By: Assemblyman Phillip Chen (R-Brea) and Assemblyman Matthew Harper (R-Huntington Beach)
California is in a housing crisis. Simply put, the prices of homes are very high compared to individual salaries.
The current homeowner’s exemption in California is $7,000. This is taken off the value of a homeowner’s primary residence, amounting to $70 annually off your property tax bill, or one percent.
The homeowner’s exemption hasn’t been increased in 40 years. The last time the exemption changed was in 1974, Ronald Reagan was still Governor of California, Mohammed Ali had just knocked out George Foreman to regain the Heavyweight Boxing title, Apple Computer and Microsoft had yet to be founded, and the median home price in the Golden State was $21,000.
A lot has changed since then.
California’s population has nearly doubled from 21 million residents in 1974 to 39 million residents today. According to the real estate tracking firm Zillow.com, the median price of homes in California was nearly $400,000 as of January 2015.
With the high housing costs,homeownership is just out of the reach of most households in the state. A household would need to make about $78,000 a year to reasonably afford a home at that price, assuming a 20 percent down payment. With the average Californian earning an income of $61,000, the high cost of homeownership is out of the reach of nearly two-thirds of the state’s households, according to the U.S. Census Bureau.
That is why we have introduced AB 1100 the “American Dream Act” to give tax relief to homeowners and renters. The American Dream Act increases the existing homeowners’ exemption on their property tax from $7,000 to $25,000, giving relief to homeowners, renters and those aspiring to own a home.
Californians are paying some of the highest overall taxes in the nation, making it impossible for too many who spent their lifetime living and working here, to stay in California. It’s about time that the size of the homeowner’s property tax exemption kept up with the increases in cost of living.
This past Monday, our bill passed its first major hurdle by passing the Assembly Revenue and Taxation Committee – similar legislation had been attempted in years past but had failed to successfully pass the committee.
More and more young people are missing out on the American Dream of home ownership and still living at home with their parents. This problem is exacerbated in Orange County, where you would need to earn an income of $140,000 to afford a median priced home in Yorba Linda and over a $129,000 income to afford a similar home in Huntington Beach.
Due to these high costs, many young people are missing out on the American Dream of home ownership and still living at home with their parents.
Providing tax relief for homeowners and renters will not only lead to future economic prosperity for California. It is also the right thing to do.
Assemblyman Chen is a small business owner and former educator. He represents California’s 55th Assembly District which includes portions of Los Angeles, Orange, and San Bernardino Counties.
Assemblyman Matthew Harper represents the 74th Assembly District; he is the former Mayor of the City of Huntington Beach. The 74th Assembly District includes the cities of Huntington Beach, Costa Mesa, Newport Beach, Irvine, Laguna Woods & Laguna Beach.