patrick.net

IMO, no one (not even grandpa) is "entitled" to live on Nob Hill in perpetuity simply because he bought there a long time ago (when it was cheap). No more than I'm "entitled" to own real estate by virtue of being a CA native.

Life's already unfair. Let's not advocate public policies that make it even more unfair --on a gargantuan scale.

Btw, if you really want a law protecting elderly homeowners, why not just target the elderly? Prop. 13 isn't that law --it caps tax reassessments for ALL existing homeowners, not just fixed-income retirees.

Harm

The last thing I am ever going to do is advocate public policy that throws a monkey wrench into the economy in any way. I tend to lean on the side of the fewer taxes the better. The only point I was making is that in this kind of crazy bubble, there aren't a lot of options for seniors on a fixed income. If the argument is correct that prop 13 is in large part responsible for the run-up in housing prices, then by all means abolish it. If, however, the main culprit is all the NAAVLP's then maybe prop 13 isn't the evil twin to all the loose lending. And believe me, my husband's grandparents DON'T live on nob hill. When I said modest, I meant it. The only thing they are entitled to is to hang on to the home they worked their whole lives to pay for. Not too much to ask in my book.

I would have no problem with tax laws that apply to seniors only. You start the petition, and I'll sign it.

SactoQt,

Like I said, I DON'T think the run-up in prices in recent years has much if anything to do with Prop. 13. But I do think Prop. 13 and other NIMBYish UBL laws have much to do with why CA housing (including rents) is/was more expensive than practically everwhere else even BEFORE the bubble.

The only thing they are entitled to is to hang on to the home they worked their whole lives to pay for. Not too much to ask in my book.

No arguments here. Like I said, if Prop. 13 were restricted to ONLY low-income elderly people, then maybe even I'd be ok with it. The whole "grandma being evicted" myth to me is nothing more than a smokescreen for it's true purpose: transferring the tax burden from older established homeowners to younger homeowners --generational selfishness at its finest.

I would have no problem with tax laws that apply to seniors only. You start the petition, and I’ll sign it.

I posted before I read this --great, we're back in agreement!!

Hey, SactoQt,

Did you hear the good news? The S&P 500 is at a 4-year high! That means speculators could soon be exiting RE and getting back into stocks! Also, I've heard that buyers AND sellers are away for July/August.

The good news just keeps on coming :-) .

I was excited to hear that stocks were heading back up. You knew that the stock market and the RE market historically move in opposite directions right?

Good news indeed!

I am neutral on the Prop 13 issue. I still think it is the wrong target to shoot for.

We may have to live with the possibility that nothing is to be blamed. Boom-bust cycles are perhaps part of capitalism that we have to live with. There is no alternative.

Good news indeed. Back into the stock market everyone, quick!

(Not investment advice)

Boom-bust cycles are perhaps part of capitalism that we have to live with. There is no alternative.

But wouldn't common sense tax laws (ROFL) .......... wait, wait.... lost my train of thought...

I'm ok now. Doesn't the market function better without government interference? The fed driving down interest rates has taken normal out of the housing market equation. Maybe it would be better if there wasn't a Prop 13 (as it is written now) so that the market could function with less interference.

Boom-bust cycles are perhaps part of capitalism that we have to live with. There is no alternative.

Very true, Peter. And (as you already know by now) my opinion is that every time the government attempts to interfere with these relatively "natural" economic cycles/trends, it inevitably succeeds in making them even worse.

Exhibits A: 1997 homestead law tax-exempts $500K/250K for anyone who sells in 2 years, to "ease the tax burden" on homeowners who need to sell.

Exhibit B: Greenspan's too-low-for-too-long interest rates attempts to limit the damage caused by the tech bubble.

Exhibit C: The GSEs converting mortgages to MBSs like there's no tomorrow, to "encourage homeownership".

All three had reasonable-sounding justifications, and all three severely magnified the current housing bubble. Ahh... those unintended consequences.

I wonder why all of a sudden not much posting here. ???

This is a problem we should address very soon.

I know, history is unfolding as we have expected but complacency would be ill-advised.

Where is Fake P?

It is interesting that we haven't had the bulls posting as much lately. I haven't even seen Jack, my favorite contrarian, as much.

Doesn’t the market function better without government interference? The fed driving down interest rates has taken normal out of the housing market equation. Maybe it would be better if there wasn’t a Prop 13 (as it is written now) so that the market could function with less interference.

God bless you, SactoQt!

HARM, I think that government itself is a market participant and that it contributes to "normal" cycles. Even without government interventions, I suspect that other large participants will still find a way to make cycles volatile during their blind pursuit of profit.

God bless you, SactoQt!

*Blush*

I like being back in agreement with HARM.

I suspect that other large participants will still find a way to make cycles volatile during their blind pursuit of profit.

I have to ask. What other participants do you think could move the market as much as the fed has with a 1% interest rate?

I have to ask. What other participants do you think could move the market as much as the fed has with a 1% interest rate?

Cartels like OPEC can have different but equally powerful impact on the market.

The herd is the ultimate cartel.

Don't get me wrong, I am no fan of big governments. It is just that I think greed will find its way with or without help.

But don't oil prices generally coincide with other factors to cause big moves in the market (job layoff's, crazy housing market etc.)

No question that the herd can move markets. But usually there is a catalyst, isn't there?

Peter P

I do agree, greed will find a way. I just hate it when the government gives the greedy a boost.

No question that the herd can move markets. But usually there is a catalyst, isn’t there?

Not necessarily. What was the catalyst of the "ty" beanie baby boom? What about the cabbage patch dolls?

Human behavior is highly chaotic. Occasionally, thing leads to thing leads to thing leads to the next big thing. It is truly a conundrum.

Not necessarily. What was the catalyst of the “ty” beanie baby boom? What about the cabbage patch dolls?

I must concede the point.

greed will find a way

Sounds like one of Jeff Goldblum's lines from "Jurassic Park".

I do agree, greed will find a way. I just hate it when the government gives the greedy a boost.

I hate it too. But what are we going to about it?

Sometimes, the victims of greed are powerful enough to fight back with more greed. For instance, the greed in the insurance industry was apparently powerful enough to fight the greed in the auto industry. The result was safer cars.

Sometimes, the victims are just helpless.

Sounds like one of Jeff Goldblum’s lines from “Jurassic Park”.

Didn't they call it "chaos theory" (read the book too)

Perhaps I am cynical but it appears that powerful motivating emotions are all negative: hatred, bitterness, anger, greed, fear.

Love should be more widespread.

Peter P

I don't think you're cynical. It's better to recognize the motivations of people through the 7 deadly sins model. I think most of the time you'd end up being right.

Nice chatting with you guys. Getting sleepy. Good night.

Nice chatting with you guys. Getting sleepy. Good night.

Good idea.

Not necessarily. What was the catalyst of the “ty” beanie baby boom? What about the cabbage patch dolls?

I must concede the point.

Don't be so quick to concede, SactoQt --you were onto something here. OPEC or any number of big cartels or powerful companies (Microsoft) don't weild anywhere near the Fed's (or GSE's) impact on the big macroeconomic picture. No, they don't control it (nod to Peter), but they ARE major catalysts on a scale no cartel or single company can match.

Also, when the beanie baby / cabbage patch doll "booms" crashed they didn't take the rest of the economy with them.

G'nite.

When the beanie baby / cabbage patch doll “booms” crashed they didn’t take the rest of the economy with them.

And luckily the Fed didn't try to "mitigate" the damage from them, either.

Harm

You're probaby right that I shouldn't have conceded too quickly. But Peter's argument reminded me of the tulip bubble, and I had to concede that manias can occur without any rational intervention. I still think nothing will fuel a mania the way the government can, and God help us when it decides to "help" the situation.

Did I say "rational intervention?"

When the beanie baby / cabbage patch doll “booms” crashed they didn’t take the rest of the economy with them.

I heard that those busts took quite a few merchants and collectors with them (the sub-economy!). Silly booms have silly busts. ;)

The one aspect of Prop 13 that no one has really talked about yet is the fact that it actually reduces supply of pre-existing housing by making it a financial disincentive to move.

What you have now is that people who have owned for 5+ years don't want to move because their property tax would jump dramatically if they were to buy a similar sized place (or in some cases for people who have lived in the same place for over 10 -- more for a smaller place!).

The faster that prices jump, the fewer people that want to sell, which further reduces supply.

SactoQt, "rational intervention" is right, although the consequence of the intervention can be highly questionable.

Also, the seemingly rational actions of individuals can sum up to a highly irrational herd.

Only vulcans have rational herds.

Henry, but Prop 13 reduces demand for new housing because existing owners do not want to move, right? So long as new housing can be made readily available (with "smart" growth laws), there should be no problem.