A policy this significant would cause a market crash so massive that it would entirely reshape the market. I don’t think any of us could genuinely guess how it will work out.
My hope is that it would cause a crash so significant that essentially all owned properties that are not lived in enter the market, causing homes to be sold for insanely low prices in order to avoid paying taxes, causing rates of home ownership to skyrocket. The government then needs to buy up anything leftover to rent as social and affordable housing to low-income people who can’t afford a mortgage at that time. Crashing house prices also mean that the value of these taxes drops in absolute terms as well.
Then we have a situation where everyone who has a stable income owns a home, and those who can’t will rent directly from the government at extremely affordable rates. Homes are the object we as humans own that we regularly lease to one another the most - particularly for profit or capital gain. It’s super weird and it needs to stop.
The main issue is that economists would shit their pants because so much GDP growth is locked up in our property markets. It would cause at least a recession, if not a depression, and depending on which country did it, the effects could ricochet throughout the global economy such as during the GFC.
Well, you’re right about the epic market crash, also right that it’s unpredictable, but then you go on to predict a bunch of things which seem extremely unlikely to me.
The thing is, a “crash” is not just a lowering of prices until everyone can afford the repayments on a house.
The kind of crash you’re taking about here is more like a market failure. Yes all banks would become insolvent but that’s kind of like saying the toilets on the titanic became “out of order” when it sank.
You’d basically revert to subsistence farming. Everyone living in a community of more than a few hundred would die of starvation or disease. Mexico, China, or Russia would roll in to permanently “provide aid”.
What you say also seems extremely unlikely to me, given that humans who have sufficiently advanced to the state we live in now will be unwilling to accept subsistence lifestyle.
I didn’t predict anything; you’ll note I said that this is what I would hope happens.
I’m not talking about a market failure; I’m talking about trying to take away the whole concept of a ‘market’ applying to residential real estate altogether. Because it’s so intertwined with the value of our economies, taking it away will cause a significant, permanent shrinking of GDP and other economic measures, and I think that’s appropriate given the circumstances we’re in now.
It’s a big and bold move, and as I’ve said before none of us can be exactly sure how it would pan out, but nothing is gained in life if nothing is ventured. We need to try something. I say this as someone who is lucky enough to be able to have a mortgage: it’s inherently unfair that my fellow citizens have to miss out on that opportunity.
Sorry, I meant that subsistence agriculture would be the only possible lifestyle, not a chosen one.
Each of us are talking about a crash or collapse of completely different magnitude.
At the risk of sounding too preppy, I think societal collapse is absolutely possible due to what we might think is a fairly minor supply chain interruption.
Regardless, it’s a moot point. No one is going to crash the economy so you can buy a house I’m sorry.
