One big thing that could help address the problem is make buying a second home as difficult as borrowing to start a business or getting margin on a trading account. As it is, they are treated as any other primary home purchase because the government backs the loans. The government should not be in the business of propping up second home prices. The reason so many people are able to buy and hold multiple homes is because it's so easy to leverage 5x or even far more. Most margin investment accounts can only leverage 2x. This ease of getting highly leveraged on a home is also the only reason that homes as an investment outperforms the market. Because a 1% increase actually equates to a 5% ROI if you put 20% down on the house.
Again, how will it make me care less about price of my own house? It's not an investment. It's my only house. I bought it because I need to live somewhere. What would convince me to agree to a landfill next to it?
I think Japan is one country I know of where RE isn't considered an investment. Not sure if there are other places. Might be worthwhile to find out how they do it.
I understand that the Japanese market has to do with earthquake-worthiness. Nobody wants a house built to 30-year-old codes, likely with 30 years of being lightly and occasionally heavily shaken. So the potential growth in value of the land is largely neutralized by having a boondoggle that needs to be demolished on top of it.
I figure the simple answer is a large tax on non-owner-occupied homes. If the tax rate was 50% or 100% of assessed value per annum, it's unlikely property prices would rise enough to justify holding the asset.
Maybe require 60 or 100 days per year of residence, to be considered "occupied" with excused exceptions like "pandemic travel lockdowns". This would allow for a modest second-house model that keeps daylight between people like elderly "snowbirds" (who maintain a household in Arizona in the winter, and Minnesota in the summer) and the speculators who have no real intention of ever occupying the homes.
Not OP but Good question! a big part of NIMBY is driven by how much people's net worth is tied into their residence. So IMO you need to reduce this. It starts with convincing people that real estate is on average not a great investment. There is no way for primary residences to universally (1) be a good investment by beating inflation rate and (2) be more affordable.
This is more of a "cultural" thing, and I think most important.
Following that, in practice there are supply side and demand side methods of driving down the cost of living. The big ones are probably maximum height requirements, minimum parking requirements, and minimum size requirements.
China is probably the most extreme end of real-estate-as-an-investment mentality. Even without NIMBYism and zoning laws, everybody invests in real estate because it's impossible to make money off the stock market without insider government knowledge i.e. the government can destroy entire industries overnight like the recent private education bans. They're experimenting with increasing property taxes for each non-primary residence but only time will tell if it'll work.
Unfortunately, culture will take multiple decades/generations to change so the current generation are essentially out of luck if they are not in a high income career or have rich parents
Ok, you convinced me that real estate is not a good investment. I'm not going to invest into it. But I still don't want my house to become twice cheaper overnight because city decided to build landfill nearby.
You could create a tiered tax structure - which would be unpopular - where the yearly tax increases with time. In addition, you could have a progressive increase in tax based on the number of residences you have.
