San Diego Union-Tribune (Sunday)
IMPACT ON THE HOUSING MARKET
U-T ECONOMETER
Will Prop. 19 substantially increase home inventory in California? Our panel of economists and executives weighs in.
ECONOMISTS
NO
The proposition adds another intricate set of procedures to California’s already complex system of assessing property values. Proposition 19’s complicated tax arrangement is another maneuver to squeeze relatively little incremental revenue from property taxpayers. California raises enormous amounts of revenue from taxes in an inequitable manner hampering home building with overbearing rules, burdensome fees and higher property taxes making homeownership unaffordable to many across the state.
NO
San Diego has a deficit in excess of 60,000 housing units. Proposition 19 will not increase inventory because it does not encourage new home building. Only a small segment of homeowners can take advantage of transferring their tax basis to a different home. Prop. 19 could marginally increase the available housing supply, but in turn it will also increase demand as people selling will still need to buy another house to avoid paying capital gains tax.
NO
We already had the ability for those 55 and older to buy a home of equal or lesser value and maintain their tax basis. Proposition 19 adds some flexibility to the price range for new purchases, but don’t expect a surge of inventory. As interest rates move up late next year, we may have problems getting those who refinanced to give up below-market mortgages. So, we will continue to have low existing home inventory, keeping prices up.
NO
While it may change the inventory mix, it has no effect on the total supply of housing. A few more older homeowners might purchase more expensive properties, while a number might see the tax benefits from moving anywhere in the state. Rural areas could see the influx of seniors, with rapid increases in prices and sales. Entry-level housing inventories will remain tight and not enough price declines for larger homes will occur to accommodate the potential “move-up” buyer.
EXECUTIVES
YES
Opportunities for seniors and the disabled to move within California and transfer their property tax base will likely increase available housing. Many may seek more accommodating housing. Higher tax bills to heirs will drive more inherited homes to the market. This provision stifles property inheritance among lower-income heirs — mostly Black and Latinx — who largely keep their family property. Some will not meet the higher taxes, and if families must give up these homes, inventory will also increase.
NO
Proposition 19 enables existing homeowners to buy larger homes and evade taxes (that everyone else pays). Realtors (spending $45 million to pass) know it will increase sales but not increase supply (the real problem). Prop. 19 means less money (from people that can afford to pay) for local services like public schools. I have little confidence in ballot initiatives as mass-manipulation through marketing works again against the public interest (10/12 aligned with money spent).
NO
In theory, allowing homeowners to move anywhere in the state and retain the previous tax basis should encourage older homeowners to move on from their larger, multibedroom home and put it in the re-sale market for younger families. However, that means that the older people have an equally desirable housing alternative. Given the dearth of housing choices, it is not likely to have any significant impact on the housing market.
NO
While the thinking is that many of those who would take advantage of Proposition 19 are empty-nesters who would choose to downsize to a smaller home, freeing up larger homes for young families, I don’t believe it would create a meaningful increase in housing inventory. It could increase turnover of housing inventory, which may help the economy as homebuyers spend money on all that comes with improving a house and making it a home.