Imagine paying $60,000 more than the asking price and thinking you got a deal…
So the seller gets $60,000 more than the asking price…
[for] an $800,000 four-bedroom townhome in Lynnwood with space for a home-office and rooms for their teenagers, he said.
and the realtor® makes their percentage.
So where did the $800,000 value come from? What makes a townhome worth $800,000? (And seriously…townhome? Call it a townhouse and be done with it.) Same as any other property…what’s around it? What investment went into those properties that make this place desirable? Good schools? Shopping? Restaurants? A park? The seller didn’t build any of that. Their taxes might have paid for some of it, same as everyone else’s, but I feel confident they listed a lot of nearby amenities they didn’t build or pay for.
Not that there is anything wrong with that. If I were selling a place that had a tremendous view, I’d mention it, even though the play of light over it was not my own work.
The point of a land value tax or a ground rent would be to recoup some that unearned value, recapturing the value of the land and location, and driving development of nearby parcels. If I am sitting on vacant land as other people develop theirs, I’m doing fine if the “highest and best use” of that land is for parking or as another brownfield or graffiti exhibit. But what if the assessor sees those nearby parcels and decides mine should be valued as if it was in productive use, rather than as a speculative asset? Am I going to sit on an idle parcel of land that is being taxed based on what it could be worth once developed? Not likely.
The neighbors around this lucky family built up that $800,000 sale price through their own investment of time and money but what do they get? Sure, they get the promise and hope that they’ll be able to do the same in their turn. But the floor under that investment, if you like, is the work of the commons, every person who funded the roads or schools or utilities that made that place worth buying into. And the rewards all get pocketed by the cartel members, the land owners, who benefit from scarcity and a system that rewards private wealth creation at public expense.