If you’re involved in the real estate market in Walnut Creek, the East Bay, or anywhere in California, you’ve probably wondered why property taxes don’t skyrocket even when home values soar. The answer lies in a unique law called Proposition 13.

What Is Proposition 13?

Proposition 13 was passed by California voters back in 1978. It fundamentally changed how property taxes are calculated in the state. Instead of property taxes rising sharply as home values increase, Proposition 13 sets the tax rate at 1% of a property's assessed value, which is typically based on the purchase price.

For example, if your home in Walnut Creek is worth $1,000,000, your annual property tax will be about $10,000. But here’s the key part — property taxes cannot increase by more than 2% each year, regardless of how much your property’s market value rises. This cap protects long-time homeowners from sudden and significant tax hikes as the California real estate market appreciates.

Why Does This Matter for Walnut Creek and East Bay Buyers?

In fast-growing housing markets like Walnut Creek and the greater East Bay, home values can increase much faster than 2% annually. Thanks to Proposition 13, owners who have lived in their homes for decades pay property taxes based on long-ago assessed values — often significantly less than new buyers would pay on the same property.

This creates a disparity between new and long-term homeowners, which is a common point of debate in California real estate circles.

The Controversy Around Proposition 13

While many homeowners appreciate the stability and predictability Proposition 13 offers, critics argue it reduces funding for essential public services like schools, fire departments, and infrastructure. Despite ongoing debates, Proposition 13 remains a cornerstone of California’s tax system and is unlikely to be repealed anytime soon due to its political sensitivity.

What Should Walnut Creek Buyers Know?

If you’re buying a home in the East Bay or Walnut Creek, understanding Proposition 13 helps you anticipate your property tax responsibilities and the differences between your tax bill and that of long-term neighbors. It’s a crucial part of planning your homeownership finances in California.

If you have questions about real estate, property taxes, or buying a home in Walnut Creek or the East Bay, feel free to message us at Ask Brendan. We’re here to help you navigate the California housing market with confidence.