California's Prop 13 is an overlooked driver of CA's housing production crisis. Why? Because long-time owners of prime development parcels can sit on them forever thanks to a super low property tax basis. Here's a great example from Menlo Park, a wealthy suburb south of San Francisco. 545 Middlefield is a collection of 3 low rise office buildings totally around 80,000sqft sitting on 6-acres of land. Based on recent sales which peg land value here at around $20 million per acre, let's call today's market value of 545 Middlefield ~$120 million. Which equates to almost $1,500,000 in annual property taxes for a new owner. The current owner pays $200,000 per year, according to public records, because Prop 13 limits reassessments to a change in ownership. Hard to know if the current owner would sell if they were forced to pay market property taxes, but a 700% increase in tax bills would shake loose some interesting sites. Together with neighboring parcels along Middlefield Rd, there are almost 50 acres of low density, lightly used office and medical buildings smashed between some of the wealthiest suburbs in the country. These 50 acres front a main artery with good access to freeways, and building here would have limited impact on nearby residential neighborhoods (some additional traffic for example). But given how many years it took to redevelop the shuttered car dealerships a mile west on El Camino - which faced stiff local opposition - don't expect this stretch of Middlefield to change any time soon. I pick on Menlo Park because I grew up there and know the streets, but this story is repeated in wealthy suburbs around the state. Menlo Park and its kind struggle to even create a plan that's compliant with the state's housing goals, let alone implement it. In neighboring Atherton for example, city officials are pushing to comply by mostly building ADUs. Which is laughable - the median home sells for just under $16 million, according to RedFin. How many working class families will become tenants at an ADU inside a $20 million Atherton mansion? Locals often cite limited building sites as a reason they can't build more housing. Boloney. There's plenty of land and plenty of money, but thanks (in part) to Prop 13, we'll go on under-building housing and wondering why it’s so freaking expensive.