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Comment by mjr00 | Hacker News Reader

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on.

This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions.

But there's also the second-order problem which is the people who realize that governments will never let the value of housing decrease because of the above, so you have upper middle class people owning "investment homes", or foreign investors buying homes they never intend to live in (or, in many cities, never even bother renting out), or even corporations like BlackRock buying up houses because they know it's such a safe investment.

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> every citizen of the first world

Where I lived in Italy, people certainly purchase houses, but they don't expect them to have crazy returns like in the US. It's just a way to not pay rent and have something that you can hang on to even if there's inflation or other funny business (something that Italy has seen a lot of).

People even invest in, say, apartments, but it's a similar story: they expect them to hold their value and pay themselves off over a number of years. There are certainly returns on it, but they are seen as steady, long term investments.

Where I live in Oregon, during the most recent boom, there were houses "earning" more than 100,000 a year, just sitting there. That's more than the median household.

Yeah, it's a bit apples to oranges, but still, it's really out of kilter.

Long term, it'd be healthiest if housing were 'boring', neither gaining or losing much. That'd also facilitate people swapping out different housing at different stages of their lives without worrying about timing the market.

For instance, there are a lot of people getting older in the town I live in. Are they always going to want to or be able to shovel snow? Mow their lawns? Maybe a townhouse or a condo would be a better alternative that lets them stay in their general neighborhood.

> Where I lived in Italy, people certainly purchase houses, but they don't expect them to have crazy returns like in the US. It's just a way to not pay rent and have something that you can hang on to even if there's inflation or other funny business (something that Italy has seen a lot of).

Agreed, we didn't buy house as an investment vehicle, we bought it for living expenses consistency over time. It's the speculators that ruin any market.

There is lots of boring housing in the US. It is not going to be in the Willamette Valley in Oregon. Just like houses in the Alps in Italy versus less desirable places in Italy.

"Just go somewhere else" is causing even the 'boring' places to have problems:

https://www.nytimes.com/2022/02/20/business/economy/spokane-...

We need some more fundamental reforms.

Check out upstate NY. I found a <20 year old 4000sqft home, >40 acres, gigabit fiber internet, in ground pool, outbuildings, and a backup generator for well under $500k. Even with the higher taxes here vs the west coast, I'm ahead.

Only caveats are you need to enjoy seclusion (check) and be good at remote employment (this year will be my 10 year anniversary of being 100% remote). Energy costs are a bit high, so I installed 20 kW of solar and will be switching to an air-sourced heat pump for heating & cooling. Even adding these costs to the purchase price results in paying less.

That's nice if you can make it work, it's a quick solution to the housing problem. But for a lot of people being close to the economic powerhouse areas of the country is a win, and we should figure out how to make that work for them. And, long term, migrating further and further out is just going to delay the problem, because it'll arrive eventually unless they're in complete economic free fall.

Another aspect is that being near family while raising your children is immensely helpful. Housing prices have gone 30-40x since my parents bought, for example. Salaries have definitely not increased at a similar pace!

Such as what?

The merging of Seattle and Tacoma was inevitable. The same thing has happened to a lot of cities that are separate by <1hr commutes via highways.

Hopefully this year, Washington will follow in Oregon's footsteps and re-legalize things like 4-plexes, or maybe go even further in big cities like Seattle.

Basically, "(re)legalize housing", along with things like corner stores and neighborhood commercial like corner stores and barber shops.

I’m not surprised Spokane real estate market popped. Expect that in every small town surrounded by beautiful mountains …

Tax on non-primary properties solves this if you can get it past vested interests.

Reasonable tax breaks for your primary or only home, and none for second homes / investments you let out.

That gives a valve to perform qualitative easing on the housing market whenever you need to, and is not uncommon in other parts of the world.

EDIT: Having read the responses below I’ve realised I didn’t clearly word what I meant here, that’s my bad. I mean a holding taxation rather than CGT. Essentially, an elevated annual property tax on non-primary properties that would have the effect of penalising investors relative to those seeking a home to live in.

I agree with that. Investment homes, second or maybe just third homes, etc. should be taxed rather extremely aggressively.

The problem with this approach is the impact it has on areas that have availability problems, and where there is more demand than supply for housing (think big cities that are experiencing condo booms).

In those high-demand areas, owners will simply pass those tax costs down to their tenants, and the rents prices will go up, leading to even less affordability.

They might not be able to find someone to pay that rent. In which case they might be forced to sell. Ideally someone who doesn't own a home will purchase it and won't have to pay the tax that caused the original owner to sell.

If you combine that with looser zoning regs, the higher rents will make building more housing more lucrative.

Make the tax scale with number of homes the entity owns.

In my mind, I was separating out homes for rent from investment and second/third/so-on homes. Although, it seems tough to separate those out since investment homes and non-primary homes are often rented out, although sometimes not permanently or continuously as homes specifically treated as rental properties. It needs some more thought, but I don't like the no holds barred approach that takes place right now. I in general don't like homes being treated as a business and investments, and I think it should be discouraged. Apartment complexes are a little different. Even there though, renters need better protection. One of my friend's rent just increased by 25%. It's ridiculous.

So you punish renters for the benefit of prospective homeowners?

Not everyone wants to buy.

Sadly I don’t see any better way to help renters.

If you make the costs of real estate investment so onerous that it’s only attractive to owner-occupants then it becomes far harder for your landlord to exploit you as a tenant, as the option for you to buy much more cheaply will be there even if you choose never to do so.

Every time a housing discussion comes up someone comes in with this argument. If you stopped to think about it you'd realize how silly it is.

Renting doesn't need to be handled solely or even at all by the private market.

You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!

You do pay tax on that.

However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.

> This is the step-up in basis and is key to building generational wealth in the US.

Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny.

Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.

capital gains ought to be taxed like regular income. it's insane that we cut breaks for wealth generation that requires no effort, and is scalable

There is definitely capital gains tax on non-primary residence homes. Only primary homes are exempt up to certain dollar.

You can do a “1031 exchange” to trade a non-residence property for a different one.

This is just a tax deferral, you will still pay tax eventually.

Not necessarily. You can hold on to it until you or your spouse dies, which will reset the tax basis.

Cannot find where spouse dying resets the tax liability. If the outright owner passes away, that makes sense.

There are exceptions if you have lived in the property for 2 of the last 5 years.

I don’t understand this. There are a lot of places in the US, and certainly globally, where housing prices decrease. There are also plenty of folks who got soaked in 2008 and lost everything, and no one helped them. How precisely does “the government” do this house price propping up? Via loan guarantees to ensure liquidity in the mortgage market? These make houses affordable and accessible to most people. Without loan guarantees people would still be buying houses all cash, and through loans for high credit quality, but primarily by high value entities who can afford to buy and rent many properties. In this world housing would largely be corporate owned rental units. Prices alone wouldn’t be keeping people out, but rather lack of loan liquidity would ensure a lack of lending. What keeps housing values high isn’t loan liquidity, it’s the ability to convert property into cash flow via rentals. Ultimately to stay risk neutral in pricing the cash flow option for renting is what supports home values.

But I’ve seen nothing that guarantees anyone pricing continues to rise or that their home investment will make them rich. What it does do is force savings by allocating a portion of their loan to principal growth. Even if it doesn’t grow at all or even declines, it’ll be worth a lot more later than the latte they forwent 20 years ago.

If you want guaranteed returns, buy treasuries.

I think you make a good point about places in the US seeing falling prices.

It is obviously incorrect to say that prices are guaranteed to rise but I don’t think that’s what anyone claims.

I think the general claim is that policies around housing tend to prop prices up by restricting supply (zoning, permitting, higher building costs due to various regulations like stricter codes or safety standards as well as stuff like parking requirements, giving old properties lower taxes) or subsidising demand (loan guarantees, buyer assistance, etc). That is, governments choose housing policies that keep prices high at cost to taxpayers instead of policies that reduce house prices, which is what is meant about governments not wanting them to fall. Also, if house prices fall and the people think the government is responsible, the government probably gets voted out.

The reason that loan assistance for people (ie not including companies) causes house prices to go up is that it means for a given house price, mortgage payments will be lower so more people will be able to afford that price. Instead people tend to pay for the most they can afford and (for a non-silly definition of afford) and so they end up paying more because they are competing for the same houses.

On the loans, if you make loans less liquid and less accessible then fewer people will own homes because they can’t leverage into a house the can afford over 30 years but not this year. It likely won’t decrease the cost of housing because people still need housing, and will instead have to rent. There is enough capital on earth that those with capital will want that cash flow. See my point on rent : mortgage cash flow arbitrage. This would not lead to cheaper housing, just less people owning housing vs renting and more housing owned by fewer people - mostly corporations that have vast access to leverage at rates considerably more favorable. That seems like lose lose to me.

Zoning IMO is a red herring. Developers have no interest in driving property prices down with their marginal developments. They will develop in a way that sees prices stable or rise, which is favorable to them as property investors. People betting zoning law repeals will magically result in vast Soviet style SRO arcologies housing everyone affordably will be disappointed that the Victorian single family home torn down and redeveloped as a duplex is developed as a four story duplex with twice as much space, with each duplex roughly the same price as the original single family home. There also won’t be a massive selling of existing property because, well, NIMBYs like where they live. Ultimately we will just have less Victorians that will never be rebuilt and a handful more luxury duplexes.

> How precisely does “the government” do this house price propping up?

Primarily by not allowing construction of new housing supply.

All the economic research I’ve read says repealing zoning laws induced no meaningful decrease in home price. That makes sense - home builders build to maximize profit and aren’t in the business of devaluing property they buy to develop. They develop it in a way that appreciates prices to improve their margins. But like this piece there seems to be some view that market forces are shaped by immoral behavior on someone’s part, rather than simply that’s how things work in a world of scarcity.

We will see how things go in California! Maybe the anti NIMBY dream of style sky high SRO arcologies will come true and everyone will be living in communal peace in their bleak windowless cement efficiency. My bet is prices continue to rise for as long as people move into the region and developers don’t buy into the egalitarian view of affordable housing any more than they ever have.

In virtually the whole of Canada and the United States, dense, walkable neighborhoods are illegal. Even if you get rid of one type of zoning, other types remain. For example, one of the Texas cities has no zoning laws, but it does have mandatory parking minimums, mandatory street setbacks, etc. Basically the city must be car oriented and low density, even if you can add commercial stuff in residential zones.

Japan is the one place in the world that freely allows density, and Tokyo has not seen rising prices. Note that though Japan's population is shrinking, Tokyo's is rising. Unlike North America, new housing production has kept up with population growth.

https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...

Square what you just said with the data:

https://resources.realestate.co.jp/buy/how-much-does-an-apar...

Utopia!

A longer time chart is more instructive: https://si.wsj.net/public/resources/images/OG-CM820_JHOUSI_4...

Thanks for pointing out that prices are rising, I may have misspoke. But the key point is that relative to other major cities Tokyo's prices are not rising anywhere near as fast. The chart from 2000 to 2019 was basically flat, and even from the lowest point maybe a ~15% rise

I expect even the current rise is dwarfed by rises in comparable cities

> They develop it in a way that appreciates prices to improve their margins

What way would that be?

All producers of goods and services maximize profit. That doesn't explain the unique housing sector price developments.

What’s unique? I see nothing unique about high prices in high demand markets.

And it's not just the home you own. For decades now, the tax and financial system, at least in the US, has incentivized being a landlord even if you are below middle class. Everything you put into a rental is deductible, low down payments, rising rents made it very, very easy to at least break even against a mortgage payment.

> You'd be destroying everyone's retirement plans and there'd be major economic repercussions

I think that exaggerates it. Most retirees aren't profiting from the home they own if they live in it. The "income" from it is just imputed rent. So if the housing supply increases dramatically, that imputed rent drops, but it doesn't matter since the cost of housing drops as well.

Many (most?) retirement plans involve downsizing from the large home in a (sub)urban area where they raised children and worked for most of their life to a lower-cost area in a lower-cost house. If my SFH is worth $1,000,000 and my retirement plan involves selling and moving to a $500,000 condo, that's $500,000 of money in my retirement account. If politicians implemented a policy that slashed housing prices in half, suddenly I'm going from $500k->$250k, which means I only have $250k from the downsizing. This is a significant impact to my retirement plan.

Most people are not downsizing by such massive amounts though. The median home price is only $470kish and people aren’t going to accept massive quality of life drop..I.e. very few people are selling $470k homes to buy $150k homes. Thus the gains will be much smaller..

and with a $1M house should have a sizeable 401k specifically so they’re not relying literally on the housing market to retire. Any number of events could cause the same scenario you mentioned.. so I’m pretty much any realistic scenario for most people, tax deferred investments dwarf the small boost you get from buying a slightly cheaper house.

And having more $250k houses now means it’s easier for everyone else to build up a retirement plan.

On the other hand, we’ve made it so new condos are so hard to get built that a 2 bedroom condo in a walkable neighborhood (which you likely need when you retire) is the same or more expensive than a 4 bedroom suburban home. In order to be able to downsize, you need the smaller unit to be less expensive than your current home, and in many markets right now that’s barely, if at all, the case.

> a walkable neighborhood (which you likely need when you retire)

Really don't agree with this -- retiree doesn't mean "decrepit". You're still very capable of driving. My own parents recently retired to a rural area in the US, in a neighborhood with other retirees, where they're a 5 minute drive from the nearest grocery store and a 30 minute drive from the nearest "city" of ~20k people.

It's very walkable in the sense that there are sidewalks and parks, but not in the sense of living in a downtown core with public transit access to essential services.

I don't think it's safe to bank entirely on driving-as-transportation in old age. My grandparents and my partner's grandparents all live(d) in unwalkable places in the US, and it was hell on their families when they slowly lost the ability to drive. You somehow have to either drive them around yourself (expensive and a massive time commitment), move them in with you, or move them into a retirement community when they eventually lose the ability to drive safely around others. It's inevitable!

The problem isn't retirees who paid out their house already, it's the households who still have a big mortgage on their house.

What would change for them? They still need to pay that down in either case, don't they?

Granted, they can sell at some point and make a 3x their investment. But by then, buying another house will also be 3x, and rent will be 5x, so they're kind of back where they started.

The point is that if housing prices tank, they won't have made 3x on their investment. They are talking about the case where you sell below what you paid.

But they'd also pay much less for their next house, making up for it. If we all take a 90% pay cut but all products now cost 90% less, nothing really changes, does it?

I guess the exception would be if they sold and then moved to a different area with a very different housing market (or left the country), but at least for domestic migration, I suppose the more rural and the cheaper the houses are, the worse the necessities for the elderly will be, e.g. doctors will be far away, no home nursing services, no local shopping.

First, The idea behind housing as a retirement plan is that eventually you cash out that retirement plan, not take it to the Grave. If you never sell, or buy only equivalently priced houses, it's not really helping with your retirement.

Second, if you buy a house for a million dollars and sell it for 500K, it doesn't matter if you can buy an equivalent house for 500K, you are still 500k in the hole on the balance sheet.

What do you do when you cash out though, live in a van? Any house you'll then buy will be at the same price level.

And yeah, sure, you'll be down 500k in nominal value, but you'll exchange one house for the value of another. If that's 500k or 1m doesn't really matter, if you've lived in that house, you'll need another place to live at. Of course this changes drastically if it was a house you bought only for investment purposes, with no intention of living in it. But at that point, it's pure speculation, and I don't see why we should protected that asset class more than stocks or baseball trading cards.

>What do you do when you cash out though, live in a van? Any house you'll then buy will be at the same price level.

You rent or move somewhere with lower COL.

If selling your house is how you plan to pay for costs in retirement like food, healthcare, or leisure, you must must cash out at some point. If you have 500k less to spend on food, healthcare, or leisure, it will suck.

If you dont plan to sell your house for the rest of your life, the market value isn't relevant to your retirement. In that case you are right that it doesn't really matter.

> You'd be destroying everyone's retirement plans and there'd be major economic repercussions.

Investments have risks. If you invested most of your net worth into something that's a necessity for decent life without any thought into how shifting societal priorities may impact that investment, then you made a poor investment choice.

>You'd be destroying everyone's retirement plans

Everyone?

yes I agree. I was always told, and believed "a house is for living in, not an investment". It figures in my retirement plans in the sense of not having to pay rent on my house as I will own it. That is really positive because it also means not having to pay tax on the money that I would have to have to pay rent.

But I bought it because I wanted to own it and live in it, not to sell and make money off.

Having said that it's obvious that the availability of cheap money has jacked up housing costs to a stupid level, and it's obvious that when it unwinds there is going to be a big mess. What stops it from unwinding - immigration... because as soon as immigration stops the pressure will go out of the housing market and a-la Japan houses will get cheap.

> when it unwinds

Don't underestimate the inflationary potential of fiat currency. Maybe it'll just stay the same price, but everything else still gets relatively more expensive.

The majority homeowner class. Which is why politicians enabling it keep getting voted in.

I presume by "everyone" they mean upper middle class folks

"everyone that counts"

There - fixed it.

I assume it’s more people who’ve bought a house, sell it to downsize once the kids have moved out and use the excess towards their retirement (to make up the difference between the low amount they’ve been able to scrape together over the years)

everyone that matters...

> You'd be destroying everyone's retirement plans

Not where I live. Housing prices have exploded, like everywhere else, but it's not people's retirement plan. We've got state and employer pensions (from a fund not owned by the employer).

So it's not that. Look elsewhere. E.g. at AirBnB, and at ridiculous (both low and high) salaries.

> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions.

I wonder if one way out would be to 1) build government rental-housing projects again, to fill the immediate housing need, and 2) implement other policies to increase home-building (but only enough to keep price increases below inflation).

One serious problem would be the association of housing projects with crime and poverty, but maybe that could be addressed by putting police stations on the first floor (or something) and eminent-domaining them into upscale areas over luxury housing.

Yes but 1 is a huge, massive, often insurmountable political battle because there are enough single-issue voters who will turn on any politician who threatens to enable “undesirable” types to share their neighborhood. And 2 is blocked by people who think their aesthetic preferences are more important than others ability to survive (often the same people as blocking 1).

It’s not really the crime that matters, at the core, but rather the perception of “other”. The single-issue anti-housing people don’t want police in their neighborhoods, they want police in other people’s neighborhoods keeping those people out of the “nice” neighborhoods.

Sadly, most people do in fact want more housing for people who are less well off than them, even if it means they have to run shoulders with strangers. But these are the people who work and don’t have time to show up to community meetings about a new apartment going up, and don’t usually decide who to vote for based on neighborhood aesthetics.

Because the problem is mostly political, most of the solution is political as well: identify, train and support local politicians who will vote to build more housing, and help them write new laws that do so. And convince them (by consistently winning at the ballot box) that the anti-housing crowd is loud but not actually large, so there’s little danger in losing their votes.

Seems like it would be simpler to fix this with regulation on housing "investment". Don't allow large corporations to buy up giant counts of single family homes (taking them off the market and jacking up real estate bubbles). Basically we need to stop the predatory act of spending billions to buy many thousands of houses out of the market just to turn around and rent them to those who can no longer afford to buy in the market they're effectively cornering. Some builders are now building whole neighborhoods full of single-family homes that are being sold directly to rental investment companies from the outset.

My off the cuff (and thus probably naive) thought would be to charge progressive federal taxes on home ownership which progresses based on the unit count owned by an entity. Whether you're an individual or a corporation: your first house is free (0% federal tax). If you own two houses, you pay 3% on the value (of both houses) every year for the right to own them. Maybe at three houses it's already at 10%, and by the time you get to ~10 houses owned, it caps out at 100% tax on the value every year, making large-scale home investing completely unprofitable. The funds from this new tax could be set aside specifically to fund affordable housing programs of some kind.

Under such a scheme, we'd still have rising prices from true single-owner-occupiers under the existing system, but it would slow down and be less-bubbly, at least in the national average, and builders will eventually build new homes to equilibrium, where regulations allow them to. Some moderately-wealthy people could probably still own a second vacation home, or 2-3 rental properties. Some extremely wealthy people might still own 10+ different homes for personal/family use at exorbitant tax cost, but at least the taxes from such scenarios go towards fixing things.

> build government rental-housing projects again

It's a cultural thing too. We're brainwashed to look down on government housing simply because of the racist practices of the past. It wouldn't even have to be government funded necessarily. The problem could be fixed with non-market housing similar to Europe, where the building costs are fulfilled by a loan, and the HOA or housing entity is setup without the goal of making a profit off the rent, setting rental rates at a margin to cover only the loan and necessary expenses.

The solution there seems to be you only get to profit from your primary house that you can prove you have lived in for x years. Otherwise, all profit goes to the government. That would stop investments and such in a hurry.

> Tanking housing prices would destroy their trust in the system that they bet everything on.

rip the bandaid and cut the losses. The house as investment is the blight on modern society

What I think would help at least is if prices stopped increasing. That way, people who buy now at least won't lose money, but the expectation that valuations will continue to go up will have to taper off.

Also, in the case of high-cost coastal cities, I don't think the issue is trust in government propping up prices, as much as it's trust that demand will continue to outpace supply for the next several years at least.

That isn't an equilibrium. If the market formed the expectations that property values were going to stop increasing, then property values would drop - because the current price bakes in the assumption that they're going to keep increasing.

In the short term, sure. I'm being a little idealistic, but I don't think it's impossible for housing markets to find a new stable-ish level without lots of people losing their shirts in the process.

This misses the two biggest problems with prices going down:

1) if losses are small, people will refuse to move / sell, reducing housing stock.

2) the really, really big problem is if prices go down enough that people have to start taking big losses when selling, or if it stops making sense to pay the mortgage. People would instead default on the mortgages, sending our economy into a 2008-like crash. This would lead to less construction (again) and more housing capture by the wealthiest people and corporations.

The biggest problem we have right now is insufficient supply. Builders won't build if they can't profit; if they can't sell at relatively high prices, they can't profit.

This fact cannot be ignored, but we must also grapple with the question of whether betting your retirement on rising home prices is a decision that should be underwritten by the public at large.

My answer is no. I want to live in a world where goods and services are abundant and cheap, including housing. I own a house and benefit from the rise in prices but I'm under no illusion that this is beneficial to society. On the contrary, the rising prices are a calamity.

If we care about the wellbeing of our fellow people, we should desire that homes become cheap.

How is it exactly a retirement plan if your house goes up 200% over N years, but so do all of your neighbor's homes? You aren't changing your relative position to them.

If all homes increase in value by the same percentage, you generate a lot of cash by owning for a long time and then downsizing, or moving to a location which started out with cheaper property (historically, this is the "retire to Florida" strategy).

Or, you're going to pass on your home to your children, so it becomes part of the value of your estate. Or if you don't have any children, you can just reverse mortgage and get cash out that way. It's just like any other illiquid asset.

You sell your house and go back to renting or get a reverse mortgage.

s/retirement plans/state endorsed pyramid schemes/

It's going to collapse one way or another.

> ...their house is the single biggest investment

Is it really anyone's fault but their own? I don't recall housing being offered as a low/no-risk investment with guaranteed profits. Financial blogs, podcasts, and Reddit commenters might have shared that view.

Are there any examples of mortgage issuers or home builders advertising housing as an investment?

If most people in the system are making similar mistakes, then the system is directing them there. Saying it's their fault does nothing but ensure it keeps happening.

Whether or not they make the mistake isn't the point. If they were encouraged by a specific entity to treat it as an investment, then the blame should be placed on that entity. Regulations should be put in place to prevent that (I suspect they already are). Otherwise, they have to take the L.

I expect banks and home builders are careful with how they communicate with customers.

It's less about placing fault on the purchaser. It's more that there is no one else to blame. Never-ending bail-outs only hurt future generations. I wish I went into deep debt to buy a house a lot sooner. I didn't because I knew I couldn't afford it.

> low/no-risk investment

foreclosure makes it no-risk leveraged investment modulo downpayment.

That depends significantly on state law w.r.t anti-deficiency rules and so on. California is a non-recourse state where a mortgage lender can only repossess the home, but there are other states where the lender can foreclose and then come after you for the difference in case of a short sale.

That's the problem isn't it? In most countries in the world (including many in the "first world") a house is something that solidifies your place in the community and is handed down from one generation to the next. What dollar value it can command isn't even a concern for people living in them.

Make a multiplier on property tax based on number of properties owned. Make it robust against corporations spinning off one-shell-per-properly. Make it revenue neutral so the increased tax revenue from landlord-companies and airbnb superhosts subsidizes tax rates for homes that are full time primary residence.

> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight

This is a crazy thing to state with almost no justification. How could housing prices be fixed overnight? Please don't say "zoning changes." Plenty of places without zoning issues have really expensive real estate.

What's an example of a place without "zoning issues" with really expensive real estate?

NYC

high enough property tax.

Wouldn't that make homes less affordable and increase rents?

it will make houses less attractive investment vehicle: people will start selling rental houses and downsize to smaller units, which will create additional supply on the market.

Also, in case of California for example, if prop13 got eliminated, it will hit mostly existing house owners, and not new ones.

Doesn't lack of affordable housing kinda destroy everyone's retirement plans too? So it's kind of a losing situation.

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