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Land itself isn't "productive" in our time the way arable land once was the key to wealth. Persistently rising housing prices does not mean that land is product

by yobbo 5y ago

Land itself isn't "productive" in our time the way arable land once was the key to wealth. Persistently rising housing prices does not mean that land is productive, it means mortgage rates are persistently too low. Taxing land will not create more housing; if it was profitable it would happen regardless of tax. > “It doesn’t disappear — so you can lower taxes on things that do go away.” It absolutely goes away. The only value of land is its utility to humans - the infrastructure, buildings, utilities. Just look at all the ghost towns that lost their economic viability. That land now has negative value since old buildings need to be demolished before being developed. Measured in acreage, there is effectively infinite land, but without infrastructure and buildings it has no value to people. The value of land that is polluted and needs to be rehabilitated becomes negative.

onlyrealcuzzo 5y ago
> Taxing land will not create more housing; if it was profitable it would happen regardless of tax. Completely false. Prop 13 is the reason you have parking lots that generate less than 1% per anum on the value of land in some of the most expensive pieces of real estate in CA. Prop 13 means the property tax is next to nothing - so the 1% is still cash-flow positive. It also artificially reduces supply since prices are high because no one wants to sell because buying something new would mean taxes 10-1000x higher. On the vast majority of lots in CA - you cannot buy from the owner and put enough additional stock on the market for it to make sense for anyone. It's just so much better for the existing owner who is paying 90% less property tax and getting all those unrealized gains they can HELOC out tax-free if they really want. So many major cities are moving the way of California and either passing laws to limit property tax increases (Michigan) or simply never re-assessing home values (Pittsburgh). In a market where prices are re-assessed and everyone pays the same taxes - I agree. But that's not the way it works in ~50% of the US.

by yobbo 5y ago

onlyrealcuzzo 5y ago

> Taxing land will not create more housing; if it was profitable it would happen regardless of tax. Completely false. Prop 13 is the reason you have parking lots that generate less than 1% per anum on the value of land in some of the most expensive pieces of real estate in CA. Prop 13 means the property tax is next to nothing - so the 1% is still cash-flow positive. It also artificially reduces supply since prices are high because no one wants to sell because buying something new would mean taxes 10-1000x higher. On the vast majority of lots in CA - you cannot buy from the owner and put enough additional stock on the market for it to make sense for anyone. It's just so much better for the existing owner who is paying 90% less property tax and getting all those unrealized gains they can HELOC out tax-free if they really want. So many major cities are moving the way of California and either passing laws to limit property tax increases (Michigan) or simply never re-assessing home values (Pittsburgh). In a market where prices are re-assessed and everyone pays the same taxes - I agree. But that's not the way it works in ~50% of the US.