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0 pointspaconbork5y ago0 comments

>They abandon their properties, which have already declined in value, because the tax is more than the newly lowered cost of buying space in one of the tall buildings.

If we hit the saturation point for tall apartment buildings, the land is less valuable (since you can't extract as much value from it), decreasing the land value taxes (and thus, incentive to leave homes). Lower land value taxes incentivize constructing more modest apartment buildings, as those will now be profitable. This process continues until housing supply meets demand.

Also many people prefer living in single-family houses. The bay area is full of people who won't sell their single-family house even though the value has gone up 20x. They wouldn't abandon their properties unless they had to. And if they have to it means they can sell them for a lot to a developer who will profitably build an apartment.

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AnthonyMouse5y ago

> If we hit the saturation point for tall apartment buildings, the land is less valuable (since you can't extract as much value from it), decreasing the land value taxes (and thus, incentive to leave homes).

The problem here is that you're assuming we can just reduce government revenues that way. That would imply a corresponding reduction in government spending, or else the government would have to increase the rate to account for the reduced land value.

Which is why people would be forced out of single family homes. The amount of government services required by the occupants of a twelve story building would have to be financed by a tax that collects the same money from the owner of a single family home. The latter would be forced out by that amount of tax.

throwaway2011035y ago

It's one thing to sell because you have an unrealized 20x gain. It's another thing to be forced to sell because you can't afford the taxes.

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