The house that sold for $800K over asking price speaks to the inequity of California

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Priced out, big time

The three-bedroom, two-bath ranch was listed for $1.68 million and sold, in a bidding war, for $2.47 million.

According to sales records, the property tax at the time of the sale was just above $1,500.

Not per month.

Per year.

Thank you, Proposition 13.

The annual tax bill was so low, I figured the previous owners had lived there a long time. So I called the listing agent to see what I could find out.

Dave Clark, a Keller Williams agent who’s been in the business for 30 years, said the house had only one owner prior to this year’s sale. A couple bought it brand new in 1963, raised two kids and held onto the house until recently, when the gentleman followed his wife in death and their son and daughter sold it.

“I think they paid around $25,000,” said Clark. “So it went up in value about 100 times.”

That’s astounding. But median incomes, unfortunately, have gone up only about 10 times over the same period.

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Proposition 13 and the affordability crisis

For working folks in California, flat wages and housing scarcity — which drives up prices — are at the center of the affordability crisis. People are forced to live farther from where they work and pay ever-increasing percentages of their income on housing, which leaves less for education, healthcare and everything else.

My Uncle Pete, long deceased, wouldn’t be able to buy a house anywhere near Sunnyvale today on a mail carrier’s salary. News about working people living in RVs and cars has become routine in Silicon Valley, including a recent story about a San Jose State University professor whose home is her vehicle. Meanwhile, nurses, teachers and laborers are commuting great distances.

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More than $600,000 over asking price

He sold a house, also a three-bedroom in Sunnyvale, for more than $600,000 above asking. It was listed at $1.88 million and sold for $2.55 million.

“It’s in escrow,” Clark said, and the story gets crazier.

Clark said he sold that same house in May 2014 for $1.54 million.

So the house went from $1.54 million to $2.55 million in just 3½ years.

This kind of equity, by the way, is a huge source of wealth among Californians lucky enough to own houses, enjoy the benefits of Proposition 13 and mortgage deductions, and then sell to the highest bidder.

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People with current mortgages in San Jose, Santa Clara and Sunnyvale are sitting on more than $239-billion worth of equity, according to Frank Nothaft, chief economist at CoreLogic.

Clark, the real estate agent, put me in touch with Bill Malcolm, an Irvine lawyer who grew up in the Sunnyvale house that sold for $782,000 above asking.

“It was absolutely amazing,” said Malcolm.

When he has visited his old turf, Malcolm told me, “what has plagued my thoughts” is the question of where regular folks are living. “When I go into the Safeway or the gas station or Costco, I think, ‘How do these people afford it?’”

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