To spur housing construction, raise taxes on those vacant lots!
Harvard’s Ed Glaeser says Boston might learn something from NY Mayor Bill de Blasio’s call to raise property taxes on vacant lots in the Big Apple, as a way to get land owners off their butts and develop properties.
We have no idea if this is at all applicable to Boston, for we’re admittedly not overly knowledgeable about vacant-lot tax policies and loopholes.
But Glaeser points to this Crain’s New York article to help make his point. From Crain’s:
Call it Exhibit A. On part of an irregularly shaped block in the Highbridge section of the Bronx, a chain-link fence wraps around a three-acre property that has sat vacant for decades. Trees and weeds have run riot, in the process encroaching upon the sidewalks along University Avenue, even as the property’s assessed value in the past decade has quietly soared from $716,000 to $9 million, according to city records.
And yet, because most of the property is zoned for residential use, and is assessed in the same low-density class as single-family homes, the Olnick Organization, which owns the land, pays less than $8,000 annually in property taxes on that residential portion.
Cases like that spurred Public Advocate Bill de Blasio in April to push for tax hikes on vacant land to force owners either to put it to use and build housing or to sell it to those who will. As mayor-elect, Mr. de Blasio is pledging to carry out his idea, which today would affect more than 10,500 lots in the five boroughs, with the largest concentration on Staten Island. The plan, after a five-year phase-in period, would hike yearly rates by an average of $15,300, according to estimates by the Independent Budget Office.
We generally like the idea of developing vacant lots and trying to crack down on long-time absent property owners who let their land deteriorate into derelict eyesores.
But isn’t this also just a way to increase taxes? If you “tax the land, not the buildings,” and yet assess unused land as if there was a certain type of building on it, isn’t that still a form of taxing a building?
Maybe someone can explain this. As we noted above, we’re not overly familiar with Boston’s vacant-lot tax policies.
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Updated: Boston condos for sale 2021
Lot values for single-family detached (SFD) spec homes are surging, according to a report from the National Association of Home Builders. The Census Bureau’s Survey of Construction shows that the overall value for lots started in 2020 has increased 18%: a significant and unprecedent jump. However, these findings are in line with other current building factors including the cost of materials as well as increased demand and supply chain issues caused by the ongoing pandemic.
The median price for a SFD home lot is now $53,000. Although that’s technically a record-high, when adjusted for inflation, lots during the housing boom of 2005-2006 went for $55,000. Still, what we’re seeing is remarkably sharp growth.
Lot Values Over Time
For decades, New England has been the division holding America’s most expensive lots. And after 2020, it remains in that top position with a whopping median lot price of $120,000 for SFD homes. Ranking second is the Pacific Division at $103,000 despite having the smallest lots in the nation. The rest of the median prices are as follows:
$73,000 in the Mountain Division
$65,000 in the Middle Atlantic Division
$60,000 in the West South Central Division
$52,000 in both the West North Central and East North Central Divisions
$40,000 in the East South Central Division
$35,000 in the South Atlantic Division