Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

High property taxes are good

brooock.com

Post reply on HN
Print view View original

561–570 of 620 posts

Re: High property taxes are good

#561

Post by parineum »

999900000999 wrote: post #458
parineum wrote: post #302

Earlier quoted context omitted.

The biggest barrier to entry for first time home buyers is by far mortgage rates. Low mortgage rates cause house values to go up because value is based on what an affordable monthly payment for that house. Low rates means value goes up to equalize payments which is mostly superfluous for people with only one home and good for anyone with investment property but it causes a 20% down payment to be an unsurmountable bar…

If we're talking California, I'd argue a 200k down payment on a million dollar house is a bigger barrier.

That's exactly my point. If a house is a million dollars with a 3% loan, that house will be significantly cheaper with a 15% loan but the payments will remain relatively static making a 20% down payment significantly easier for those who are trying to get in the market for the first time.

When people bring up the prices of houses for baby boomers they totally overlook the interest rates and monthly payments.

The price of a house doesn't really matter. The payment and the down payment are what matter and the volatility of those isn't based on the piece of land changing value (in the shorter term).

In the last 6 years, my house doubled in value. Also, I recently refinanced for less than half the rate.

When borrowing money is cheap, there's a lot more competition for things bought with loans. On the other hand, the market rates for rent don't really change because the people don't suddenly have more disposable income.

Re: High property taxes are good

#562

Post by parineum »

imtringued wrote: post #428
parineum wrote: post #302

Earlier quoted context omitted.

The biggest barrier to entry for first time home buyers is by far mortgage rates. Low mortgage rates cause house values to go up because value is based on what an affordable monthly payment for that house. Low rates means value goes up to equalize payments which is mostly superfluous for people with only one home and good for anyone with investment property but it causes a 20% down payment to be an unsurmountable bar…

How would you value a perpetuity? If the present and future are worth the same, then the value of land is practically infinite because millions of generations of humans can use it. The obvious problem in this case is that nobody should own land forever.

Unless you know someone that lives forever, nobody does.

Re: High property taxes are good

#563

Post by mcntsh »

btilly wrote: post #27

And, thanks to Proposition 13, California has entirely removed this policy tool from consumer housing. A tremendous amount of our problems, from high rent to gridlock, can be traced back to this decision.

The push back on Prop 13 blows my mind. "What will actually make housing cheaper, is to make costs higher, actually."

Ok you've forced a bunch of house painters and restaurant owners to sell and move out. More tech workers buy the houses, more large chains buy the retail space, now what?

Re: High property taxes are good

#564

Post by danielheath »

presentation wrote: post #514
danielheath wrote: post #507

Earlier quoted context omitted.

> almost everywhere it has a double function in also being an appreciating retirement fund. That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth. Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look lik…

Sounds almost like "have the government own all the housing stock and rent it to the people"

That’s an extreme case, yeah.

I think at that point you’re disincentivising capital works too strongly, since there’s a higher risk you’ll lose the property via default on taxes, but it’s not clear to me that the same effect would exist even at a 20% rate.

Re: High property taxes are good

#565

Post by pas »

KerrAvon wrote: post #438
negamax wrote: post #390

Earlier quoted context omitted.

What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check

The elephant in the room is the amount of housing supply being held by banks and private equity in an effort to shore up housing prices. They can afford high property taxes. Your elderly parents might not be able to. Obama should have let the bankers twist in the wind when the citizenry was out for blood in 2008. They repaid him by channeling money to Republicans. Put them all in jail.

Banks/investors don't let property to just sit there if the cost of renting out is small. (Ie. if the risk of getting into an long eviction fight is low, then they will not let it sit empty.)

Re: High property taxes are good

#567

Post by fuzzfactor »

cbm-vic-20 wrote: post #6

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

The original purpose of the tax is to reclaim the land if the possessor can not make enough money off the land, or prosper some other way, to pay the tax.

A mortgage acts like this too and if the tax was insignificant by comparison it would seem so fair but at least a mortgage can eventually be paid off in full. Then the bank no longer has an interest but the taxman never stops.

Taxes always go up but economic fortunes do not, when these become out-of-phase the original purpose is fulfilled.

This is what makes people demolish perfectly good buildings to reduce the taxable value of their property while they try to hold on to the land during a downturn.

Mortgages don't make people act like this.

For the greatest prosperity of the average citizens in a sustainable system, you tax nothing but commerce.

The purpose of taxing the income or property of average citizens is to repress opportunity for the majority.

This is by design.

Re: High property taxes are good

#568

Post by TimPC »

Retric wrote: post #398
TimPC wrote: post #389

Earlier quoted context omitted.

We aren’t talking multi-level though we are talking about an actual flat parking lot in the middle of a downtown core which is what speculators do and have done in my city while they wait to sell expensive land.

To be more clear. Depending on the location, those flat parking lots can be pulling in 1+ million per year in profit. That doesn’t mean building a multi level parking garage in that same space is actually a good investment because demand isn’t unlimited. What you see as wasted space can therefore actually be a highly efficient business.

The business has maybe 30 spaces at $20/day. If we assume some people use hourly rates but most use daily lets say each parking space makes $25/day for $750/day. That works out to $273,750 before expenses. To get $1 million you’d need over 100 spaces which is quite a massive plot of land for the downtown core of a city.

Re: High property taxes are good

#569

Post by mring33621 »

8note wrote: post #515
mring33621 wrote: post #312

Earlier quoted context omitted.

"It also requires property owners to do EXTENSIVE research and information gathering CONSTANTLY" Every year in Chicago. My house has been, and still is, assessed for 600K over what I paid in Nov. 2021. It had been on the market since 2016, until I bought it. The price I paid is the value of the house. First assessment appeal denied. Second appeal lost in the system. We have to fight against an unfair and arbitrary ta…

what could you sell it for though? what could you mortgage it for? what you paid for it is irrelevant if people are buying the neighboring places for double or triple the price. if it's worth so much more than you think, sell it

The house was literally for sale to the public since 2016 through end of 2021. If it was worth more than what I paid, someone would have purchased it before I did.

This is how free markets work.

Re: High property taxes are good

#570

Post by brigandish »

mlyle wrote: post #555
brigandish wrote: post #547

Earlier quoted context omitted.

I agree, I often think about such things and wonder if they'd work as this hasn't been tried. I'm wary of taking the road to Hell with my "good" intentions/ideas. For the improvements on the land bit, you could project at the beginning of the year what you think the land will be worth by the end of the year, due to planned improvements. That locks in the value for the year. I can see problems with that too, but the r…

But the idea with a land value tax is you tax the value of the land, and not any property on it. So it's not just improvements added in a year, but any improvements residing on the property. If the land is worth $100, and your house is worth $200-- it's worth $300 to you. But a LVT should just be taxing that $100.

There are two kinds of improvements, those of the land itself (like a new road or a water pipe etc) and those like houses or businesses. LVT directly includes the former, as they would be included in anyone's assessment of value (whether that be a government assessor or the owner). However, the value of the land is also indirectly linked to the improvements like houses. If you make a piece of land more productive by building on it then the land itself becomes more valuable, as will nearby land.

So with either kind of improvement the tax can go up, but LVT still encourages development compared to property tax as undeveloped land will still attract a greater proportion of tax than it would under a property tax.

Post reply on HN