&gt; Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices.<p>As I see it, the <i>long-term</i> expected costs for a purchaser with an average expected time to hold are neutral compared to an equal-revenue scheme that didn&#x27;t favor long-term property owners over newer property owners. (Given the same assessed value.)<p>OTOH, the future costs of holding property are lower compared to the same alternative for current property holders (since, even with a short holding period, some of the early, highest-relative-tax-burden years are sunk costs under Prop 13) under the same comparison.<p>So, rationally, people are just as likely to want to <i>buy</i> property, and less likely to want to sell it once they&#x27;ve already bought it. This reduces supply and increases market clearing price.