Well, this is certainly blogworthy and so I am forced to break this hiatus.It seems that the fiscal crisis in California -- Californians' long overdue day of reckoning -- is fueling discussion regarding the viability of Proposition 13.
It's about time! But don't get too excited. Talk like this has happened before following other crises, but there was always some new boom just around the corner to derail any serious reconsideration of Prop 13; the last one being the .com bubble. I can only hope that there won't be another boom anytime soon to distract determined discussion of at least seriously modifying Prop 13. But it'll never happen, of course; Californians form opinion using their pocketbooks and not their brains.
14 comments:
You are wrong, it's not only californians, it's everybody - we think what will be tomorrow, maybe next week. later? ah, don't be kiddin'
We're seeing what the future will hold with the planned (additional) massive cut backs in education.. All those McMansion home owners will be sitting in their Prop 13 properties, sipping their wine and looking out the window with no kids to yell at to keep off their grass... yea, that's a good formula to sustain housing prices..
And anyone who thinks the fallout from CA's $24B budget deficit is already cooked into the housing books / value yet is nuts... not even close..
Did I read a few weeks ago that commercial RE vacancies in Marin were running at ~ 41% ? think that number is cooked into the housing price books yet, either ? Nah..
A good time to buy real estate is when the real estate is properly valued and you have the means to do so.. it's really pretty simple..
Hahahaahaha!
The New Homeowner Hallucination: "We'll Rent For A Year And Then Sell When The Market Comes Back"
link
Prop 13 is great for long time owners.
It is terrible for new buyers.
It is not fair.
Another reason CA is sliding down.
Prop 13 is one of the only remaining reasons to buy California real estate.
I haven't bought a house here yet; if Prop 13 disappears I never will.
Were for out thou Marinite?? I need my fix from your next AWESOME post. Me and the rest of your followers are dying without you..
So, how are housing prices holding up ? Anyone seeing cracks in the RE machine's fraud & racketeering front in their area ? I sure do... foreclosures and pre-foreclosures are continuing to stack up and we have not nearly seen the affects of the now $26B CA budget deficit rock local economies yet… look out below..
Wall Street and the RE machine sure did a number on this country in trying to get everyone in hock up to their eyeballs for life... housing was their means to do so... they made more money trading and leveraging fraudulent paper during the historic period of fraud and economic disaster than many of the great industry titans who built this country did..… imagine that.. to hell with them all.. every blasted one of them…
That $650K home (that cost $300K in 96) will cost the FB about $1.35M over the life of the 30 year loan, not including taxes, insurance or upkeep... hell, lets call it an even $1.5M conservatively… that's quite the scam by the Wall Street and NAR scum, if you ask me... more money than some people make in their entire working lives.. that's 100% gross pay for a $75K / year job for 18 straight years or 60% of an individual's gross pay for an entire 30 year career at $75K / year (much more than the median wage in Marin).. Anyone think that pricing model is sustainable, even a little, without massive fraud ? I don't think so, and that's why I continue to predict another 25% or so housing price declines from the already 35-40% or so declines we've seen since 97 or so... the scam is up…
We’ll no doubt see periodic blimps in the steady decline to historic equilibrium between now and the end of this fiasco… And, each time, the RE machine / NAR and MM will be all over those periodic rises calling the start of the next housing bubble, and that “you better get aboard now or be priced out forever BS”… But, alas, without the massive fraud to support it, each blimp up will stall out soon after starting and then we’ll continue the steady decline downwards again towards historic balance with wages... all the smart RE investors will dump their inventories during these brief periods of apparent housing appreciation as well, because they know the larger picture and imbalances that still remain. They know their gig and scam is really up without the massive fraud that supported and stoked it during the bubble..
Sorry, the math at current housing prices just does not work out without massive fraud to support it over the long haul... anyone who thinks differently does not understand basic economics... all the RE machine / NAR shenanigans and BS bubble gum policies from pea brains Frank / Dodd and all the others are just fingers in the dam or dike...
Here is just one way of many, many, many that the $26B budget deficit will depress housing prices...
Education cuts.. lots of them coming... those CA state grants for UC and CA State colleges for middle / low incomes residents will be cut to almost nothing... in fact, they'll be cut severely (or entirely) from what I'm seeing.. that's another $350-$450 bill / month added onto to a low or middle income CA resident who has a kid in college (or going to college next year)... that's $350 / $450 less for "housing" expenses.. that's before the UC or State college raises rates to compensate for the cuts they'll be taking..
So, what will be the priority ? A college education for your child or some fraud induced, inflated mortgage for an overpriced POS shack in Marin or SF ? hmmm?
"Here is just one way of many, many, many that the $26B budget deficit will depress housing prices... "
Well, and what happens if they have to raise state taxes or sales tax AGAIN or start tinkering with Prop 13??
I've been thinking my next cottage would be in Petaluma, but I am seriously thinking about Ashland, Oregon instead. I still won't buy anywhere until late 2010 or 2011, but I don't know if I want to buy my retirement home here in CA. It's already so expensive here, and if taxes go up and/or services are reduced, at what point does it just become silly to try to stay?
BTW, a darling cottage in West Petaluma that I drove by last year (paid $550K in 2005, on the market for $497K and never sold) is back on the market as a short sale for $375K. Yep, $122K haircut in one year. Thank God I'm renting, is all I can say.
Even if they don't modify Prop 13, the state is going to be squeezing the sponge on it's residents to try and make up for the $26B deficit.. car registration fees, tickets, park fees, sales taxes, gas taxes, other taxes all projected to be going up to help bring in additional revenue.. I also predict Marin will raise property tax rates to compensate for the reduction in housing prices that are ongoing and projected to get worse... Yes, Marin will need to keep that income coming in to support all those $150K lifelong pensions for their gaggle of retired employees...
"Even if they don't modify Prop 13, the state is going to be squeezing the sponge on it's residents to try and make up for the $26B deficit.."
Combine that with the next spike in fuel prices, the next time we hit $4 or $5 a gallon, and it will be just about impossible to afford to live here.
Were for out thou Marinite??
Traveling Europe for three weeks, sorry. Gosh but the weak dollar really hurts.
If one takes California's 2000 budget and expands it in accord with population growth and inflation, you get $106B exclusive of federal transfers. In short California government simply spends too much. If spending did not keep growing faster than population, we wouldn't have the current fiscal debacle. Increasing taxes will simply drive more businesses and people out of California and decrease revenues. That will cause another round of tax increases-- and so on.
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