Sunday, February 10, 2008

Things Are Better Now?

I recently did a comparison of my life and living with that of my dad. The results are quite interesting and revealing of life in America today - or at least the San Francisco Bay Area.

He was 32 when he bought his current house. I was 40. He had what was considered a blue collar job, a cop. I am a senior level white collar professional, an architect. He started out as a traffic officer and never had a promotion. I started out on the low end and have had many promotions. He had a brand new three bedroom, two bath house built for him. I bought a 60 year old, two bedroom, one bath fixer upper. He got a single 30 year, fixed loan; I got two adjustable rate loans that are due to go market value in less than two years. I couldn't afford a fixed loan; it didn't matter anyway because I didn't qualify even though I have the highest credit rating anybody has ever seen. He lives in a more affluent community in central county in a peaceful neighborhood on a cul de sac; we live on the fringes of the county in a blue collar neighborhood two blocks from a major oil refinery. His house has twice the market value mine does, is already paid for and has a tenth of the property taxes.

I'm not so sure America is better off than it was forty five years ago.


  1. What was it called, Proposition 13, passed in 1978 or so? Does that have anything to do with it?

  2. James, under the California ballot proposition scheme, voters get the opportunity to vote on political propositions (I'm not sure how they get on the ballot. Minimum number of verifyable signatures, etc.) Prop 13, passed in 1978, limited the State's ability to increase property taxes. It limited the increase to 1% of the previous year's tax amount, regardless of home value. The original tax is based on home value at the time of purchase.

    It has worked the best for those who bought their houses long ago and have held onto them. Inflation and hot housing markets greatly affect the amount of tax on newer homes. But those who have older homes find problems when they try to make a lateral move. They can't "swap" for an equal house because the market has continually risen resulting in a much greater property tax. It pays to stay put. So, even though my dad's house is worth twice what mine is, my taxes are ten times higher (a 20 fold increase per dollar) because I bought it recently.