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Comment by nkmnz

9 hours ago

> One might think that homeowners would be happy that their largest asset has appreciated substantially in value, as homes did,...

This is absurd. There's absolutely no benefit to you if the value of your house increases if you have no intention of selling it. That's exactly the point of treating owner-occupied homes differently from commercially owned property. The author should be embarrassed that he, as a an economist, doesn't know that in economic theory, households do not optimize for profit on some balance sheet, but for personal (subjective) utility. That's econ 101.

7 comments

nkmnz

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garbawarb  9 hours ago

Yes there is. You own a more valuable asset, so now even if you want to keep it you could take out a loan against it for a greater amount than if it hadn't appreciated.

  • nkmnz  8 hours ago

    Your statement is based on assumptions that just don't hold for many people. First and foremost, you imply a subjective utility of receiving a loan. For many people, having loans - especially collateralized against your home - has negative utility, not positive. Case in point: someone who'd need to take our a loan to pay the property tax.

    But even if you were right for the majority of home owners: feel free to tax collateralized homes as commercial property based on the volume of the mortgage. Case solved.

  • aceazzameen  9 hours ago

    You mean take out a loan to pay for the increased taxes? The banks win with that one. Some people, especially as they age, are seeking out simplicity with their finances amongst everything else.

s1artibartfast  9 hours ago

It is basically the billionaire/ unrealized gains argument.

I can take a loan against or collateralized my home value.

I can have greater operational flexibility if I know I have a deep financial backup.

There is something to it, even if overstated

  • nkmnz  8 hours ago

    You're making a valid point, but not in favor of taxing owner-occupied homes, but in favor of treating collateralized homes as commercial property. I'd be okay with that as long as the basis for taxation is the volume of the mortgage.