Effects of New Law Debated - Page 2

"For people in that category, it's not a good thing," Swartz observes empathetically. "In Silicon Valley, there are a lot of people who grew up here. Their parents pass away and they inherit the house and get to stay."

Under the new law, Swartz predicts, "There may be more homeowners that decide to just go ahead and sell their properties instead of passing them on to their relatives."

"Overall, I think it's going to force people who don't want to sell to sell [anyway]," said the realtor, adding remorsefully, "It's going to speed up the pace of those people leaving the area."

Fellow realtor Monique Bryher concurs, telling a reporter for HousingWire.com, "Estate-planning attorneys are going to be very busy, as this new law may cause many people to decide to sell properties that they intended to pass on to their heirs."

For his part, Westfall said this group includes a higher percentage of Eichler owners than for any other type of home. He disagrees, however, that Prop. 19 will force their hand.

"I think the people who are planning to leave a legacy will still do that," suggested Westfall, owner of a Castro Valley Eichler. More important than any tax legislation, he said, is the number of heirs involved: "All the legacies I know are single children or single grandchildren. When you have more than one [heir] involved, it's very difficult."

Jon Coupal, president of the Howard Jarvis Taxpayers Association—itself another product of the 1970s Prop. 13—is even more critical of the new law than Swartz or Bryher. Coupal has written opinion columns calling Prop. 19 "a steak laced with cyanide" and "a painful tax increase on hundreds of thousands of ordinary Californians."

On the San Francisco Chronicle's chat board about the topic, contributor Alissa Armijo summarized it similarly, posting, "Prop. 19 is great for the state as it brings in more tax revenue…[and] great for the real estate industry as it will increase the number of homes for sale. The net effect is there will be a few more homes for sale and any property tax increase on rental units will be passed on to renters. For the average consumer, this is negative."