking prices get lowered

Spot on. Now, some areas hole their value better than others, buy yes the ramp seems to have at least flattened.

 

[Arc]

If who we vote into office is any indication of our values/morale (which it is), this statement is false.

True.
Stats have indicated that folks these days are far wealthier than they have ever been.

A good decent God fearing man doesn't want to be a politician.

 

[slo town]

Does the house do more now that its worth 2M vs $330K?

If you were to sell your house would you be able to buy a place down the street for less? I doubt it.

I assume your $5K tax bill is due to homestead / tax cap. How much would tax bill be for a new owner. My guess - 1% so about $20K? How much has your home-owners insurance increased. Those are all part of the reason that rent is so much.

I'm a lifetime California resident who has owned homes in Cali since 1976. I can speak knowingly about this subject.

The reason @JeffKeryk property taxes are so inexpensive relative to the value of his home is because Prop 13 limits property tax increases to 2% a year. Because @JeffKeryk bought his home for $330K, he pays property taxes based on that purchase price. His property taxes can only increase 2% a year from the original purchase price.

A bit of Cali history that I witnessed with my own eyes... Home price inflation in California became so out of control in the early '70s (dollar taken off the gold standard); people, families, and even 3rd, 4th or 5th generation family members were losing family homes and properties because of their inability to pay the huge, yearly property tax increases. California Prop 13 was passed in 1978 because soaring home prices caused massive property tax increases, which caused people to lose their homes - even fully paid off homes - to government foreclosure.

The state itself has a 1% property tax rate. On top of that is the tax that the city or town add, usually about 0.5% more. A property tax rate of 1.5% of the assessed value is pretty much the average in California. The value of a California home is assessed yearly by the county tax assessor and the home's property taxes are adjusted accordingly - but the tax bill itself can go up no more than 2%, even if the new assessed value of the home increased by more than 2%.

There is important "however" in Prop 13. The Great Recession saw the assessed value of our home drop by a third, which in turn lowered our property taxes. However, the long term 2% trend line was still the long term measure and remained the basis of our maximum allowable tax rate based on our original purchase price.

In instances where property values declined during the GR, they are allowed snap back to the original 2% trend line without limits. Ten years after the GR our property taxes had doubled - a huge percentage increase - but they could not exceed that of the original 2% trend line.

One of the consequences of Prop 13 is that two identical homes might have two radically different property taxes. Take @JeffKeryk home for example. He bought it for $330K. Assuming 1.5% would be a tax of $4950. His tax bill is limited to 2% a year, so assume he's paying $6K or $7K now (figure it out on a spreadsheet if you want).

But let's say there is an identical house next door to @JeffKeryk and someone buys it for $3M (entirely possible in Los Gatos - I lived most of my life there. LG is expensive for a reason). That person's property tax - for the same home - would be $45K per year!

I hope this explains things. I know this tax law well. Ask me any questions you may have.

Scott

 

[SC Maintenance]

I'm a lifetime California resident who has owned homes in Cali since 1976. I can speak knowingly about this subject.

The reason @JeffKeryk property taxes are so inexpensive relative to the value of his home is because Prop 13 limits property tax increases to 2% a year. Because @JeffKeryk bought his home for $330K, he pays property taxes based on that purchase price. His property taxes can only increase 2% a year from the original purchase price.

A bit of Cali history that I witnessed with my own eyes... Home price inflation in California became so out of control in the early '70s (dollar taken off the gold standard); people, families, and even 3rd, 4th or 5th generation family members were losing family homes and properties because of their inability to pay the huge, yearly property tax increases. California Prop 13 was passed in 1978 because soaring home prices caused massive property tax increases, which caused people to lose their homes - even fully paid off homes - to government foreclosure.

The state itself has a 1% property tax rate. On top of that is the tax that the city or town add, usually about 0.5% more. A property tax rate of 1.5% of the assessed value is pretty much the average in California. The value of a California home is assessed yearly by the county tax assessor and the home's property taxes are adjusted accordingly - but the tax bill itself can go up no more than 2%, even if the new assessed value of the home increased by over 2%.

There is important "however" in Prop 13. The Great Recession saw the assessed value of our home drop by a third, which in turn lowered our property taxes. However, the long term 2% trend line was still the long term measure and remained the basis of our maximum allowable tax rate based on our original purchase price.

In instances where property values declined during the GR, they are allowed snap back to the original 2% trend line without limits. Ten years after the GR our property taxes had doubled - a huge percentage increase - but they could not exceed that of the original 2% trend line.

One of the consequences of Prop 13 is that two identical homes might have two radically different property taxes. Take @JeffKeryk home for example. He bought it for $330K. Assuming 1.5% would be a tax of $4950. His tax bill is limited to 2% a year, so assume he's paying $6K or $7K now (figure it out on a spreadsheet if you want).

But let's say there is an identical house next door to @JeffKeryk and someone buys it for $3M (entirely possible in Los Gatos - I lived most of my life there. LG is expensive for a reason). That person's property tax - for the same home - would be $45K per year!

I hope this explains things. I know this tax law well. Ask me any questions you may have.

Scott

Very insightful, thank you.

Its not much different from South Carolina. Were limited to 15% every 5 years on your primary residence then your capped for the next 5. So call it 3% a year roughly. Mine was raised last year - 15%. Still half of what the guy next door pays - he bought 8 years later in 2022.

Of course this is primary residence. If its not your primary residence the mill rate is double, and there is no cap on increases - although I do think they only re-assess every 5 years.

Friend of mine in TN has no such cap. He is always crying about taxes. I keep telling him to move but then he cries he would have to pay income tax. No free lunch anywhere.

 

[wavinwayne]

Home prices in the town where I work (Huntsville, AL) are likely to climb soon, since the President announced the relocation of Space Command from Colorado to Huntsville. Inventory is already thin here due to the recent influx of new people. This place is growing like crazy.

 

[slo town]

Home prices in the town where I work (Huntsville, AL) are likely to climb soon, since the President announced the relocation of Space Command from Colorado to Huntsville. Inventory is already thin here due to the recent influx of new people. This place is growing like crazy.

I urge Alabama citizens to see that something like California Prop 13 is passed in your area! The irony is that the California newcomers in your state and others likely enjoyed the benefits of Prop 13, but their arrival and having all that California money is going to destroy whatever property tax affordability you once had.

Prop 13 was passed in a different political era in California. Those in control now want to eliminate Prop 13 protections. If that were to happen I think it would cause California real estate to make a giant sucking sound while it cratered. But maybe that would be a good thing.....?

Scott

 

[ArrestMeRedZ]

... No free lunch anywhere.

Nevada. Free lunch here. Californians pay all our taxes through casino winnings taxes.

 

[2heeldrive]

I'm a lifetime California resident who has owned homes in Cali since 1976. I can speak knowingly about this subject.

The reason @JeffKeryk property taxes are so inexpensive relative to the value of his home is because Prop 13 limits property tax increases to 2% a year. Because @JeffKeryk bought his home for $330K, he pays property taxes based on that purchase price. His property taxes can only increase 2% a year from the original purchase price.

A bit of Cali history that I witnessed with my own eyes... Home price inflation in California became so out of control in the early '70s (dollar taken off the gold standard); people, families, and even 3rd, 4th or 5th generation family members were losing family homes and properties because of their inability to pay the huge, yearly property tax increases. California Prop 13 was passed in 1978 because soaring home prices caused massive property tax increases, which caused people to lose their homes - even fully paid off homes - to government foreclosure.

The state itself has a 1% property tax rate. On top of that is the tax that the city or town add, usually about 0.5% more. A property tax rate of 1.5% of the assessed value is pretty much the average in California. The value of a California home is assessed yearly by the county tax assessor and the home's property taxes are adjusted accordingly - but the tax bill itself can go up no more than 2%, even if the new assessed value of the home increased by more than 2%.

There is important "however" in Prop 13. The Great Recession saw the assessed value of our home drop by a third, which in turn lowered our property taxes. However, the long term 2% trend line was still the long term measure and remained the basis of our maximum allowable tax rate based on our original purchase price.

In instances where property values declined during the GR, they are allowed snap back to the original 2% trend line without limits. Ten years after the GR our property taxes had doubled - a huge percentage increase - but they could not exceed that of the original 2% trend line.

One of the consequences of Prop 13 is that two identical homes might have two radically different property taxes. Take @JeffKeryk home for example. He bought it for $330K. Assuming 1.5% would be a tax of $4950. His tax bill is limited to 2% a year, so assume he's paying $6K or $7K now (figure it out on a spreadsheet if you want).

But let's say there is an identical house next door to @JeffKeryk and someone buys it for $3M (entirely possible in Los Gatos - I lived most of my life there. LG is expensive for a reason). That person's property tax - for the same home - would be $45K per year!

I hope this explains things. I know this tax law well. Ask me any questions you may have.

Scott

I guess if they can afford a $3M house, they can afford the property tax too. It's not like they don't know about it.

I'm surprised the California politicians haven't abolished prop 13. They are probably looking at $Billions of additional revenue that is just out of their reach. The politicians around here salivate over rising property values and the resulting increase in property tax receipts.

 

[slo town]

Californians pay all our taxes through casino winnings taxes.

As a Californian, all I can say is "good for you guys". The wealth migrating from California and New York is destroying the financial balance of the other 48.

Scott

 

[ArrestMeRedZ]

...I'm surprised the California politicians haven't abolished prop 13. They are probably looking at $Billions of additional revenue that is just out of their reach. The politicians around here salivate over rising property values and the resulting increase in property tax receipts.

Oh, they have tried and tried. Even resorted to trying to have the courts overturn it. The problem is that it was voted in by the people in a ballot initiative. They can't overturn it without the voters, and that will never happen.

 

[slo town]

I'm surprised the California politicians haven't abolished prop 13. They are probably looking at $Billions of additional revenue that is just out of their reach. The politicians around here salivate over rising property values and the resulting increase in property tax receipts.

In today's California government there is constant talk of abolishing Prop 13. At one time there may have been even more support for this, but I think it's waned a bit now.

The free money inflationary period that began in 2020 now sees relatively new homeowners being at risk if Prop 13 were abolished. The attitude used to be "screw the old people who've lived in their homes forever". But now, if Prop 13 were to be eliminated, it's going negatively affect younger people who bought their home just 5 years ago.

Scott

 

[GON]

In today's California government there is constant talk of abolishing Prop 13. At one time there may have been even more support for this, but I think it's waned a bit now.

The free money inflationary period that began in 2020 now sees relatively new homeowners being at risk if Prop 13 were abolished. The attitude used to be "screw the old people who've lived in their homes forever". But now, if Prop 13 were to be eliminated, it's going negatively affect younger people who bought their home just 5 years ago.

Scott

Scott, what incentive does a homeowner protected under prop 13 have to fight state of California (over) spending?

Is it disparaged treatment for two homeowners, same size home, same size lot, in same sub division to pay very different amount of annual property taxes?

 

[SC Maintenance]

Scott, what incentive does a homeowner protected under prop 13 have to fight state of California (over) spending?

Is it disparaged treatment for two homeowners, same size home, same size lot, in same sub division to pay very different amount of annual property taxes?

It does seem bias. However of course the idea of being taxed based on property value is dis-proportionate on its face. Does someone use twice the services because there home is in a better end of town? They likely use less services?

 

[CKN]

I lived in California when this passed. Here is the bottom line-many, many people were on the verge of losing their homes due to taxes, specially the elderly.
If you move in to a new home-the taxes are not a surprise. And I believe there are circumstances where you keep your old tax base.

https://assessor.saccounty.gov/LowerMyTaxes/BaseYearValueTransfers/Pages/default.aspx

 

[Dave Hess]

Melody Wright on YouTube talks about all the red flag warnings that all media are ignoring about non payment of mortgages.

Tons of Loan Loss Mitigation programs to keep non paying homesowners in their properties.

 

[CKN]

Melody Wright on YouTube talks about all the red flag warnings that all media are ignoring about non payment of mortgages.

Tons of Loan Loss Mitigation programs to keep non paying homesowners in their properties.

And yea the used car market is going to crash as well. Nonsense. Another Youtube expert-OK. There are Youtubers that have said property is going to crash for years-and it hasn't happened.

 

[slo town]

Scott, what incentive does a homeowner protected under prop 13 have to fight state of California (over) spending?

Is it disparaged treatment for two homeowners, same size home, same size lot, in same sub division to pay very different amount of annual property taxes?

1) IMO, all self sustaining California residents should try and insulate themselves from California's overspending. Prop 13 is a means to accomplish that, which is the very reason California's current political orientation wants to abolish it.
2) When a person buys a home they know how much the property taxes are and budget their home purchase accordingly. Maybe...

In states without Prop 13, how can a person budget home ownership costs when property taxes may double or triple in just a few year's time because a bunch of wealthy California or New Yorkers move to town and disrupt historical home prices?

Remember when there was a proposal to tax unrealized capital gains on stocks still owned but not sold? Remember Wall Street's uproar over that? Isn't taxing a homeowner based on unrealized gains on a home they aren't selling the same thing?

Scott

 

[KrisZ]

And yea the used car market is going to crash as well. Nonsense. Another Youtube expert-OK. There are Youtubers that have said property is going to crash for years-and it hasn't happened.

Eventually it's bound to happen, but at what scale and when we don't know.

But I agree about the youtube "experts" predicting an imminent crash. Nothing but click bait.