[quote=CA renter]How are they subsidizing me? I’m paying full, market-rate property taxes.
Yes, my long-time LL was an original owner, and was kind enough to “share” the benefit of their Prop 13 subsidy with us by keeping us at below-market rents (started at market rate, and was raised after the first year, per the lease agreement, and then once by us over the years). But that’s because we were excellent tenants who paid rent 6-12 months in advance, handled (and paid for) all of the small repairs/maintenance, and many of the more expensive repair/maintenance items and upgrades…and raised our own rent in order to control the increase and maintain goodwill with the LL.
And yes, an increase in property taxes would most definitely make me reconsider holding onto a property that was older (and in need of more maintenance), and worth a lot of money. This is especially true if other investments begin to look relatively more lucrative given the carrying costs — including the higher property taxes — and risks of keeping the home vs. more passive investments.
We are watching this closely because we’re probably going to inherit a couple of properties in desirable areas in the future. One of these is paid-off, and has been in the family for a couple of generations. Changes to Prop 13 for investment properties will absolutely factor into our decision-making process.
BTW, never said it would prevent current prospective landlords from buying, mostly just the long-time owners who are currently paying well below-market property taxes. Of course, in the desirable areas, there are very few “new” landlords because it’s rare for rents to cover the carrying costs of owning in these higher-cost areas, especially if the deal is financed.[/quote]They’re not subsidizing you right now because you just bought. Just like they’re not subsidizing the new landlord. But going forward, you’ll be paying less and less of your fair share, assuming housing price goes up more than 2% on average each year. You can easily go through all the older neighborhood and see people paying only a few hundred/year on a 1/2 million dollar house. Do you not think somehow that’s not a subsidy?
If you don’t think it prevent current prospective landlord, then what make you think it would increase the home ownership? FYI, those 45% who are renting would not be looking in the desirable areas, because they can’t even afford the cheaper area. So, the supply you’re upset for not being turning over will not help the current renters becoming home owners. The only way you can help those renters become home owners is to give them 0% down option and a drastically reduced price. If we see a drastically reduced price, you’ll again see plenty of people jumping in to be landlord, unless you somehow see a drastically reduced rent to go w/ that drastically reduced price. Logic is telling me what you’re proposing isn’t going to do what you said it would.
FYI, if I was given a paid off $1M house and my property tax was $1k and will go to $11k/year. I would no way in hell sell that. A few reason would be, if it’s a $1M house today, then it probably mean it’s in a desirable area and the area is all built out. So, I’m keeping it for future appreciation. Secondly, that $1M is probably renting for >$3k/month, so, although my cost went from $100/month to $1k/month because of taxes, it’s still WELL BELOW rent. So, I’m still making good profit. Thirdly, if a house has been in my family for many generation, why would I want be the duche generation that destroy that multigenerational legacy. So, while you might sell, I’m sure there are plenty who wouldn’t.
