I'm not advocating for or against, but property taxes help gov't collect on the rising value of the homes as an asset. If it went strictly income tax, they would not be capturing on the increasing value of homes.

But from the CA example, there have been major unintended consequences of relying more on income tax. They could have solved this by eliminating the trust feature or the parent-child transfer, which would turn homes over at a higher pace and reset the values quicker. But Prop 13 will never change because people would be opening themselves up to major tax increases and thus they won't do it.

I don't know what the true solution is, other than less overall spending by all different governments. Ha, like that'll ever happen.

Right, Prop 13 rewards people who have lived and stayed put within California. And at the end of the day, California is a state that has beautiful weather, but you have to make heavy compromises on literally every other dimension. COL, size and location of house, updates, transportation problems, sky high taxations, homeless camping, open drug use, and schooling costs/quality/curriculum. Every time I look at job opportunities out there its just not worth it.

You've got to absolutely make a killing to have a chance in California. And the only people who are really helping out their bottom lines are those in tech or those who own a home and have sold it. Everyone else is just treading water. I couldn't imagine trying to raise a family out there.

one MEEN Ag said:

---

Right, Prop 13 rewards people who have lived and stayed put within California. And at the end of the day, California is a state that has beautiful weather, but you have to make heavy compromises on literally every other dimension. COL, size and location of house, updates, transportation problems, sky high taxations, homeless camping, open drug use, and schooling costs/quality/curriculum. Every time I look at job opportunities out there its just not worth it.

You've got to absolutely make a killing to have a chance in California. And the only people who are really helping out their bottom lines are those in tech or those who own a home and have sold it. Everyone else is just treading water. I couldn't imagine trying to raise a family out there.

---

Pretty much spot on. I moved out there in 2000 and it was a wild fun time right out of A&M. Pretty much partied for another 5 years before the housing crisis blew everything up. I wish I had been able to afford a home right in 2000-2002, after that the cost started to sky rocket. Which is what we're seeing now but for different reasons.

And also very true people are getting pushed out of the market very quickly. TX was spared the majority of the craziness during the bubble popping, and now that another bubble is happening here it's interesting to watch people's reactions. Interest rates will have to climb to deal with this inflation, but adding to that is a changing world which is adding all sorts of other complications and bottle necks. Wife and I were talking a few weeks ago about after the next hail storm we will replace our roof. Now? That's still the plan IF there are materials.

Could we afford a new $50k roof? HELL NO.

We are at the start of what's going to be a crazy decade.

AlaskanAg99 said:

---

one MEEN Ag said:

---

Right, Prop 13 rewards people who have lived and stayed put within California. And at the end of the day, California is a state that has beautiful weather, but you have to make heavy compromises on literally every other dimension. COL, size and location of house, updates, transportation problems, sky high taxations, homeless camping, open drug use, and schooling costs/quality/curriculum. Every time I look at job opportunities out there its just not worth it.

You've got to absolutely make a killing to have a chance in California. And the only people who are really helping out their bottom lines are those in tech or those who own a home and have sold it. Everyone else is just treading water. I couldn't imagine trying to raise a family out there.

---

Pretty much spot on. I moved out there in 2000 and it was a wild fun time right out of A&M. Pretty much partied for another 5 years before the housing crisis blew everything up. I wish I had been able to afford a home right in 2000-2002, after that the cost started to sky rocket. Which is what we're seeing now but for different reasons.

And also very true people are getting pushed out of the market very quickly. TX was spared the majority of the craziness during the bubble popping, and now that another bubble is happening here it's interesting to watch people's reactions. Interest rates will have to climb to deal with this inflation, but adding to that is a changing world which is adding all sorts of other complications and bottle necks. Wife and I were talking a few weeks ago about after the next hail storm we will replace our roof. Now? That's still the plan IF there are materials.

Could we afford a new $50k roof? HELL NO.

We are at the start of what's going to be a crazy decade.

---

Yup.

I've got a buddy who works a refinery. He sends me pictures of stuff thats from the 70's-80s that has broken now that shouldn't have broken yet. The root cause is almost always not installing the correct materials or dimensions at the time. It was all just so expensive and the proper materials were so scarce you had no idea what it was going to cost the next week. So you just bought what you could, slapped it together, and made it maintenance problem for another day.

When I first heard about this, I couldn't understand it. But now I do. We're going to start seeing shrinkflation on all materials. Shingles gonna get thinner. Standing seam metal roofs as well. Product quality is about to reach new lows.

Imo if the home prices and rents continue to increase significantly those in the "middle class" who don't currently own are ****ed, and there won't be a middle class much longer or an "American dream". Myself being one of them. I should've bought a house 2-3 yrs ago but at the brink of divorce that wouldn't have been a wise choice. Now I'm basically priced out of my area and anywhere within 30-45mins unless it's in a bad area. Houses in my current neighborhood are going for obscene amounts and they're not worth it at all.

I was trying to calculate hypothetical property taxes to get an idea of a monthly mortgage price with the taxes rolled into it and the couple of houses I used the monthly property tax was about 40% of the principal.

I'm ridiculously fortunate with what I have now, but I also want to get out of the house because of the bad juju associated with the house.

Tax rates should drop substantially with property value appreciation. It won't in blue counties because they'll find ways to waste the additional tax revenue.

One of the reasons I'm leaving harris county asap.

I know. I should have wrote steals not takes, but it is what I meant.

Regarding Costs discussion on page 1 - Are we in a Cost Bubble? Supply chain issues and labor shortage has fed greatly into increased costs. Once (If?) these issues normalize the costs we see today may essentially flatline or maybe decrease. Assuming a relationship between Cost and Value, those with a cost basis based on today's costs may see their values follow s similar trend. Regarding investment property, a property constructed at a higher cost basis would have a difficult time competing and making debt service, or generating targeted returns, as compared to a similar newer (or older) properties constructed at a lower cost basis. I recognize the relationship between Cost and Value, but I also see risk in constructing or buying if the rationale is largely based on current costs. Proceed with caution.

It's hard to predict anything, but this euphoria in housing can't last forever. Right now its insanity, but its been a sellers market for almost a decade now, its the last two years that's made this a much bigger problem on the question of how it will impact our middle class. If rates keep going up, there will be a tipping point imo.

The only silver lining here is the constant 10% appreciations dropped my PMI 7 years early

awesome. did you need to get an appraisal or did they go off CAD roles? That happened to me too. PMI gone about 2 years in to my loan.

Sea Speed said:

---

The more I think about it, the more I realize property tax is evil. I am fully in favor of changing the way the state government takes my money.

---

I became friends with a guy who worked for the State Comptroller's Office for many years. He told me that the fairest way to tax people and the best way for the State "obtain" funds is:

1/3 from property taxes
1/3 from a state income tax
1/3 from a sales tax

Sea Speed said:

---

awesome. did you need to get an appraisal or did they go off CAD roles? That happened to me too. PMI gone about 2 years in to my loan.

---

Yeah I had to pay for an appraisal. It also took like 6 weeks because they had so many requests to drop PMI

Diggity said:

---

one MEEN Ag said:

---

94chem said:

---

Good point. Counter to the way most of us were raised. Take on as much debt as you can because the interest rate almost forces you to do so.

---

This is similar to what is also causing a logjam of people never moving once they buy in california. The tax rate of your home is locked in when you purchase. So the longer you hold onto your home, the better a deal it is. If you ever move, the rate resets. I've heard of stories of people's parents buying a home in the 1960-70s and are still paying just $400 a year in property taxes. If they move to even just across the street it'll market true up to $40,000.

I wouldn't be surprised if California has the highest rates of dead grandmothers stuffed into closets because of this.

---

Looks like tax assessments are capped at 2% a year unless you do a major remodel or sell.

Also, the lower tax assessment can be passed on to unlimited descendants so granny's corpse can be buried now.

---

I lived in Northern California (Mountain View) for 8 years. I ran into a family at a park in Palo Alto. The wife was a teacher and the dad worked an average job yet they owned a house blocks from downtown Palo Alto.

They inherited the house. His grand parents bought the house and they kept it in the family.

Medaggie said:

---

I do not see how prices do not keep going up if prices for land/new build/material keeps going up.

If a 2k sq foot house today went for 200K and next year, building a new 2k sqft home in the same neighborhood costs 400K then wouldn't it make sense that prices will go up?

More fed money being pumped into economy = inflation = higher costs of goods

---

The principle of substitution generally states that a person isn't willing to pay more for a home than an equally desirable substitute property.

Limited inventory of active listings also influences prices in an upward direction.

Low interest rates usually influence prices in an upward direction, but not always.

Cost of materials & labor increasing will obviously send prices for new construction upwards; and as value is a function of depreciated cost, the cost new of a home & subsequent purchase price should be very close to market value, but there are exceptions.

I think most reasonable estimates put 30yr fixed rates at ~4.5% in the next 12 months, which is double some of the lower rates I have seen...imho I think the steep rise in median sale price will correct as interest rates increase, but not as quickly as they otherwise would due to the cost increases in labor & materials...but who the hell knows anymore, I'm just along for the ride at this point.

one MEEN Ag said:

---

94chem said:

---

Quote:

---

If you sell now, prices and rates will be higher whenever you finally find something to buy.

---

This is the "other shoe." People locked in at ~3% on 30 year mortgages won't be able to move if the rates are substantially higher.

If I decided for some unimportant reason to sell my house and move into the identical home next door, I still have get a mortgage on the new home, I'm gonna seriously reconsider if the interest rate on the new loan is double what it was.

---

One step further, I'm locked in at 2% 15 year. I'm not selling this home even if I move out of state. Its not that I can't move, its that I got such a good deal I'd rather put up with the headaches of renting, let it pay down the mortgage, and keep the asset.

Low interest rates don't force our hand, they make it so attractive you don't have to give up your home.

---

Me and the wife are in a similar situation. Blessed to be in a position where we just bought a lot for House #2 and there is no financial need to sell House #1 which we are living in right now while we build on the new lot. With a 30-year and low 3% interest rate, our starter house which is in a nice area of Greater Houston becomes an asset that we likely won't want to get rid of and would prefer to rent out.

Apartments near our house are going for 35% more than what my mortgage is on house #1.

Edit: 35% more than what my PITI is on house number #1.

Same situation and I think a lot of people are. We modified our mortgage to reamortize over 30 years and dropped the rate to 2.5% fixed. I'm never giving up that loan.

Quote:

---

We modified our mortgage to reamortize over 30 years and dropped the rate to 2.5% fixed. I'm never giving up that loan.

---

I was able to refinance over 15 years and dropped the rate to 2.25%. My monthly mortgage stayed about the same.

What about the Keebler Elf mumbling unintelligibly in our White House? As long as Mexican drug cartels are leaving dismembered bodies on the border, desperate Afghans are falling from C130s, and communist Russian and Chinese leaders have no fear of America, we've got much bigger problems than housing prices.