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But would the lenders adjustments offset the huge rise in prices from people not selling? Prop 13 already locks people in. With this law they'd have an even bi
by rcpt 6y ago
But would the lenders adjustments offset the huge rise in prices from people not selling?
Prop 13 already locks people in. With this law they'd have an even bigger reason to bank land forever.
- titzer 6y agoI don't follow that. Suppose the tax was 100%. Real estate would effectively never appreciate, so no one would hoard it. If the tax is 0%, then it's a completely "free" market. Anything between the two just reduces the ROI. Since a high ROI in the short term promotes speculation (and not development), it seems like this would reduce speculation and the likelihood of bubbles forming. Of course that's a ridiculously oversimplified view. There are a zillion different ways to stack this, which is what would happen in any case. To spur development and not just buy-and-hold, the law might be written to exempt certain kinds of improvement costs.