Although a few neighborhoods shine, Washington area condo market still struggles - The Washington Post.
This article describes how difficult it is for condo owners to sell, since most buyers need mortgages with high loan-to-value (LTV) ratios, and FHA, Fannie and Freddie aren't lending because of rule-making on building approvals. And many buildings prohibit renting one's condo, a particular problem in a city where people rotate from one assignment to another, often in other countries.
It suggests that people with cash offers can get good deals.
Let's consider a different approach to housing. Suppose that, instead of paying taxes on one's wages, sales and building, taxes were shifted over to the value of the land one occupies. Were we to collect the full rental value of the land, in the form of a tax, reducing the selling price of the site to $0 or a token amount, a home, be it a high-rise condo unit or a single-family house, would sell for the depreciated value of the structure. A 2-bedroom, 2 bath condo of 1200 square feet would sell for pretty much the same amount wherever it is, with the buyer taking over the land value tax just as buyers now pick up the responsibility for the conventional property tax.
Buyers would need to borrow a great deal less. A 1200 square foot condo, at a generous $100 per square foot, would sell for $120,000. A 10% down payment on that would be a manageable $12,000. And the $108,000 mortgage could probably be paid off in far less than 30 years, incurring much less interest.
Relieved of taxation on wages and other income, one could afford to pay for the location one chooses, in the form of a monthly or quarterly payment to one's community. One wouldn't expect appreciation of one's housing -- after all, it is a depreciating asset. But assuming one's local government is providing services which others consider worth the price of the rental value of the land, one could expect to sell an attractive house or condo unit fairly quickly, and be able to relocated locally or cross-country in fairly short order.
Housing would no longer be regarded as an investment expected to appreciate. Buyers would enter clear-eyed and realistic, and seek to find the housing that best fits their needs without trying to make an investment.
Perhaps best of all, it would free up capital. We'd no longer be borrowing anything to buy land, so those funds would be available for investment in buildings, equipment and other things that create jobs. And many more of us, I think, would become investors, and would be accumulating resources to see ourselves through our retirement years.
Post Script: It occurs to me that among the first people to benefit from this measure, were it to be enacted in Washington, DC, would be our incoming congressmen, senators and their aides, who could afford housing, whether they were coming from a rich district or a poor one, whether they had tremendous fortune, or barely enough for a down payment. They could afford their own home, without living with roommates on C Street, or sleeping on their congressional couch and showering down the hall, as some impecunious or loudly frugal members of Congress choose to. And they would become conscious of how much of the cost of living in a city is payment for the location itself -- which should benefit all of their constituents, be they in blue counties or red ones. (And it might be interesting to look at how many blue cities there are.)