pull down to refresh
I agree the government won't do anything to help, but not for the reasons you state.
The government literally sustains itself on high real estate appraisals. It's long-, short-, and medium-term interests are to have real estate prices stay artificially high. To that end, they restrict the market from adding supply, which those greedy profit maximizers would be happy to do.
There's nothing special about the housing market that prevents normal market mechanisms from working, other than the peculiar mix of government regulations, taxes, and subsidies.
Not quite. Local government gets a big piece of the pie upfront with development fees before building can even start. Then they take property taxes after the fact, in addition to income tax and company tax on income from the businesses involved, as well as title transfer fees during recording. The appraisal is critical for a different reason; at least out west, by law on how much property tax can be charged, so the appraisal is the only way to raise the taxes higher since it's a locked percentage of property value. Yet that's not the impact to the buyer, it's the impact to who is already the property owner.
I'm talking about general public finance, not the what happens at the point of development. Property taxes typically make up the bulk of local government receipts, so they are incentivized to prevent market corrections to high real estate prices.
I'm not arguing that there would be no issues on a perfectly free housing market, just that we aren't currently operating in one and artificial scarcity is enforced by the state so we can't even observe what the market is trying to do. You can get a glimpse, though, by comparing the expensive highly regulated markets to the cheaper less regulated ones.
I agree. It's a drastic approach. And it's one people will have to take when the market and government won't do anything to help because they are too interested in their short-term benefit versus long-term community stability (the other point I was making in my original post).