Comment by davjhan | Hacker News Reader

Comment by davjhan | Hacker News Reader

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Thanks for the concise explanation! You must be the original author. I've shared the article with many friends.

A few follow up questions:

- I'm interested to see how this affects multi-family housing. Do the same mechanics come to play? In an apartment complex, I assume that the positive or negative value of the property would be way greater than the land value, no?

- Do the resulting effects of the 3rd property only apply for teardown and straight up unliveable properties? Or would it be the blanket bottom x% of all houses in SF? If it was the latter, could this count as an inefficiency under the proposal? As "bad but livable" units today are now taken off the market?

- Does the "good house" now lose re-sale value now simply by virtue of being next to a "bad house"? Let's say that the house issues are internal, and the outside is fine. Is this okay?

Looking forward to part II. If these questions get answered then, I'll just wait until I read it and ask more questions.

Yup, I'm the author.

- As far as I know, yes, LVT would definitely incentivize multi-family housing over single-family housing.

- I'm not sure exactly where the threshold would be. Under current market conditions where landlords can collect land rents, it'd be any place where the property is so bad that the rent is less than you'd be able to collect if it were, say, a parking lot. This might still be a good investment for the slumlord because the presence of the teardown property has negative value and makes it cheaper to buy than if it were just an empty lot, and then they just refuse to fix anything and collect the land rents.

- Not 100% sure what you're asking but maybe I can answer it this way -- So locational value comes from the activity of your neighbors. That's why "location, location, location" is a thing. If you're in a good neighborhood, your land value goes up because it's a nice place to be and people will pay more for that privilege. If there's, say, a crackhouse next door that will depress your land value for obvious reasons.

Thanks for the responses.

To clarify the last question, my house value would be affected if it was known that my neighbor will undergo a construction project. So I was just wondering that if the rise in propensity to teardown increased under LVT, that it would have weird ripple effects of devaluing the land of the good house by virtue of it being next to a future construction zone.

I think that would depend on the frequency the tax assessment occurs, and under what kind of legal structure. If your whole neighborhood is in the midst of a multiyear construction boom, then maybe that gets factored in. But if we are talking about a few nearby plots, then the valuation is probably being based on a some area averages anyway without factoring specifics.

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