Proposition 13 and its affect on California foreclosures is a subject worth spending a few minutes pondering, especially as California undergoes its struggle to deal with the rate of its foreclosures and also because California has such an out sized affect on the rest of the country eventually whenever something goes on there. Prop 13 is the famous anti-tax initiative passed in 1978, by the way.
Known officially as "the People's Initiative to Limit Property Taxation, " Prop 13 was an official amendment to the Constitution of California. The basic effect of this proposition was that it capped real estate taxes to a certain level beyond which taxes could not be raised. It capped property tax rates, and reduced them in many cases by over 57%.
At its heart, Prop 13 was a push back by the state's voters over anger about how property taxes were being continually increased by state and local municipalities on an almost annual basis in order to strengthen tax revenues. Anyone buying a home prior to 1978 could expect to look at a stiff tax bill at the close of the sale as well as predictably large tax increases every year thereafter.
Of course, the passage of an initiative that restricted the ability of legislators out in the Golden State to raise taxes without any oversight created a great deal of consternation. The issue was finally settled for good in 1992 when the US Supreme Court ruled Proposition 13 legal. Although it never directly affects the decision a person might make to go into foreclosure, it can have an impact on the state thereafter.
That's because, the state and local municipalities who benefit from tax rates and the revenue those rates bring in, maintains that it has no other instrument for increasing revenues on what was an extremely vigorous housing market. California also maintains that had it had that ability, many more billions of dollars in revenue could have been banked in expectation of the inevitable "rainy day."
Over the last few years, that rainy day has hit California and the rate of CA foreclosures has been increasing with every month that goes by. There are a few small indicators of possible stabilization, but home prices have declined for a while, taking down appraised value with them. With less value, a home will cost less in property taxes. Unfortunately, municipalities haven't yet adjusted to that reality.
Conservative estimates by supporters of the proposition maintain that it has saved taxpayers over $528 billion from its inception until mid-2009. Those who argue for repeal continue to state that Proposition 13 has had a direct effect to the budget problems have only been exacerbated by the bust in real estate which California is currently experiencing.
It appears, for the time being, that the rate of CA foreclosures may have stabilized for the near future. At any rate, any talk of repeal of Proposition 13 is probably sterile, as people living in the Golden State currently don't seem to have much taste for trying to deal with that issue. It's probably better for California to get its bearings back through budget discipline and spending cuts, first of all.
Known officially as "the People's Initiative to Limit Property Taxation, " Prop 13 was an official amendment to the Constitution of California. The basic effect of this proposition was that it capped real estate taxes to a certain level beyond which taxes could not be raised. It capped property tax rates, and reduced them in many cases by over 57%.
At its heart, Prop 13 was a push back by the state's voters over anger about how property taxes were being continually increased by state and local municipalities on an almost annual basis in order to strengthen tax revenues. Anyone buying a home prior to 1978 could expect to look at a stiff tax bill at the close of the sale as well as predictably large tax increases every year thereafter.
Of course, the passage of an initiative that restricted the ability of legislators out in the Golden State to raise taxes without any oversight created a great deal of consternation. The issue was finally settled for good in 1992 when the US Supreme Court ruled Proposition 13 legal. Although it never directly affects the decision a person might make to go into foreclosure, it can have an impact on the state thereafter.
That's because, the state and local municipalities who benefit from tax rates and the revenue those rates bring in, maintains that it has no other instrument for increasing revenues on what was an extremely vigorous housing market. California also maintains that had it had that ability, many more billions of dollars in revenue could have been banked in expectation of the inevitable "rainy day."
Over the last few years, that rainy day has hit California and the rate of CA foreclosures has been increasing with every month that goes by. There are a few small indicators of possible stabilization, but home prices have declined for a while, taking down appraised value with them. With less value, a home will cost less in property taxes. Unfortunately, municipalities haven't yet adjusted to that reality.
Conservative estimates by supporters of the proposition maintain that it has saved taxpayers over $528 billion from its inception until mid-2009. Those who argue for repeal continue to state that Proposition 13 has had a direct effect to the budget problems have only been exacerbated by the bust in real estate which California is currently experiencing.
It appears, for the time being, that the rate of CA foreclosures may have stabilized for the near future. At any rate, any talk of repeal of Proposition 13 is probably sterile, as people living in the Golden State currently don't seem to have much taste for trying to deal with that issue. It's probably better for California to get its bearings back through budget discipline and spending cuts, first of all.
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The effect of Proposition 13 on the rate of CA foreclosures is a worthy activity to look into, considering how much affect California has on the rest of the US, especially when it comes to initiatives like Prop 13. We have got the best inside scoop now on ca foreclosure properties.
