Are you actually complaining that the higher house price wouldn't be good for you, because you'd have to pay tax when selling? I'm still not sure this isn't all sarcastic.
Nope, not sarcastic at all. I live in a house that is much too big for me. I bought it during the crash when prices were low. I would like to move to a smaller house, but I don't because it's too expensive. I can't just trade my house for one of equal value and come out even. It would be very expensive for me to move to a house of equal value, and the higher prices go the more expensive it gets.
I have no objections to paying taxes. Quite the contrary.
First you're complaining about "huge" capital gains, which is literally a tax on profit you made for doing nothing. A tax, might I add, that is much less than income tax. Second, you're complaining about Prop. 13, which just means you're upset about the prospect of paying the property taxes you actually owe, as opposed to the wildly deflated ones from when you purchased.
I don't think you understand just how out of touch you're coming across, and nothing in your statement suggests you have anything but objections to paying your fair share of taxes.
I'm not complaining about having to pay taxes per se. I'm mainly just pointing out that rising house prices are not an unalloyed good even if you own. In fact, appreciating house prices ONLY help you if you sell and don't buy another house in the same market. In all other situations, rising house prices actually hurt you, at least in California.
Specifically: the house I own is too big for me. I'd like to downsize. If housing prices were flat I could sell my house, buy a smaller house for less, reduce my property taxes, and only pay the transaction costs. But because my house and all the others around have appreciated, I can't do that. The smaller house I want to move in to costs more than the house I'm in when I bought it, so if I downsize my property taxes go up. Also, I have to pay transaction costs on a much bigger transaction plus pay the capital gains tax on a gain which I don't get to realize. The only way I win is if I move out of the area. But I don't want to do that. I like it here.
None of this would be a problem if prices were flat. It costs me more (a LOT more!) to downsize because the market is up. Hence an appreciating market is not necessarily good for you even if you own.
No, this is a very real sentiment. I recently saw some folks on /r/nyc complaining that their relatives had to sell their Brooklyn home for millions of dollars more than they paid for it because they could no longer afford the property taxes. They were presented (un-ironically) as victims of gentrification.
I don't know how to rebut this, because it's such an absurd sentiment on its face.
I have no objections to paying taxes. Quite the contrary.