Housing prices are out-of-this-world in Montgomery County, but leave it to the radical Montgomery County Council to raise them even further. Councilmembers Kristin Mink (D - District 5) and Will Jawando (D - At-Large) are sponsoring a bill that would impose a "demolition tax" when a home is torn down, or even partially-demolished. The new excise tax would begin at $20,000, and then rise in future years, as the tax will be linked to the Consumer Price Index as of July 1 each year. As anyone who understands basic economics knows, the $20,000+ amount will be fully passed on to the homebuyer purchasing the new house, or the homeowner investing in the new home or renovation. It's shocking the Council would deliberately impose a massive increase in home prices like this.
In true Communist fashion, the money the Council steals from struggling homebuyers via the new tax will be shifted into the Montgomery County Housing Production Fund to finance "affordable" housing projects. Comrade, er, Councilmember Evan Glass (D - At Large) proposed a similar demolition tax in 2019, but it failed to pass that year. A public hearing on Bill 5-25 has been tentatively scheduled for March 18, 2025 at 1:30 PM at the County Council Office Building at 100 Maryland Avenue in Rockville.
16 comments:
They should put all the pretense away and make it 500K in BCC but discount it to 100K in other areas. Think of all the money this will bring in!
It should be illegal to replace a single-family home with a much more expensive single-family home. It should be one-to-one if the physical condition of the old house is deteriorating, or otherwise only upgrades to duplexes or townhouses should be allowed.
Of course the "projected" revenue will be spent while builders will either curtail full builds or leave a section of the old structure and get a remodeling permit. In either case, funds already spent on "affordable housing" will create a deficit that has to be made up by all people in this county that actually pay taxes.
Why are democrats so bad at math?
On first glance, I'd say that sounds like a good thing. Speculators go in to modest neighborhoods, buy reasonably sized houses that fit the character of that community, then raze the place to erect monstrous piles that extend to the setback lines and dwarf all the other houses in the area. Arrivistes just in from the hinterlands see the giant new-construction house, plunk down the several million asking price because they think the place is glamorous [and huge, so it must be good], and suddenly the race is on for the aforementioned speculators to gobble up the rest of the more modest housing proximal, so more bubble-gum-&-popsicle-stick-construction mcmansions can metastasize across another zip code, transforming old, established neighborhoods into a hodge-podge of garish, vulgar temples to greed and absence of taste. Why not levy a tax on the developers? They're destroying neighborhoods and making out like bandits while doing it. It's not like they can't tack on the $20k price to the multi-million dollar prices they charge for their projects, which plenty of vulgarians will be all too ready to pay for the honor of living in a freshly erected 5,000 square-foot obscenity.
"As anyone who understands basic economics knows, the $20,000+ amount will be fully passed on to the homebuyer purchasing the new house"
Uh, no. As anyone who understands basic economics knows, the ARV (after-repair value) of a property has nothing to do with what a flipper spends. The new build will sell for what someone is willing to pay for it - period. The effect of this proposed bill, if anything, would be a reduction in flipper interest in teardowns (at least at current market prices). That would result in a REDUCTION of pre-reno/demo sales prices, not an increase.
I don't know if this is the answer, but if they also prevent neighbors from holding up demolitions because they are angered by a new home going up, then it's not a bad idea.
I agree the money should be used to maybe reduce property taxes or the equivalent.
6:51: Do you really believe that businesses don't pass taxes onto the consumer? No business owner is going to take a $20K+ haircut out of love for the Montgomery County Council and Worldwide Communism.
6:10/6:23/6:52 Would all like to live in a place controlled by the bureaucracy where everyone they disagree with is put in their place. Good news! Venezuela & Cuba are happily accepting expats bringing some of that evil US currency that they disdain.
Helluva job Brownie! This just accelerates the exodus from deep Blue state to Red. Fact.
That's what exists now. Do you realize how hard it is to demolish a home if you have neighbors filing all kinds of petty grievances stopping you? Costs far more than $20,000 to go forward.
A flipper can list the new build for whatever they want, but it will sell for the price at which a buyer agrees. Whether the flipper spent $700k on the new build or $720k is irrelevant to that actual market value. That's how "basic economics" works.
1:05: But you just increased the price of the house by $20,000 - that's making housing more expensive, also basic economics.
"But you just increased the price of the house by $20,000"
Again, the price the flipper asks is irrelevant. The home is not sold until a buyer agrees to the purchase price. The home's value does not magically change from $2m to $2m+20k if this bill were to pass. The home's value does not change just because a flipper asks for more money.
2:21: You're correct in that many factors will determine the home's value to the buyer. My point is that whoever paid the excise tax is not going to accept an offer that doesn't cover the full $20000+ he or she had to shell out. The tax just gives another incentive to make housing more expensive.
Correct. If this bill were to pass then either:
1. the flipper will accept a lower ROI, in which case nothing changes except $20K goes towards the affordable housing fund instead of into the flipper's pocket.
2. the flipper would not accept the lower ROI, in which case:
a. The unrenovated 1400sqft home in west county is purchased by an owner-occupant instead of by a flipper.
b. The unrenovated 1400sqft home in west county sits unpurchased until it reduces $20k, then it is again financially attractive to a flipper (or owner-occupant).
None of the possible outcomes RAISES housing prices. They only (possibly) lower housing prices. There's no scenario where magically the value of a house goes up because government taxes is more. That's not how taxes works. At all.
If you want to make a conservative's argument then you'd point out that such a tax might reduce private, flipper investment in the local housing stock which might in turn negatively impact construction trades, housing quality, property tax revenue, etc. but you certainly can't claim that average housing prices would go up.
You know what's "controlled by bureaucracy"? Zoning laws preventing the highest and best use of land - i.e. mandating only single-family housing when there is strong demand for more housing.
Post a Comment