It's amazing how little has changed in recent years in LA. The massive downzoning of the 1980s had its effect: prevent efficient land use, and channel money into the hands of landlords and homeowners from all newcomers.
LA is a ridiculously unaffordable place to live, not because it's nice, but because of an artificial shortage of built space, due to a monopoly on the permission to build.
>The massive downzoning of the 1980s...
To put numbers to this for those who aren't aware, LA was zoned for roughly 10 million people in the 1960s and by the 1980s it was zoned for roughly 4 million. It's part of the reason the city has had population growth slow to a crawl. It was decided some 40 plus years ago that LA should stay under 4 million people, so it has even til today. But the number of people who want to live in LA is constantly growing, so housing prices continue to rise and as a result lower income people are slowly but surely being pushed out of their homes and out of the city entirely.
Same story in San Francisco of course, and the rest of the US pretty much aside from a few cities in recent years.
At least we have parking lots. Ah, so many parking lots
There's still Houston but that's it as far as I know.
My impression of LA when I got there was that I would never live there, even in the nicest spots. Which confirms my intuition that the richest have no taste.
Also it’s an American city made for cars so it doesn’t help me to like it.
Interesting, I did not know that. Sure helped create the massive urban sprawl that LA is today, I mean it's basically one city all the way to San Bernardino, almost 100 km to the east.
And don’t forget prop 13, there’s negative incentive for property to change hands and develop.
Do people really think that if we revoked Prop 13 that other taxes would go down with the new money from property taxes?
Or do we think that property taxes would go up while other taxes stay put?
This feels like the argument at play when people criticize Prop 13. Not saying it’s good but California hasn’t ever cut taxes meaningfully and I’m not convinced raising property taxes would solve anything. California would still be expensive to live in.
Multiple good things would happen without prop 13:
People would move more instead of being locked in to a low effective property tax.
The tax burden would be much fairer: instead of the police and schools being funded by newcomers, everyone would be contributing their fair share to fund the city, instead of the longest tenure residents mooching off the rest of us.
Unproductive use of land would be discouraged. If a tract became highly desirable, it would be expensive to let it sit in an unproductive form
Cities could raise taxes as high as their residents wanted them to be, instead of being limited by the opinions of non-residents. Some people want to have better funded police and schools, and local government would actually be allowed to deliver that. Citizens who didnt want to live in expensive cities could vote with their feet to cheaper towns.
"People would move more instead of being locked in to a low effective property tax." - this just means that older and retired people would get kicked out of stable living situations, driven by property tax assessments. And housing prices would be just as high as with prop 13.
The bad part about prop 13, is that it never should have applied to anything other than primary residences of people. Having it apply to rental & commercial properties is what warps the market.
Cities should be cutting their police budgets - most small towns have nearly 50% of the budgets tied up in police. All while there has been a multi-decade decrease in crime.
Under Proposition 19, some people can still move without penalty, as long as they're over age 55, and move to a new property located in California.
https://www.ocassessor.gov/tax-saving-programs/savings-senio...
I've never heard anybody say anything like that when criticizing prop 13. It usually has more to do with housing prices and the fact that 2 people with the same home value should pay the same in property taxes. If you wanted to create a hereditary landed gentry, it would be hard to come up with a better policy to achieve that than prop 13.
To keep tax revenue equal, property taxes for those who purchased recently would go down, and property taxes for those who’d purchased in the past would go up.
The housing market would become more liquid because people would move out of homes if their values rose too much and they could no longer afford the taxes. This would be a shock initially, but over time it would just be seen as part of life like it is in other areas: mostly, empty nesters would downsize to a cheaper, smaller house with lower taxes. Gentrification might be more problematic though.
In practice, probably some phased rebalancing would have to happen to avoid the sudden economic shock, but, politics notwithstanding, it’s not crazy to suggest it could be done and that the end state might be overall ‘better’ for most people. The end state would be how property taxes work almost everywhere else.
Prop 13 massively distorts the real estate market and creates some strong incentives for home owners. Those distortions and incentives would go away regardless of whether abolishing Prop 13 led to a net increase or decrease in total taxes.
It would increase liquidity in the housing market.
Do you own your home? Here in Ca? You know that property tax is 1.4ish % and goes up by 2% a year, pretty much no matter what?
On a 1.5M house, that's starting at 17K a year and each year it goes up 2%, so it compounds.
That's 17k a year Just to stay in your own home.
People who don't pay property taxes here in ca, act like prop 13 means zero property taxes
Yes, your property tax is high ($17k) because of prop 13 - you are effectively subsidizing others who have sat on their residential and commercial property for 20-30+ years who are paying 25-50% of what you pay for any similar property in the same calendar year!
Your property tax goes up by 2% of your , guessing (relatively recent?) purchase price, and theirs goes up 2% of a much smaller base due to prop 13.
They have no incentive to move, downgrade. And they often use trusts to pass this tax base down to their kids. It’s feels like icky European feudalism.
Again i’m emphasizing that this goes for both residential and commercial buildings.
I agree with everything you’ve said, but one clarification: you don’t even need a trust to pass the tax break down to your kid when you die. Sure, a trust can streamline that process, but it’s not required. At least everyone lucky enough to inherit benefits, not just those whose parents had the foresight (and the means) to create a trust.
> It’s feels like icky European feudalism.
Pairs nicely with the permitting processes that basically boil down to "thou shalt pay the guild"
> Do you own your home? Here in Ca?
Yes and yes.
And I pay 10K less a year than my neighbor for the same value house. And I pay 10K more a year than my other neighbor.
I get a huge advantage from Prop 13, but I still think it needs to get replaced with a much fairer system.
That is close to the average rate of inflation, though. Doesn't seem unreasonable to me.
They go up much more than 2% in literally every other state, California is the cheapest place to own property for >10 years.
You can argue against property taxes entirely, but Prop 13 definitely means that families, businesses, and all property owners work very hard to never sell, never reassess, and never change their tax rate.
You realize government services that support that home cost money, right? You act like if you own your home that your living there doesn’t impose any costs on your neighbors.
I do own a house in California and I pay closer to $30k in property taxes. The previous owners of my house paid $7k. My neighbor—who has a bigger, more expensive house!—pays $9k.
It's pretty clear that this kind of tax policy is going to totally mess up the housing market. It's not the only factor, but it's a big one.
While I think the goal of Prop 13 is laudable, a few reforms would cut some of the biggest downsides: it should be be for primary residences, where the named owner is the primary resident.
This would eliminate the tax break for commercial property, prevent it from being abused for second homes, and avoid the property trust shenanigans that have allowed some properties to change hands without a reset in the taxes paid.
I’m not sure why people are downvoting (without commenting), but I agree.
The main selling point of prop13 was a real problem: rapidly increasing values were driving up taxes so fast that long time residents (of modest means) were being forced out.
I don’t think it’s entirely unreasonable to have some policy that attempts to protect people living in their primary residence from rapid tax increases they can’t afford.
It really isn't. You could—and we did!—solve that problem by letting people defer property tax payments or borrow against their equity. California literally has a property tax postponment program for seniors. If we just wanted to keep people from being pushed out of their homes by rising house prices, we'd just expand that program.
The point of Prop 13 is to let people have their cake and eat it too: you get to keep the equity you gain from increased housing prices, but not pay the property tax that comes with them.
With postponement you then can get the opposite problem of people getting stuck in their houses because if they sold they would have a huge deferred tax.
The approach in Washington works well. There is a senior property tax exemption based on age and disposable income. To qualify in King County (where Seattle is) in 2027 you need to be 61+ and have a household disposable income under $101k.
That gets you (1) a freeze on the assessed value for taxes equal to the current assessed value, and (2) an exemption from the statewide school tax and from "excess levies" (basically city and county levies that are voted on).
If income is under between $76k and $89k they also exclude from tax 45% of your assessed value or $70k, whichever is larger, but not more than $200k.
If income is below $76k they exclude 80% of your assessed value or $80k, which is larger.
The income levels are based on median county household income so vary from county to county.
Disposable income is basically everything that goes into AGI plus a list of other things (like any Social Security that is not already in AGI). There are also a bunch of deductions, mostly medical including Medicare premiums, with a $7500 deduction you can elect to take instead of taking any of those specific deduction. Income includes all adults living in the house.
In my county the levies that are not "excess levies" are county roads, sheriff, conservation, mental health, veterans relief, fire district stuff, public utility district stuff, and regional library. The "excess levies" are a couple of school district levies. Overall the excess levies are about 28% of the property taxes in my county. The statewide school levy that is exempt is another 10%, so the bottom line is that the property tax rate for seniors under the income limit is about 60% of the non-senior rate.
So people were getting so wealthy that they couldn't pay the property tax on their wealth. Yes. The problem is, if you let them decide to tax other people instead of themselves for the spending they themselves approve, they will.
I don’t think you read my comment very carefully
What if I did?
That makes it sound like the increase was due to some inexorable natural force. California's per capita budget is over twice Arizona's, and they're running a huge deficit on top of that. If taxes are too high, cut taxes. If that means you need to cut spending, cut spending. But don't play "hey, let's tax the other guy!" games and expect that to work.
A lot of this also comes down to prohibiting growth. In Seattle, every time we build a new building, everyone else's property tax payments decrease. High growth years lead to lower bills. The same would work in California, they just don't build much of anything because they've made it nearly impossible to.
You're not wrong, but the irony of positioning Seattle as having good zoning policies is almost unbearable.
Prop13 was a big tax cut. The people behind it were minimal government conservative libertarians.
And the state did slash spending in the years following. In particular funding for the university system was hit very hard.
They did not slash spending. At most the rate of increase slowed down for a year or so before continuing to rise at an even faster rate.
https://dof.ca.gov/about-us/history/state-budgets/
This is a solved problem.
Let people defer increases until their house is sold. This what many states do.
It’s seems insane that we “protect” people whose property taxes are going up because their home is getting so valuable
I have a dumb question. What is the eventual of efficient land use? Say we bulldoze a bunch of single family homes and get 10x as dense. Now we have 10x as many people per square kilometer. Is that an efficient use of land? Will there be someone saying at 10x population density that it's an inefficient use of space? If yes, what would they propose instead?
Why are you acting like there isn't a definition of inefficient. I think "underutilized" is a pretty good definition.
The fact that every single person has a small private park in their front and backyards that's enjoyed maybe a couple hours per day at most is pretty wasteful - if it was shared the utilization would go way up and space used would be way down. Same goes for all the parking lots needed to facilitate car traffic - if we used more efficient/shared options like buses or trams then the parking lots that sit empty most of the day could be replaced with more businesses or houses that allow people to live closer to the services that they need every day.
Meanwhile, we have big bottlenecks in our city downtowns where all the density is packed. Spread that out and things get a lot more efficient - your commute probably goes down too because you can live closer to work. Suburbs don't work without a productive city near them - otherwise they're just rural areas.
There's a really great way to think about this that doesn't get enough attention: land rents.
Some plots of land are very valuable due to their location, what you can access, etc. It's pretty straightforward to find out what the monthly cost of land is in any area, either from simple regressions on property values, or empty lot sales, etc.
When the land rent starts to excessively exceed average income of number of households allowed to live on that plot of land, that's pretty inefficient.
Owning land is society letting you say to other people: you're not allowed here. When we restrict land us so that people can not figure out their best use of it, eg 4 families building townhouses together, we start to restrict access to opportunity and basic economic freedom.
this is the same fallacy of saying there's no point getting a 10x faster server because you'll just have 10x more load and your site will still be slow.
If you're really interested: as density increases, population growth decreases. High density places become a sink for populations from elsewhere. You end up reaching a regional equilibrium, where some of the lowest density places start emptying out entirely. Japan is a great example of this, small towns there disappear regularly, as Tokyo grows. Suburban life around Tokyo remains very stable as the center increases and edges decrease.
Yes, dense cities are more efficient in every way compared to sprawl. Can you articulate what is confusing about this?
There must be a incredible incentive to build "pod-housing" basically take a overpriced suburban home, excavate out into the depths and build sleeper-coffin like homes, then in the morning, its 3 minivan of shuttleb-busses going "to schools" - and in the evening back.
Basically build affordable housing illegally
I was just down there and saw multiple massive development projects going on. Like huge new neighborhoods.
Of course they aren’t in LA proper. But it seems like people that want to live in SoCal want the suburbs. You talk like LA is this artificially small place except that it’s more like a neighborhood in the middle of sprawl at an almost unimaginable scale.
Not saying any of this is good. In fact it’s terrible. Personally I feel like the entire LA metro area is about as close as you can get to a real paradise lost on earth. Maybe one of the most naturally beautiful places on the planet, bulldozed over for a maze of 6 lane uncrossable suburban streets and cookie cutter McMansions.
It only seems like that because every other type of housing is literally banned.
If apartments, even small buildings, were legal in LA, they'd be building them everywhere and they'd immediately fill up.
The Mayor, Karen Bass, accidentally screwed up and made affordable possible to build, as in allowing it to get through the gauntlet of approvals. This resulted in a massive amount of extremely costly affordable housing to get built, merely because the approval couldn't be stopped arbitrarily:
https://www.pacificresearch.org/la-mayor-slowly-dismantles-h...
Ift that sort of project approval was opened up to not only affordable housing, but also for-profit housing, there would be a massive shift in the type of new housing in the area.
To be fair NYC has taken the opposite approach and rents are extremely high there as well
NYC has had so much downzoning too. The icon of the city, the Empire State Building, now has a floor area ratio about double what’s permitted in that district. Many historical buildings, just like ESB, simply could not have been built today under current zoning regulation.
The city’s original 1916 zoning regulation permitted a hypothetical maximum population of 55 million; after WWII the new zoning regulations essentially limited hypothetical maximum population to a little more than 10 million if everything is fully developed. Recent initiatives like City of Yes did too little to reverse the trend.
NYC zoning is less limiting than LA, but still extremely limiting.
By what measure are you saying they've taken the opposite approach? It seems to me their approach has been nearly identical, just a little less restrictive.
Everything has a gigantic depends* on it when it comes to RE. People want to find one reason why things are bad, but it is always a big bag of mixed things.
When I was in Vancouver, people kept saying if we got rid of rent control, houses will be built, rent will come down. But houses are expensive to build, and they need to make money asap in the “exit economy”. They won’t come up easily, unless they make it cheap to build, which isn’t happening. Rents just started coming down, but so far insignificant amount (I just checked, a place I paid $2500 for in 2019, is going for $3300 after the decrease!), and demand curbing had more influence on it. Personally, I think we shouldn’t force people to move to a different area because rents skyrocketed. I’m all in support of getting paid out though.
People look at Tokyo, and talk about “less-zoned build whatever, and no rent control, thus more or less affordable”. Which also depends*. YoY rents are going up by 10-15% right now, even more in some areas. It’s unreasonable for a good chunk of residents. Speculation is big influx of money from China. But you can actually challenge the rent increase in a good chunk of cases. So it’s a pseudo-rent control.
I’m not saying something is right or wrong, just saying everything has multiple layers of problems.
It's simpler than you're implying. Vancouver, like most cities, has dramatically limited what land you can build on. More than half the city is restricted to nothing larger than individual houses.
Tokyo, similarly, has hit the limit of what they allow to be built under the highest density of their stepped national zoning levels.
Nah, watch this if you have time: https://www.youtube.com/watch?v=kpK5HiCKfgU
At least watch this money shot: https://youtu.be/kpK5HiCKfgU?si=YNQBxsn15NxGdQQ0&t=272 (wait for the video to reveal the construction years)
As Max Fisher puts it: American cities have been frozen in amber.
This is such an amazing video. It collapses about three years of my casual research into housing down into just a few minutes. Thanks for sharing.
There is also a completely unreasonable shortage of water for a much bigger city.
I've lived on the westside of LA for ~20 years, so one secret I like to let people in on: there's no water shortage. There's a literal ocean of it. I can see it right out my window.
And all that it takes to turn seawater into potable freshwater is energy.
We don't have a water problem. We have an energy problem.
For all of LA County, it would take 500–750 MW each year to use seawater for all our freshwater needs.
Or put another, with a single nuclear power plant, we would solve all LA's freshwater needs -- forever.
You don't have an energy problem, you have a political problem. Fresh water is wasted on thirsty plants destined for agriculture (like alfalfa), by rich farmers who inherited water rights put into law ages ago. It's very simple to solve water usage in California, it just requires a governor that has a tiny amount of grit and cuts into their water rights.
It's crazy how to some, building a whole nuclear reactor and dozens of desalination plants seems like a simpler solution than making a couple of very wealthy farmers a bit angry for a while. Capital really is all-powerful in the States, it even holds power in the very minds of its citizens.
Your comment is a great example of the sort of zero sum ignorance that gets us where we are.
Yeah, you can always use state violence to take from one group and give to another but that's less than zero sum because it costs you use of state violence which isn't cheap and must be expensively maintained.
You might make things fairer doing that but you won't make them better overall. At some point for things to actually get better overall, for the pie to get bigger, you must actually build something for someone. If not a nuclear powered desalination plant then it will be something else.
> You might make things fairer doing that but you won't make them better overall.
Huh, yes it will? You don't need state violence to reduce wealthy farmers' water rights from 10B gallons per year to 8B, which will instantly free up water for others, more important uses. Their quality of life won't decrease if they have to switch a few plots from alfalfa to wheat, if that's what you're afraid of.
> for the pie to get bigger, you must actually build something for someone
I dislike how you just assumed that because I prefer a simple political solution over an over-engineered decades-long project on this one issue, I must be opposed to all new infrastructure. In this case, there's plenty of water to go around.
> state violence which isn't cheap and must be expensively maintained.
1, you don't need much (or any) state violence to keep a few rich families from stealing water, and 2, how is that more expensive that a fucking nuclear plant??? And what about the ecological cost? Nuclear is cleaner that most energies, but it's not free. And nuclear capacity could be put to much better use than offsetting inefficient use of the commons.
> Yeah, you can always use state violence to take from one group and give to another
Yeah, that's exactly what those problematic water rights are achieving: they take most of the available fresh water and give it to a tiny minority that benefits immensely from it. I'm suggesting we improve on that.
> Your comment is a great example of the sort of zero sum ignorance that gets us where we are.
I just can't get over how arrogant and mean this line is. The pie is continually growing, the only thing preventing people from getting a slice is that capital owners keep it all to themselves. We didn't get to this situation because the people is too greedy and impairing oligarchs from building stuff. It's quite the opposite.
We have bloated contractors receiving billions for very little in exchange, and in this situation, people like you are suggesting we don't solve this very simple resource allocation problem and instead shovel a few more billions of public money to the private sector for completely superfluous infrastructure we won't catch a glimpse of before 2048.
It's not only energy though. Desalination takes space, and you have to do something with the salt. Last I saw, to have enough DeSal capacity for all of California, you'd have to replace every beach with DeSal plants to have enough capacity, and then you'd still have a salt problem.
You could put the salt on boats and dump it back much further out in the ocean, but that too takes energy.
CA has droughts, but not water shortages. Most of the water goes to highly inefficient and low value farming.
Sure, but without that farming, how would we get our almond milk lattes?
Dense, newer housing needs a lot less water. If Los Angeles had densified rather than sprawling into the Inland Empire, etc. overall water usage would be far lower.
As it is, water usage in Los Angeles has had flat water usage for decades, even as its population grew by over a million people.
By downzoning so much, Los Angeles got the worst of all worlds: higher water usage, unaffordable housing, and unbelievably bad traffic because everybody has to drive such massive distances to the job centers.
Downzoning is an environmental disaster compared to the alternative, like allowing factories to dump their pollution into rivers type of disaster.