Why would someone want all their net worth in real estate properties rather than diversify with other investments, which if they wanted to could also still include the real estate sector?
This creates a distortion where people buy the biggest house they can afford, because everything else gets taxed.
Their houses aren’t even “investments” to them, they’re lifestyle properties that also may increase in value.
You invest 1 million USD in the stock market. It loses 90% of it's value. You basically have nothing but a tax write off on future gains.
I guess the housing equivalent would be an HOA, but honestly I would rather lose 90% of my money than sit through an HOA meeting…