alt Hacker NewsIt isn't done because it has overt pathological economic characteristics. This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option. This puts the asset permanently underwater by construction, which would crater asset values. The maths don't math. You can't just pick one side of a balanced equation and pretend the other side doesn't exist.
At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.
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When people start using financial terminology outside the natural context, it's either gish gallop or justifying antisocial behavior.
> It isn't done because it has overt pathological economic characteristics.
A secondary home over $1 million in value also has overt pathological economic characteristics. Especially if the taxes paid on it are tragically low.
> This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option.
Eminent domain already exists.
> without even collecting the offsetting risk premium
You get to have a second home, in New York, with a value of over $1 million.
Yes, I'm proposing taxation and regulation on top of that.
But, knowing this law exists, everyone gets to make the choice whether they want it or not.
We also have the legal mandate to institute taxes in the first place. You also did not collect an offsetting risk premium for that, and had no right to expect one.
> This puts the asset permanently underwater by construction
Eminent domain already did that. And you're saying "permanently," but I think you could fairly easily steel-man my proposal to say that the government has a certain number of days after property taxes are paid to declare their intention to collect. That's different from "permanently."
I'm not an expert, by any means.
But you also just described what buying a house in an HOA is like. You have no idea what future fees will be like. And you have very little control. And many HOAs can foreclose on your house, if you don't pay their fees. John Oliver did a whole segment on it. And something like 80% of new home construction is under an HOA.
So, why should I have an over-abundance of sympathy for people, with a secondary home, in NY City, worth over $1 million?
Maybe the whole concept of a secondary home over $1 million in value, in New York city, should just not exist?
Or, maybe it should exist, but the taxes should be pretty damn high, and they should be based off of a pretty damn fair assessment of value. I'm all open to counter-proposals of how to get a more equitable assessment of value.