23 Oct 2021

Urban Residential Anecdotes

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Johnny Sanphillippo describes some interesting aspects of the operation of the economics of modernity on the residential market of San Francisco.

New York City is slightly different, but shares the same rent control and building permit policies and the same national tax system.

I enjoy chatting with strangers as I walk around the city. People self-select in or out of these conversations, but the ones who chat back teach me quite a lot I’d probably never know any other way. This lady described how she and her husband built this home themselves back in 1953. He had just returned from the Korean War, rolled up his sleeves, bought lumber, and built the place with the help of his working-class tradesmen family members with minimal debt.

Land was affordable, building materials were readily available, and regulations hadn’t yet twisted themselves into the Gordian knot of the present moment. Construction permits were a simple over-the-counter transaction for a nominal fee. I’ve talked to many people of that generation all around the country, including a few of my own relatives, and it was common for people to build their own homes seventy years ago, even in big cities.

Here’s another little tidbit about this house. According to the algorithms, this place is currently worth $1,400,000. Rent for a property like this is assumed to be $4,500, although that number is substantially too low in my experience. Public records show property taxes on this house are $766 per year. That’s a consequence of Proposition 13, a 1978 tax revolt that caps property tax at the value of the house on the day it was purchased, plus a 2% annual increase, rather than present value.

That one law is probably what’s keeping a lot of older folks in their homes as prices reached for the stars over the decades, which is exactly what the law was designed to do. But it had unintended consequences. In order to make up for the lost revenue, the city has found all sorts of alternative income streams, not least of which is to massively jack up the cost of new building permits. This same couple couldn’t duplicate the construction of their own home today largely because the culture and economy that existed in 1953 is entirely gone.


HT: Karen L. Myers.

One Feedback on "Urban Residential Anecdotes"


I was living in California when Prop 13 passed. The property tax assessors were rabid. I talked to one of them who had just re-assessed the value of my friend’s home to $1 million dollars. This was in 1978 it was an older 2 bedroom home. The reason for the dramatic increase in the assessed value was simply because a company bought the property near it and put in a office building worth $2 million. The assessors logic was that this small home should be taxed at it’s “highest and best use” value and not it’s current use. The assessors office in California was off the tracks with their greed.


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