Doesn't it make it difficult to sell homes in high cost-of-living areas? Seems like you'd be taking a hit in the sale price to reflect the increased property tax burden on the new owner. I don't know whether you come out ahead, but it's probably more likely the longer you live there.
What it does do is create incentives for people to remodel extensively--keeping just a fraction of the house intact so it's legally not new construction--rather than move.
