[quote=bearishgurl]I don’t want to hear any more complaining on this forum about inventory shortages causing skyrocketing housing prices (especially in coastal markets) from people who now profess not to care about the long-term ramifications of Props 58 and 193.
I get it that if an elephant is standing right in front of you, it can be a bit “tricky” to see what is on the other side . . . to get the complete “lay of the land,” if you will, before navigating your way around it :=]
I asked two very relevant questions earlier in this thread and the fact that no one answered them or commented on them is very telling to me.
[quote=bearishgurl]Food for thought and two questions for Piggs:
If you owned a SFR in SD County in good shape which was worth $400K, it had a current tax bill of $600 per year and could fetch $1750 in monthly rent, would you ever sell it?
If you had one or two siblings and your last parent recently passed and left their principal residence in San Diego County (a SFR worth $550K) to all of you in equal shares, would you attempt to purchase your siblings’ portion from them (~$275K – $367K) to take title to use the property for a rental investment? Current assessment is $78K, resulting in a current tax bill of $850, which would carry over to any new (child or granchild) owner. Monthly rent would be $2200 – $2400.[/quote][/quote]
I can answer this because we did sell a house that was worth ~$400K — with an original assessment in the low $100K range — and could have commanded somewhere around this rent (probably higher today).
Why?
1.) Because I was the trustee/executor (and beneficiary) of the trust and needed to liquidate some holdings in order to distribute funds to multiple beneficiaries.
2.) The market was in the beginning stages of tanking (mid-2007), so I wanted to get out and realize the gains from the sale before they disappeared. For the record, it has only now reached approximately the price level that we sold it at; it dropped by about 40-50% from peak to trough when the last bubble burst.
3.) It was in an area that was a bit too far for me to manage well directly, and our kids were quite young at the time, so I was definitely not looking to add more to my plate.
For many heirs, their parents homes can be depressing places after their parents have passed away. Also, many of these older homes have a lot of deferred maintenance issues, and the kids don’t have the money, the time, or the desire to deal with it.
So, yes, there are many reasons why people sell homes that are paid off (actually, having a paid off house makes it even easier), even when they have very low assessments as a result of Prop 13. In the vast majority of cases that I’m aware of, people have sold their parents’ homes when the parents died.
Even the home we live in now was owned by an elderly lady who bought in the 1970s. The house was paid off, had a low assessment because of Prop 13, and the kids wanted/needed to sell it after she passed away. It happens all the time.
