The trend is to smaller houses, at least according to the US census. The average house size peaked in 2005 and 2007 at 2277 sq. ft. and by 2010 declined to 2169. Not much of a change, and it may reverse, but maybe the sign of a shift or at least a stabilization.
http://www.census.gov/const/C25Ann/s...medavgsqft.pdf
I just looked up my grandparents' house on Zillow and it was 3600 sq. ft, six bedrooms. Large families were common back then, and there are lots of houses of comparable size in old Portland neighborhoods. My family home was about 2000 sq. ft. Mine is 1680 and I hope to downsize by a third or so. So at least in my personal experience, house sizes are coming down.
For the record, property taxes in California, at least in the Bay Area, are cheap only for those who have owned their homes for decades. For most people in my age group (late 30s/early 40s), who have purchased homes in the last 10 years, $7500/year would be considered low. Our family pays $10,000/yr. This is for a small (1300 sq ft) modest 50's tract home in a mid-level suburban neighborhood with average schools. Meanwhile, several older individuals and couples on our block, who live in homes at least equal in value to ours, pay only $500/yr. Same with people our age who bought or inherited their homes from their parents. Unfortunately, we didn't have that option.
I certainly don't want older people to be thrown out of their homes because of an inability to pay rapidly rising property taxes. But the current system, in which young people frequently pay 20x more than older couples for similar homes on the same block, doesn't make sense either. And the schools have really suffered from the low funding resulting from Prop 13...which is doubly frustrating to people like us who pay $10,000/yr in property taxes and yet have severely underfunded schools for our children!
I think that the Calif prop 13 property tax structure was inintiated due to the high cost of housing and what were pretty rampant rises in prop taxes for long term owners who had bought low priced housing and couldn't bear the costs of huge tax bills that reflected the homes increasing values. Now it's set at 1% of the purchase price for everyone and no more than a 2% increase in taxes/year. So a person buying a million dollar house would pay $10,000/year in prop taxes and a person buying a $300,000 house would pay $3,000/year. Both would have a 2% increase each year - $200 for the million dollar houise and $60 for the $300K house. So the idea I believe was that people who could afford a million dollar home, can afford a $10K annual property tax bill. And people who could only afford a $300K house could only afford a $3000/year annual prop tax bill - both with no more than a 2% increase each for inflation. I personally don't think that someone who bought their home 30 years ago for $25K should have to pay $10K in property taxes like the newer buyer of a million dollar home. I also don't think it's fair that the new buyer of a $300K home should have to pay the same tax amount as the million dollar home buyer. That prop 13 tax law is actually keeping taxes low for the million dollar home buyer by making them only 1%. In other states they may be required to pay 4 or 5 % each year.Originally Posted by sallysue
The cost of housing in CA wasn't so divergent then from the national average (I actually think prop 13 contributes a lot to houses being way more expensive in CA for several reasons - the divergance at any rate mostly started after prop 13). It mostly passed from what I have heard tell, because the legistlature would not make any deals to keep property taxes under control and they were rising like crazy - a way more reasonable law than Prop 13 could have been passed to address this but no, they did nothing. Basically the legistlature was not doing their job so it went to the people, who in turn passed a bad law just to pass something.
And yes although it does prevent 7k a year property taxes on houses bought decades ago, other than that pretty much nothing about it is good (it distorts the housing market (there would be more housing mobility without it at the least), it's unfair on the face of it - that two neighbors with identical houses are paying very different amounts, and it pushes all taxation on to income and sales taxes - unstable revenue streams that as a result are extremely high in CA). Oh and since the schools are so bad if you have kids or ever intend to you'll probably end up paying several hundred thousand more for a house in a good school district - it's what everyone tries to do - though honestly private school probably works out better economically.
I grew up in post Prop 13 California, it was not particularly lovely. The schools were indeed every bit as bad as you have heard and got worse as I progressed through the school system. And by the time we arrived in the world housing was completely unaffordable. Prop 13 was generational warfare. Oh well at least when I got out into the world there were still some jobs and it was possible to get college classes. The same can not be said for today.
Trees don't grow on money
Property taxes could hardly be a more regressive way to raise revenue. Unless I rent out a room, my house isn't generating money for me; quite the contrary. I'd rather see a VAT or some other approach that doesn't have the potential to pauperize homeowners.
generational warfare is an interesting way to put it.
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