The slew of laws California voters have approved over the years to help homeowners save money on taxes also reward them for keeping their homes off the market. The effects of those measures could have helped create the housing crisis that is now engulfing the state, according to Bloomberg.
But an initiative on November’s ballot could help change that. Proposition 5 would attempt to alleviate the problem by building on two prior initiatives passed in the 1980s. Those measures allowed buyers 55 and older to transfer their lower assessment from a home they sold to their new home, as long as the new property was of equal or lower value. The California Association of Realtors developed the initiative.
Among the culprits may be Proposition 13, which was passed in 1975. That limited property taxes to 1 percent of purchase price and capped hikes to 2 percent a year. Many older homeowners, particularly empty-nesters who may have otherwise downsized, thought twice about selling a home with a low property tax for a newer home with a much higher tax, according to Bloomberg.
Two others, Prop 58 and Prop 193 — approved in 1986 and 1996, respectively — may have also contributed. Those allow parents and grandparents to give their homes to children and grandchildren without an increase in assessed value, regardless of how much the home is appraised.
A 2016 study by the Journal of Housing Research looked at sales in San Diego County by neighborhood. It found that neighborhood turnover was lower when homes there had a lower assessment as a percentage of appraised value, according to Bloomberg.
Prop 5, the measure on November’s ballot, would allow remove that limit on pricing, and would allow buyers to transfer their assessment anywhere in the state without approval. Instead, the new assessment would equal the old one plus the difference in price. [Bloomberg] — Dennis Lynch