Why don’t we try removing all the insane tax incentives first, e.g. 1031 exchange, and then see what happens? There are so many incentives for investment in real estate. Even if more housing was built, investors would snap up the properties and keep prices high. I don’t understand how you can complain about high prices while investor demand is massively subsidized.
Tax incentives for property investing are ridiculous in many countries. In Canada, the capital gains on the sale of your primary residence are tax-free. You just have to live there for about a year. People move annually, flipping as they go, to earn a tax free income while someone investing in the stock market is taxed. It makes no sense to me.
The U.S. has the same tax incentive, but there is an additional tax incentive, called a 1031 exchange, that lets you pay no capital gains if you invest the money in more real estate.
Without these incentives housing supply would be even lower. The incentives are designed to encourage the creation of additional housing units. Without liquidity in the space new housing creation would stagnate.
