It costs 24% more to rent the typical home in the Detroit area than it does to buy it; the biggest rent premium among the 50 most populous metro areas studied by Redfin. Luckily, a new land value tax plan from Detroit’s mayor will redistribute a portion of the collected rent or imputed rent from landowners back to the city to encourage development of more rental units while discouraging building vacancy, Forbes reports.
Implementing a land value tax in Detroit requires a law change at the state legislature, but if successfully legalized, Detroit’s new tax structure could serve as a model for the nation in a wider effort to add more rental supply and resolve the housing affordability crisis.
Growing cities may pass a land value tax to encourage the development of housing units to accommodate more residents while raising tax revenue more efficiently. Unlike income, property, and sales tax, a land value tax supports sustainable economic growth. Detroit may be the most extreme example of a city that has been unable to sustain economic growth, so if a land value tax works in Detroit, more cities will likely follow suit.
Advertisement
Related Stories
Housing Markets
More Homebuyers Are Relocating for Affordability and Remote Work
A record number of homebuyers are relocating in search of more affordable homes. But where are they going?
Housing Markets
Tracking Tool Shows Home Price Gains Over Past 5 Years
This interactive tool reveals 5-year home price changes in the priciest U.S. counties
Housing Markets
Florida Is Now the Second Most Valuable US Real Estate Market
Housing markets such as Florida are seeing substantial growth driven by an uptick in new construction
