How Low Land Taxes Contribute to the Housing Shortage

The relatively low cost of holding on to vacant lots leads to underdevelopment in what are often prime residential areas.

1 minute read

November 23, 2022, 9:00 AM PST

By Diana Ionescu @aworkoffiction


An article by Konrad Putzier in the Wall Street Journal explains how the property tax system that keeps the cost of holding vacant land low contributes to the housing shortage plaguing most U.S. cities.

Putzier begins with the example of a vacant New York City lot, zoned for 1,500 apartments, that has sat empty for 17 years, with the owner paying minimal property taxes on the land. Across New York City, private vacant lots bigger than 3,000 square feet could yield around 858 million square feet of new housing and commercial space.

The article argues that low taxes on land and high taxes on buildings encourage property owners to hold vacant lots without developing on them, waiting for land values to rise. In regions like the Sun Belt, “The cost of inaction is usually low, particularly in suburban locations, where keeping a few cows on a lot allows landowners to qualify for massive property-tax breaks meant for ranchers.”

Proposals in Detroit, Philadelphia, and Richmond would reform those cities’ property tax systems to raise the tax on vacant lots and encourage developers to build. “Pittsburgh had a split-rate tax until 2001, and a number of studies found that it had more building activity than other Pennsylvania cities.”

Tuesday, November 22, 2022 in The Wall Street Journal

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Aerial view of single-family homes with swimming pools in San Diego, California.

San Diego to Rescind Multi-Unit ADU Rule

The city wants to close a loophole that allowed developers to build apartment buildings on single-family lots as ADUs.

March 9, 2025 - Axios

Green electric Volkswagen van against a beach backdrop.

The VW Bus is Back — Now as an Electric Minivan

Volkswagen’s ID. Buzz reimagines its iconic Bus as a fully electric minivan, blending retro design with modern technology, a 231-mile range, and practical versatility to offer a stylish yet functional EV for the future.

March 3, 2025 - ABC 7 Eyewitness News

Canadian flag in foreground with blurred Canadian Parliament building in background in Ottawa, Ontario, Canada.

Has President Trump Met His Match?

Doug Ford, the no-nonsense premier of Canada's most populous province, Ontario, is taking on Trump where it hurts — making American energy more expensive.

March 11, 2025 - Toronto Star

Aerial view of Honolulu, Hawaii coastline at dusk.

Honolulu's Iwilei Center Plans for Redevelopment Into Mixed-Use Space

Striving to expand affordable housing options for Oahu residents, Honolulu's Department of Land Management requests to redevelop the Iwilei Center into a mixed-use space.

March 12 - Spectrum News

Orange Biketown bike share bikes parked at station on sidewalk in Portland, Oregon,

Biketown Lives

Despite public perception of its decline, Portland’s bike share system is alive and well.

March 12 - Willamette Week

Quiet tree-lined street in Stockholm, Sweden in summer.

‘Stockholm Tree Pit’ Saves Dying Urban Trees

After noticing that two-thirds of its trees were dying, Stockholm developed a new planting method to protect trees surrounded by concrete.

March 12 - Reasons to Be Cheerful