While that sucks, that sort of self-correcting market pressure is in fact required for a healthy real estate market.
Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work.
It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller).
People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.
You say that's how other markets work, but I can't think of any other market where an increase in the price of something you already own can make owning it unaffordable. If I buy stocks, or gold, or a car, and it gets more valuable, I'm not taxed until I sell, right? Does the same argument hold for those?
I'm referring to other real estate markets in the country.
Also, in this case, if the price of your home appreciates, it is likely the price of other homes appreciated, so your gain may not actually amount to anything (particularly after realtor fees). Likewise, you are taxed every year on real estate.
>Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory.
People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county.
So retired people living in the Peninsula can afford to move to other areas.
What you're leaving out of the equation though is that often times people that old who have lived here forever either have their home fully or mostly paid off. Sure it likely appreciated quite a bit, but depending on their savings, they may not be able to afford a new home in the area at market rates regardless of the tax situation, especially if they are retired and on fixed income. So instead they stay in their home and don't sell. Or they pass it on to the next generation who doesn't sell.
Eh, why would they not be able to afford a new home after selling the old one? Usually when people retire they're looking for a smaller home that's easier to take care of.
Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work.
It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller).
People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.