It seems like we should tax non economic wealth hoarding more not less. We have a glut of elderly people occupying houses that are far too large for their current needs while young families can’t afford larger homes. People forget that part of what property tax exist is to encourage dormant assets to trade hands from Low economic use to higher economic use. If some isn’t using a property to its highest and best use because there are no carrying costs then they will just hoard it and have no incentive to sell it to someone that could use it more productively.
It would make a lot more sense to increase the carrying costs of homes so that people are inclined to sell them when they no longer need a particular configuration.
It's not necessarily that people forgot that reason for property taxes existing. Many voters fundamentally disagree with that as a valid reason. This is a matter of ideology and values as much as economics, and not everyone shares your priorities. You can label them as greedy hoarders or whatever but that won't change how they vote.
But they aren’t the majority. And we can enact other policies to shift the incentive structure.
How is choosing to continue to live in a house you own “non economic wealth hoarding”?
I have a 4500 sqft home with 6 bedrooms because I have kids a home office a recording studio and workshop. My Nextdoor neighbors are retired and have adult kids that moved out. Their house is the same size. They could downsize and make that inventory available for other next generation families. Instead they hoard it with a mortgage that is long since paid off and thousands of sqft that serve no purpose. They don’t even heat or cool the whole thing. Now extrapolate that across the whole economy. The obvious supply and demand distortion explains part of the reason homes are as expensive as they are.
How is that “non economic”? Your neighbors prefer the value of living in that house to the value of selling it.
What business is it of yours or anyone else’s?
You are correct on the technicality, but I think OP's point is that, in combination with NIMBYism heavily restricting supply, this is a form of consumption that imposes an externality on others.