The result is much less volatility on the market.
We shoud tax short term capital gains on property at 100 percent. Nobody should be able to profit by driving up the cost of housing.
The principle behind capitalism is that you create value and get a portion of the value thereby created as income/return. Land value appreciation very much doesn't fall into this category, unlike every other investment in which 1) the capital serves an allocative purpose and 2) is being put into productive use by someone else. Land value gains are generally extractive (and destructive, through the inefficiency it introduces) of the wealth created by nearby economic activity. I know someone who bought a bought a house in Beverly Hills in the 70s for $30k: forty years and a ~million dollars of value growth later, they sold it and collected four decades of extraction from the economic activity of the area around them. There's no universe in which this is sensible policy, and as you rightly point out, encouraging it through tax policy is even more insane.
I think it's something about homeownership that makes people hyper-defensive about this topic and unable to think clearly. I can't say I relate, given that my dad's career (and an outsize portion of his portfolio) in real estate doesn't prevent me from seeing the issue clearly.
Why should somebody not be able to take advantage of that? What if they simply wanted to move two streets over? But now could not because the somebody thinks it's unfair that housing prices whent up.
But your other points are messy. People in the cominity are building that value over time by being good citizens of the region. Had they been bad citizens nobody would have moved in and continued the process of building the cominity. It also cost a ton of money to keep your house in proper working order with also increases the demand and again raising the value of the proeprty.
I have so much more to say but I am replying on a phone and I can't stand it. Phones are horrible.
There is no universe where somebody could buy a house for 30k and forty years later be told even though they sold it for millions that they gave to give it all back - and then try to find another house for 30k. God I hope I read your post wrong.
If someone wants to or needs to own for a short term, a sensible policy is to ensure that they don’t profit from their whims.
This isn't incompatible with supply and demand at all, and from your comment, you don't appear to have understood my comment at all.
Everything else is censored by downvoting.
Yes it is.
> Flipping is simply trading,
Usually, not: flipping is typically short-timeline buy-improve-sell cycles (that is, it's exploiting market irrationality where certain improvements add more to market clearing price than they cost to add.)
This does bring up prices.
Really tired of the HN thought-police censoring ideas by downvote. If you disagree, reply and make an argument.
You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion.
Otherwise the normal short-term/long-term capital gains rules apply.