Is Property Tax Transfer Causing CA Real Estate Shrinkage? Or is it a Normal Economic Trend?

Despite what critics say, there is no factual data or compelling case study that supports the frail argument that the main reason for home sales shrinkage, as well as sluggish price gains that have been  consistently hampering the California real estate market, is mainly due to property tax transfer and tax relief provided by Proposition 13, with Proposition 58 and Prop 193 thrown in for good measure.

When, in fact, generic economic statistics and anecdotal data actually tells us that shrinkage in the real estate market in California is clearly an outcome of normal fluctuations, up and down, in the real estate market and more importantly, severe fluctuations in the overall economy in California. Click Here to explore this point of view, which does appear to be logical… factoring in sky-rocketing gas taxes, and the particularly high cost of living overall in California these days. And, as many realtors insist based on nothing more than opinion and bias, not the fault of families keeping their family home “in the family”.

The leveling off of home prices, economists insist, is a national trend. And a 20-city composite index as well as the National Index have been recording the smallest price gains on home sales since 2012. David Blitzer, chairman of the S&P Dow Jones Index Committee, has said, “The patterns seen in the last year or more continue: Year-over-year real property price gains in most cities are consistently shrinking. Double-digit annual gains have vanished…”

For the broad picture, Blitzer says, “The difficulty facing housing may be too-high price increases”.  Not, we must point out, the absurd notion that the blame for California real estate market shrinkage or faltering home sale prices, lies with property tax transfer, avoiding property tax reassessment, or the ability to keep parents property taxes intact, with the ability to transfer parents property taxes when inheriting property taxes associated with real property transfers. This argument simply doesn’t hold up under scrutiny.

Moreover, many of these properties in question are quite old, and, frankly, usually require quite a bit of work involving a great deal of time and money… and would certainly not be selling at the fabulously high prices many investors and other real estate professionals claim they would be. To insist otherwise raises questions regarding the grasp many of these realtors and brokers have on the reality of the residential home market in California.

The bottom line is – California real estate investors would prefer to have as many homes on the market to buy and to sell solely to increase their profits; and the brokers and

realtors that are critics of Prop 13 and Proposition 58, or Proposition 193 (involving grandparents’ property transfers to grandchildren) prefer to have more homes to sell strictly for the additional commissions… Click Here: for more on the critics of these popular tax relief initiatives.

Click Here: for more on the critics of {Not, as they insist in the media, to maintain “fairness for families looking to buy property in California”. The “fairness” argument just isn’t holding water any more… Not that it ever did.

Let us know what your thoughts and opinions are, below.  We   publish viewers’ comments, based on editorial determinations:

Proposition 13 & 58 Tax Relief Still Popular with Californians, Despite Critics

Is Proposition 13 & 58 in demand despite critics… Without hesitation, the answer is yes. On June 6, 1978, 42 years ago, California voters passed Proposition 13 with 65% of the total vote. And to this day, interestingly enough, 65% of “likely voters” in California still support this tax relief initiative.

This popular and unique property tax break immediately froze California home owners’ real estate tax rate at 1% of the assessed value of their property – i.e., the assessed value on the day they bought the property.

So if you were a California resident at that time, you clearly saw that taxes on your home and land were no longer reassessed at current market value – and no longer went up more than 2% in total. And home owners in California are fortunate enough to be benefiting from the same formula 42 years later.

Moreover, the ability local governments had to raise money for city and town running budgets, including school funding – by arbitrarily raising real estate taxes whenever they felt it was needed – was all of a sudden severely restricted. And restrictions remain popular with consumers to this day.

The only parties perhaps not so thrilled with these restrictions and everything else associated with Prop 13 are political parties motivated to destroy Proposition 13 regardless how many critical protections for commercial and industrial properties are  guaranteed by Proposition 13, not to mention raising their commercial property taxes by billions… Plus certain individuals involved within the political arm of the educational system in California… as well as conventional executives, realtors, brokers, and other functionaries involved in the real estate market.

Click Here: For More Discussion on Critics of Proposition 13, at the Taxpayers Association… and on the stability home owners, renters & businesses have from Proposition 13, being able to avoid property tax reassessment; plus the positive affect Prop 13 has on local CA government – bearing in mind robust tax revenues pouring into local government coffers since Proposition 13 was passed.

Unfortunately, these folks in the California real estate business will simply have to continue riding the merry-go-round affecting the real estate market, with up-and-down sales cycles.  Let’s face it, they have had their mega profitable bull years, and now they’ll just have to learn how to cope with a bear market for a few years.

And pinning the blame on Proposition 13 and Prop 58, as well as blaming  “elderly home owners who don’t wish to put their house on the market”, simply isn’t going to fly. The shrinking numbers of homes becoming available to buy and sell is a natural business cycle.  And that’s just the way it goes.

Proposition 13 & 58 in demand despite critics?  It certainly is…

Click here for more on polling data and the vast popularity of Prop  13 in California, among middle class and upper middle class home owners of all ages…

With so many property owners inheriting property taxes – yet urgently needing to transfer parents’ property taxes so they can keep parents property taxes the way they are, and not fall prey to egregious tax increases. Hence, that 65% to 70% approval for Proposition 13 in California will only go up, and up, as the  reality of the real job market and the real job-based economy in general becomes clearer and hits home, in stark direct contrast to the sunny unrealistic TV news stories people are subjected to every night on CNN and MSNBC and network news,  citing the “strongest economy is 50 years!” while ignoring the millions of under-employed people with PHD’s waiting on tables and bar-tending…

Or, we’re forced to listen to uninformed politicians  breathlessly decrying the “lowest unemployment numbers in decades”, based solely on how many people are signing up for unemployment checks, while completely ignoring the millions of workers no longer receiving unemployment checks, who have fallen into the cracks and disappeared off the grid.

Perceiving all this realistically, and personally experiencing the ups and downs of real estate in one of the key property states in the union, middle class Californians realize the importance of saving every dollar they can – and this is where Proposition 13 and Prop 58 and 193 step in and provide such critical, often life-saving, support in this regard.

Please feel free to provide your thoughts below.  We are always interested in your comments and ideas, and will continue to publish your interesting feedback:

CA Proposition 13 & Prop 58 Popularity Vastly Outweighs the Critics

Another feature of Proposition 13 that is popular with Californians is the fact that all state taxes – and that includes real estate taxes of course – must be approved by a majority of two-thirds (2/3) of the state legislature; and that any new “unpleasant surprises”, in other words, any proposed new taxes, even under stealth, imposed by any local city or town government, also must be approved by a confirmed vote of two-thirds (2/3).  More reasons that CA Proposition 13 popularity outweighs critics, regardless of how loud and aggressive they may be.

Naturally this type of necessary regulation, reigning in local tax-happy politicians, is obviously not going to be terribly popular with folks working in local township and city government. Just as avoiding property tax reassessment and home owners “keeping a family home in the family” is not going to please most realtors looking to place more homes on the California real estate market!

CA Proposition 13 popularity outweighs critics on all popular topics, hands down.  Whether it’s reigning in local representatives, at least where new taxes are concerned…  or being able to avoid property tax reassessment, to keep parents property taxes intact… Just so long as those particular realtors can drive their revenue numbers up, and those brokers can ramp up their commissions – that’s what’s important.  Not the will of the public.  And it looks like this conflict of interests goes all the way back to June 6, 1978; back to the beginning of this initiative.

Click Here: to take a look at how all this started, and developed through the years; and how the will of 2/3 of California voters got some control over how their homes would be taxed & not taxed!

Realtors and real estate brokers are especially not partial to Proposition 13, or Proposition 58 involving parent to child exclusion, parent to child property transfer, any type of ability to transfer parents property taxes or parent to child transfer involving a trust loan – given the slightly shrinking numbers of homes on the market to sell.

These real estate sales folks would of course prefer that all those homes remaining in the family were not so and were instead in their hands on the market for sale, and of course this involves families that have resided in the same home for decades; naturally taking advantage of Proposition 13 tax relief, and Proposition 58 property tax transfer benefits, loans to irrevocable trusts or, to put it simply, a trust loan from a trust lender familiar with loans to trusts… Naturally these realtors would prefer those homes were signed to their office, and were available to buy and sell; need we remind ourselves – at nicely inflated prices!

Naturally, local government entities with certain special interests (such as a tunnel-vision view of the CA school system), and especially motivated real estate sales professionals, are not going to be overjoyed with California home owners’ hanging on to particularly nice properties, with the ability to avoid property tax reassessment on a parent to child transfer (referred to as parent to child exclusion).   Moreover, Californians also enjoy some  very personal, family oriented benefits from Prop 13 and Proposition 58… Click here for more discussion on these personal dividends…

Of course, to be fair, we have to ask: Is Proposition 13 & 58 in demand with all age ranges and incomes, despite critics?  The polling data speaks for itself, and the answer is decidedly yes – CA Proposition 13 popularity outweighs critics with all demographic and income segments.

Without a doubt, 65% to 70% of the people residing in California enthusiastically want to keep parents’ property taxes, they want to continue to avoid property tax reassessment, and without question want to be able to transfer parents’ property taxes when facing the prospect of inheriting property taxes – anywhere in southern, northern or central California. This is a given. Or as they say in New York, “a no-brainer!”