Those houses are <i>lived in</i> though (ignoring the whole issue of unoccupied investment properties).  You can have an illiquid market with a ton of housing stock.  The Bay Area has a problem with insufficient total housing stock, not with tax policy.  You can see this via rental market prices, which are not locked-in like property taxes are.<p>Imagine a Soviet grey-concrete apartment block.  You get on the list when you&#x27;re 18, and get your &quot;free&quot; apartment five years later, in which you are effectively stuck for the next 50 years.  It&#x27;s illiquid, there is high supply, there are low prices.<p>Now imagine you can swap apartments by paying a huge bribe.  It&#x27;s still illiquid, there is high supply, there are low average prices, there are high marginal prices.