Zuma
Dryer sheet aficionado
Our 2000sf home on 1 acre of land in Boston's metrowest area is 15% of our net worth not accounting for SS.
Sent from my iPad using Early Retirement Forum
Sent from my iPad using Early Retirement Forum
Proposition 13 means that as a newcomer to the state, you will be paying 20X or more of what your neighbor is paying because he's a long-time resident.
In actual dollar amounts, you can expect to pay around 1.1-1.2% of the sales price each year. This means close to $20K/year for the lovely $1.8M tear-down home mentioned in a previous post.
Just go on Zillow, look around and you can find homes offered on the market at $3M+, yet the current owner is paying less than $2K/year.
And by the way, the above tax rate is roughly the same in Southern CA too.
Prop 13 means that if someone pays less, then somebody else has to pay more. I would not want to be that somebody else.
A $4M house in a flood zone? I dunno.
I really don't understand why people want to live over there. The salaries are at best 10-15% higher then in for example Route 128 but one needs at least 35% more to adjust for cost of living and sky high taxes.
Now I do not argue that places like San Luis Obispo are nice in CA....but that is much different from Palo Alto in quality of life and prices.
That place in Palo Alto sold for that much money because it will be leveled and a McMansion built on it. If I sold my house here the same thing would happen though my house is a bit nicer but small relatively speaking at 1900sf. The lot though is 13000sf and lots this size don't exist in very many places in the Bay so those that want one are willing to pay for it. Since I don't live in PA I won't get 1.8M for it though
To the original poll though, my house is not considered in any net worth calculations. It is paid for and the budget considers the PT and other expenses. But you have to live someplace so I would never consider it as part of my net worth. I would only consider it if I knew categorically that I would be selling in short order and what I would likely have after getting something else
Net Worth is simply just your assets minus your liabilities. Why not include your home, after all it is an asset. Your NW number is just for fun. NW has little to do with retirement planning. I would not include home equity in expense and income calculations.
Paying 20X more than your neighbor is not particularly accurate. Prop 13, passed around 1978, set a base value on 1976 assessment (I can't remember exactly, somewhere around that time). Then the increase is capped at 2% per year. All other base values are on the purchase price (or renovation). So if someone bought a house 10 years ago for $1M and a new person just bought the house next door for $1.5M, their base values will be $1.22M (10 years at 2% per year increase) vs. $1.5M. Hardly a 20 to 1 difference.
I think 20x is on the high end but I don't think it's that unusual. When I was in San Jose, my next door neighbor had a tax basis of 45k -- that's 1/15 of mine. Her house was a little bigger but basically the same age. Another neighbor down the street had a similarly low tax basis and paid roughly 1k/year (compared to our 8k). These are for similar houses, same age, same size lot.
Another friend owns an Eichler in Palo Alto which she and her husband bought as teachers for 25k (yes they are old). Her property tax is 1k on a house worth ~2M. A new owner at 1.25% property tax would pay 25k.
I know anecdotes are not data...
The PTA and other groups would get pretty adamant about getting their extra cash - some even placed flat out "bills" right on the student schedules and labeled it a "levy" instead of making it a request for donations.
We live in the SF Bay Area and bought our house about 8 years earlier than neighbors. Their's is worth approx. 10% more than ours and their property taxes are 2x ours.
Yes indeed. My thinking too. In fact, a quality Class B or Class C that is, say 15-20 years old, will still fetch a thousand or three after you've had your 5-10 years use out of it.And if you buy used, home on wheels are inexpensive enough to be disposable. Just push old one off the cliff and buy another one every 5 to 7 years.
I do not have hard statistics, but one quick look on Zillow after 2 or 3 minutes gave me the two following contrasting examples of homes currently on the market in Palo Alto, CA.
Home at 1266 Hamilton, asking price of $6.985M, 2013 tax of $3,509.
Home at 1051 Parkinson, asking price of $4.980M, 2013 tax of $47,676.
In the 1st case, the current owner is paying 0.05%/yr of market value. In the 2nd case, the owner is paying 0.96%, or almost 20x the other rate.
You sure will. I'm planning on being there in 4 years tops - maybe a bit lessSee ya on the road.