The listings will continue until people can afford houses in places they want to live. New City By the Bay, Who Dis They want to live in San Francisco, but San Francisco has no interest in building homes. What to do? The city’s answer is to spend massively to support its homeless population, causing it to grow, while letting the housing shortage get worse. Some tech billionaires instead propose to go to Solano 60 miles away, and start the initiative California Forever on 55k acres to build a new city. We have our first look at what they are imagining, and
Your list of six reasons for not doing Georgian taxes reminds me strongly of the range of reasons people give for not going after AGI.
I think these are likely to be people who made up their minds for a reason they don’t want to acknowledge or defend, and therefore they come up with a plausible reason to block the action. It seems a little like a Gish Gallop - they can always come up with more flimsy arguments than one has time to debunk.
Are there ways of destroying the value of unimproved land that aren't illegal and/or hurt you worse than they help you? I'm having trouble thinking of any.
Also, I'm not sure I understand the argument that 100% LVT is completely confiscatory. It seems like, in the long run equilibrium state, a higher LVT just drives unimproved land prices lower.
Ignoring all the other issues with development (which, as you correctly point out, would prevent an LVT from fully fixing anything), under an LVT system, land prices should settle to whichever price results in the maximum tax that either A) businesses are willing to pay while making the business worth it or B) residents are willing to bear while living in their homes.
As a toy example, if a $100/year tax is the maximum I'm willing to pay while still thinking my business is worth it, then the maximum price I will pay to buy a lot to run that business is $100 under a 100% LVT. If it's a 50% LVT, then the maximum price I'm willing to pay is $200.
I'm not sure how I see that one of these two as more confiscatory than the other.
I like Georgian taxes in theory, but "the value of unimproved land" is not a thing that currently exists. I can't just look up the value of my unimproved land. We would have to go construct it, we would have to build a system for evaluating it. And then the actual system we get would very likely have all sorts of garbage. It's easy to say that the value of unimproved land will be a value that has all these nice theoretical properties, when we don't actually have these calculations.
Of course Prop 13 is so terrible, my neighbors with a larger, nicer house than me pay about 1/5 of the property taxes, so pretty much any overhaul of the system would be great for me. I doubt my neighbors would support it though. Better reform the system before I live here another decade and the lingering miasma of Prop 13 corrupts me into a NIMBY.
It's extremely hard to explain the ways in which "housing is too expensive" is the hidden despair factor in mid-30s American city life right now.
Nothing has driven me more insane than seeing a city where it's easier to steal public land for a literal insurrectionist's think tank's patio than to build a by-right permitted ADU on private land.
I'm definitely in the camp opposed to Georgian taxes, specifically because of #2 on your list. The fundamental problem here is that the most common version of this proposal, the 100% Georgian tax, attempts to fix the problem for future generations through the complete destruction of most current homeowners, rather than looking for a solution where everyone takes a proportionate share of the costs. There can be reasonable compromises where homeowners are compensated for the taking of their property, the tax is phased in VERY gradually, or mortgages are voided to share the losses between banks and homeowners, and I see that you propose a gradual ramp that stops at 50%, so I'm not strongly opposed to that proposal if I was confident that's how it would happen, though we would first need to determine how steep the immediate drop in values would be as people will not pay as much for property that will predictably lose much of its value. However, every time I see this discussed there are quite a few in favor of an immediate 100% tax who view the ruination of the middle class as a side benefit, as long as that's the case this reform is too dangerous to be seriously considered.
For those who saw the bit about voiding mortgages and objected that's wildly impractical because it would destroy the banking system, I'd ask you to consider that the situation is not improved by moving that same cost onto people who are less able to afford it. Personally, I would only lose about a third of my net worth to a 100% Georgian tax, so I'd survive, but for many people the size of their mortgage would be higher than the remaining value of their home, resulting in underwater mortgages and trapping those people where they are, unable to sell their house in a way that pays off the mortgage and unable to afford the new tax. The millions of resulting bankruptcies and foreclosures would be even more harmful to the economy than the failing banks from voided mortgages would be.
Most people who own their homes keep a significant portion, maybe a majority, of their wealth tied up in that home. I might be able to buy a home in a year if that was an absolute top priority, but because I can sell my current home and use that money towards a down payment, I don't have to think about it.
That's how most people buy homes - they sell their home for the cash they need.
Renters might be in a tough place, especially if they want to live in or near a city where prices are much higher. I highly recommend considering a more rural location, especially a non-satellite city (meaning not dependent on a larger city for why people move there, like Manassas for DC).
It is a shame that starter homes are built far less often than they used to be. A small 2-3 bedroom home with a postage stamp yard - good for a family with no kids or maybe a few small kids - is a great way to get into a house and start building equity that can be used to upgrade to a future home. Spending the same money on rent doesn't allow someone to live in a place while also using the same money to save up for a bigger place.
This plan leaves most people a little vulnerable to price shocks, which may also answer the question of NIMBYs and people against Georgist taxes.
Not sure what is going on in the rent control section - your link titled "Where ‘get rid of rent control’ gets implemented, it keeps working." is to a tweet about implementing supply increasing YIMBY policies, nothing to do with rent control. You even quote the tweet!
It's not official yet, but it has the support of city council now, so it will likely make it through all the necessary steps. I hope that Calgary will soon be another example of successful YIMBYism.
>Twitter Community Note: According to the Census Bureau, the vast majority of Americans (65.8% of US households) live in a home that they own. The home ownership rate continues to increase, and is currently higher than it was before the start of the pandemic.
In what sense is 65.8% a "vast majority"?
------------------------
>You have to live somewhere. In many places the rental market is at best thin. Home ownership rates have not declined much because many will respond by buying and living in a smaller house, or one in a much worse location, or most importantly by having fewer children.
Why is Singpore's fertility so low? It's commonly talked about as a YIMBY paradise, and yet nobody wants to have kids. This is important because it is claimed that people are having fewer children in the US due to housing affordability, and YMIBYs love high density housing. But it really seems like either apartment living or urban living is toxic to fertility - obvious confounders around culture, IQ and other behavioral traits that apartment dwelling people and populations are more likely to have notwithstanding.
I'm torn. The point that this changes incentives by making growth a plus in city budgets rather than a minus is super-important and under-appreciated. Still I can draw the housing supply curve and notice that this too creates deadweight loss. In practice it's not so different from non-monetary kinds of onerous requirements, which do give the city something it wants (other things equal) and not necessarily at a worse rate than "oh we'll spend it on parks". I notice that the monetary and non-monetary requirements are positively rather than negatively correlated and I claim that yes, in practice there is "just one dial to turn" of Cities Are Entitled To Make New Construction Jump Through Hoops.
I think I have an objection to Georgism that actually falls under the #1 umbrella - viz., I think you can't in principle tax the unimproved value of land.
Specifically, the maximum amount I'd be willing to bit on a piece of unimproved land is the NPV of its *as-improved* value -- as YIMBYs themselves point out, land on which you can build an apartment building is generally worth more than land you can only build an SFH on. This also means that as construction or zoning improvements occur, the more-intensive potential use of the same plot increases its (unimproved) value (and under a 100% LVT as a property owner/developer I actually see no gains, merely transaction costs at best if I undertake the improvements to its maximally-intensive use).
Essentially, because my maximum bid for the unimproved land would be epsilon less than the NPV of (Expected rents in as-improved state - market-clearing RoR - cost of capital), any value *not* allocated (to cost of capital + market-clearing RoR) is implicitly capitalized into the bid price for the unimproved land value.
In brief: I don't think you can tax land value but not tax improvements even in principle.
This would be less true under a highly idiosyncratic improvement market in which some combination of uniquely low building costs (seems extremely unlikely in general and especially under typical construction contractor arrangements) and/or uniquely high above-market rents following improvement (not characteristic of the urban apartment market, which is dominated by basically commoditized rectangular prisms where price, square footage, and location rather than improvement-unique amenities dominate price) was a big consideration, but in general I don't think that urban apartment construction is characterized by high alpha. Disneyworld is the exception rather than the rule when it comes to improvements.
Your list of six reasons for not doing Georgian taxes reminds me strongly of the range of reasons people give for not going after AGI.
I think these are likely to be people who made up their minds for a reason they don’t want to acknowledge or defend, and therefore they come up with a plausible reason to block the action. It seems a little like a Gish Gallop - they can always come up with more flimsy arguments than one has time to debunk.
Re Penn station, Alon gave an alternative design plan here
https://pedestrianobservations.com/2023/09/18/penn-station-3d-model/
Are there ways of destroying the value of unimproved land that aren't illegal and/or hurt you worse than they help you? I'm having trouble thinking of any.
Also, I'm not sure I understand the argument that 100% LVT is completely confiscatory. It seems like, in the long run equilibrium state, a higher LVT just drives unimproved land prices lower.
Ignoring all the other issues with development (which, as you correctly point out, would prevent an LVT from fully fixing anything), under an LVT system, land prices should settle to whichever price results in the maximum tax that either A) businesses are willing to pay while making the business worth it or B) residents are willing to bear while living in their homes.
As a toy example, if a $100/year tax is the maximum I'm willing to pay while still thinking my business is worth it, then the maximum price I will pay to buy a lot to run that business is $100 under a 100% LVT. If it's a 50% LVT, then the maximum price I'm willing to pay is $200.
I'm not sure how I see that one of these two as more confiscatory than the other.
I like Georgian taxes in theory, but "the value of unimproved land" is not a thing that currently exists. I can't just look up the value of my unimproved land. We would have to go construct it, we would have to build a system for evaluating it. And then the actual system we get would very likely have all sorts of garbage. It's easy to say that the value of unimproved land will be a value that has all these nice theoretical properties, when we don't actually have these calculations.
Of course Prop 13 is so terrible, my neighbors with a larger, nicer house than me pay about 1/5 of the property taxes, so pretty much any overhaul of the system would be great for me. I doubt my neighbors would support it though. Better reform the system before I live here another decade and the lingering miasma of Prop 13 corrupts me into a NIMBY.
It's extremely hard to explain the ways in which "housing is too expensive" is the hidden despair factor in mid-30s American city life right now.
Nothing has driven me more insane than seeing a city where it's easier to steal public land for a literal insurrectionist's think tank's patio than to build a by-right permitted ADU on private land.
I'm definitely in the camp opposed to Georgian taxes, specifically because of #2 on your list. The fundamental problem here is that the most common version of this proposal, the 100% Georgian tax, attempts to fix the problem for future generations through the complete destruction of most current homeowners, rather than looking for a solution where everyone takes a proportionate share of the costs. There can be reasonable compromises where homeowners are compensated for the taking of their property, the tax is phased in VERY gradually, or mortgages are voided to share the losses between banks and homeowners, and I see that you propose a gradual ramp that stops at 50%, so I'm not strongly opposed to that proposal if I was confident that's how it would happen, though we would first need to determine how steep the immediate drop in values would be as people will not pay as much for property that will predictably lose much of its value. However, every time I see this discussed there are quite a few in favor of an immediate 100% tax who view the ruination of the middle class as a side benefit, as long as that's the case this reform is too dangerous to be seriously considered.
For those who saw the bit about voiding mortgages and objected that's wildly impractical because it would destroy the banking system, I'd ask you to consider that the situation is not improved by moving that same cost onto people who are less able to afford it. Personally, I would only lose about a third of my net worth to a 100% Georgian tax, so I'd survive, but for many people the size of their mortgage would be higher than the remaining value of their home, resulting in underwater mortgages and trapping those people where they are, unable to sell their house in a way that pays off the mortgage and unable to afford the new tax. The millions of resulting bankruptcies and foreclosures would be even more harmful to the economy than the failing banks from voided mortgages would be.
Most people who own their homes keep a significant portion, maybe a majority, of their wealth tied up in that home. I might be able to buy a home in a year if that was an absolute top priority, but because I can sell my current home and use that money towards a down payment, I don't have to think about it.
That's how most people buy homes - they sell their home for the cash they need.
Renters might be in a tough place, especially if they want to live in or near a city where prices are much higher. I highly recommend considering a more rural location, especially a non-satellite city (meaning not dependent on a larger city for why people move there, like Manassas for DC).
It is a shame that starter homes are built far less often than they used to be. A small 2-3 bedroom home with a postage stamp yard - good for a family with no kids or maybe a few small kids - is a great way to get into a house and start building equity that can be used to upgrade to a future home. Spending the same money on rent doesn't allow someone to live in a place while also using the same money to save up for a bigger place.
This plan leaves most people a little vulnerable to price shocks, which may also answer the question of NIMBYs and people against Georgist taxes.
Not sure what is going on in the rent control section - your link titled "Where ‘get rid of rent control’ gets implemented, it keeps working." is to a tweet about implementing supply increasing YIMBY policies, nothing to do with rent control. You even quote the tweet!
My hometown, Calgary, Alberta, Canada, is relaxing residential zoning. https://calgaryherald.com/news/local-news/calgary-housing-strategy-approved-whats-next
It's not official yet, but it has the support of city council now, so it will likely make it through all the necessary steps. I hope that Calgary will soon be another example of successful YIMBYism.
>Twitter Community Note: According to the Census Bureau, the vast majority of Americans (65.8% of US households) live in a home that they own. The home ownership rate continues to increase, and is currently higher than it was before the start of the pandemic.
In what sense is 65.8% a "vast majority"?
------------------------
>You have to live somewhere. In many places the rental market is at best thin. Home ownership rates have not declined much because many will respond by buying and living in a smaller house, or one in a much worse location, or most importantly by having fewer children.
Why is Singpore's fertility so low? It's commonly talked about as a YIMBY paradise, and yet nobody wants to have kids. This is important because it is claimed that people are having fewer children in the US due to housing affordability, and YMIBYs love high density housing. But it really seems like either apartment living or urban living is toxic to fertility - obvious confounders around culture, IQ and other behavioral traits that apartment dwelling people and populations are more likely to have notwithstanding.
You may have seen it already but a recent Works In Progress piece shares your contrarian take on city fees: https://worksinprogress.co/issue/growing-the-growth-coalition
I'm torn. The point that this changes incentives by making growth a plus in city budgets rather than a minus is super-important and under-appreciated. Still I can draw the housing supply curve and notice that this too creates deadweight loss. In practice it's not so different from non-monetary kinds of onerous requirements, which do give the city something it wants (other things equal) and not necessarily at a worse rate than "oh we'll spend it on parks". I notice that the monetary and non-monetary requirements are positively rather than negatively correlated and I claim that yes, in practice there is "just one dial to turn" of Cities Are Entitled To Make New Construction Jump Through Hoops.
I think I have an objection to Georgism that actually falls under the #1 umbrella - viz., I think you can't in principle tax the unimproved value of land.
Specifically, the maximum amount I'd be willing to bit on a piece of unimproved land is the NPV of its *as-improved* value -- as YIMBYs themselves point out, land on which you can build an apartment building is generally worth more than land you can only build an SFH on. This also means that as construction or zoning improvements occur, the more-intensive potential use of the same plot increases its (unimproved) value (and under a 100% LVT as a property owner/developer I actually see no gains, merely transaction costs at best if I undertake the improvements to its maximally-intensive use).
Essentially, because my maximum bid for the unimproved land would be epsilon less than the NPV of (Expected rents in as-improved state - market-clearing RoR - cost of capital), any value *not* allocated (to cost of capital + market-clearing RoR) is implicitly capitalized into the bid price for the unimproved land value.
In brief: I don't think you can tax land value but not tax improvements even in principle.
This would be less true under a highly idiosyncratic improvement market in which some combination of uniquely low building costs (seems extremely unlikely in general and especially under typical construction contractor arrangements) and/or uniquely high above-market rents following improvement (not characteristic of the urban apartment market, which is dominated by basically commoditized rectangular prisms where price, square footage, and location rather than improvement-unique amenities dominate price) was a big consideration, but in general I don't think that urban apartment construction is characterized by high alpha. Disneyworld is the exception rather than the rule when it comes to improvements.