[epistasis]

Prop 13 gives huge tax benefits to using land less than productively. Both selling land, and building on it will massively increase taxes.

Property values are rising at 5%-10% per year, but bulidings themselves only depreciate without dumping more money into the building. So that 5%-10% is all land value gain. As a property owner, why increase taxes by using the land more productively with new buildings, when you can continue to profit just as much without that? Also, attempting to build is hugely risky, because the permitting process is fraught, long, and likely to fail.

If we didn't have Prop 13, every single property owner would have a lot more incentive to actually try to build.

[smegger001]

> As a property owner, why increase taxes by using the land more productively with new buildings, when you can continue to profit just as much without that?

because the bubble will pop eventually.

[epistasis]

Is it really a bubble if the overvaluation is created by law? The only way to pop the bubble would be to change the laws. And with Prop 13 being untouchable politically, and homeowners have an iron grip over city councils to keep cities underzoned, there's little chance of the systematic problem being eliminated any time soon.