The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting and the James Irvine Foundation.
Published Oct. 22, 2018
It was within reach. That was the lure of the California dream.
"The highest possible life for the middle classes," is how the late historian Kevin Starr described the promise of the Golden State.
By the mid-1970s that dream was in peril. Housing prices and property taxes spiked. Homeowners worried they wouldn’t be able pay their bills. In 1978, voters backed Proposition 13. At its core, it was a vote to preserve the California dream of owning and keeping a home.
Forty years later, that election continues to shape the state.
Prop. 13 changed the formula for funding schools, libraries and other public programs. It influenced the building of houses and commercial properties. To this day, Prop. 13 plays an outsized role in who can afford to live here and what it costs to own a home.
So did Prop. 13 save the California dream or spoil it? To answer this question, we focused on a single block in a middle-class neighborhood in North Oakland.
That’s where we found stories you could hear on almost any block, almost anywhere in the state.
All figures are estimates. Methodological choices likely overestimate tax payments and underestimate savings from Prop. 13.
Because of Prop. 13, property taxes in California are based not on what your house is worth, but what you paid for it. That means the benefit of Prop. 13 is unevenly spread out around the state: some places get huge breaks on their property taxes, while others...not so much.
With the help of the real estate data company Zillow, we’ve mapped as many neighborhoods as we could in California to estimate where Prop. 13 is most valuable to homeowners and costly to local governments. You can search for your neighborhood, and see how it compares.
This is a middle-class street on a middle-class block in a middle-class neighborhood in North Oakland. The sidewalks are cracked. Overgrown trees stretch across the road. Some residents are wealthy, some are not. Kids and parents and grandparents and dogs walk up and down this street everyday.
We chose this block not because of any unique features it possesses or noteworthy people that call it home. We chose it for its relative normalcy and for its ability to help understand the subtle impacts of Prop. 13 on the California dream.
Every house on this block has at least one thing in common: They’re all worth a lot of money. The median property value was three quarters of a million dollars last year. The cheapest property — a 2 bed, 1 bath 825-square-foot home — was worth $630,000 in 2017.
(Illustration by Mika Mingasson for California Dream)
In most states, the property tax you pay depends on how much your house is worth now. The nicer the home, the more you pay. But because of Prop. 13, property taxes in California are pegged to the value of a house when it was purchased.
That’s why owners on this block pay such wildly different property taxes for very similar properties. Decades-long owners of a 1,300 square foot home on one end of the block paid $1,168 in property taxes last year. New homeowners with a smaller home on the other end of the block paid almost 10 times that amount. Two very similar homes, two incredibly different property tax bills.
Why does that matter? Critics of Prop. 13 say it starves local governments of much-needed revenue. Cumulatively, the 41 properties we’ve mapped on this block paid $201,753 in property taxes last year. That money went into a variety of local government services, including schools, public transportation and parks. If Prop. 13 hadn’t passed and California properties were taxed at market value, these 41 homes would pay an additional $130,000.
As defenders of Prop. 13 are quick to point out, one local government’s lost revenue is another taxpayer’s savings. Without Prop. 13, many of the homeowners on the block would see their property taxes rise upwards of $5,000 a year. That includes a handful of seniors who have owned property on the block for decades.