> I personally think it's awful to see elderly people getting priced out of a house they've owned for decades
Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
It’s one or the other. If you want housing to be seen as something that more or less “always goes up” but you can’t be taxed in the increased value then you are by nature distorting market dynamics you don’t see elsewhere.
We need a land value tax instead it’s more fair and less volatile
> Another way to think about it: they’re selling at a premium well over they bought it for.
It's not a premium. It's what housing costs. If they take their "premium" and buy the next house, their tax bill is unchanged (more or less). They have to actually go find a house that is much cheaper so they can afford the tax bill.
More often than not, it causes them to move out of an area that has seen growth to an area that has not seen as much. This might be moving from Houston to a suburb of Houston, or moving from a suburb of Houston, to a small town 100 miles outside Houston.
The correct "Other way to think about it" is like telling someone this;
You bought this property when the neighborhood was worth nothing. You lived here for years when it was nothing. That might mean it was rural or crime ridden or whatever; but it was cheap and you could afford it. Good job sticking it out all those years and then letting "us" build it up around you. However, now that we've done that, we feel you are still a nothing if you can't afford the tax bill, so go find another rural/crime ridden area to live in. That's where you belong.
> Another way to think about it: they’re selling at a premium well over they bought it for.
Not necessarily. The fact that they're getting priced out right now via taxes on the estimated value of the house doesn't mean they can sell the house at that value (being forced to sell) and that they can find a cheaper alternative that works as well for them. So they can be in for a net loss, all things considered.
> Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
I agree with this part. Viewing it as investment is the wrong choice.
Not sure I do agree. During ownership, it should appreciate as assets do. Then things like taxes get reset for the next owner based on whatever they pay. In this way, things reset transparently and still often enough as the normal duration of mortgage is something like 8 years. Not everyone is a buy and hold generation of ownership, people move for jobs and a million other reasons, but people that do choose to live in a house for 50 years shouldn't get penalized for it.
This is why I distinguished it as asset class vs asset. It should be primarily tied to the value of the land beneath plus some nominal appreciation for the building on top rather than assessed value of the building on top plus nominal appreciation of the land. Similar to the land value tax formula. This treats it closer to a commodity rather than its own asset class as it is today.
This makes it more of a modest investment overall, one that people would stop tying their entire net with to
Deferring tax increases based on the sale of a house until the next owner is what California does and it’s a disaster.
Land value taxes are more equitable and treat it closer to a commodity and drive more efficient utilization
>>>> tied to the value of the land beneath >>>plus some nominal appreciation for the >>building on top
I'm not sure i agree with this take.
The building is clearly a depreciating asset. If left alone the house will eventually be worth nothing because a decrept properly carries liabilities instead (neighborhoid fire hazard, penalties , fees etc) So there no nominal value there.
Onward to the land. The only real reason for land to appreciate is because it ia scarce resource. But then you see that the land also has a carrying cost (taxes) that is fixed regardless of its use. Therein lies the dilemma. If land is an asset that generates expense , and then that expense only grows as time passes but theres no income associated with it, are you really seeing land appreciation when you sell, or are you simply recouping your carrying cost during the term it was held?
Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
It’s one or the other. If you want housing to be seen as something that more or less “always goes up” but you can’t be taxed in the increased value then you are by nature distorting market dynamics you don’t see elsewhere.
We need a land value tax instead it’s more fair and less volatile