What are some possible negative effects of very high real estate transfer taxes?

Very high real estate transfer taxes can lead to market participants concealing property transfers as a means to avoid or minimize the financial burden imposed by these taxes. When transfer taxes are elevated, buyers and sellers may seek ways to circumvent the full tax implications, which can create a lack of transparency in the real estate market. This concealment can manifest in various ways, such as underreporting the sale price or engaging in non-traditional sale arrangements that are not documented properly.

The consequence of such behaviors can lead to erratic property valuations, hinder market analysis, and complicate regulatory oversight. This dark side of high transfer taxes not only impacts the individuals involved but can also distort overall market dynamics, reducing trust among stakeholders and making accurate assessments more challenging.

In contrast, the other options highlight outcomes that do not align with the negative implications of high transfer taxes, such as increased market efficiency or improved housing affordability, which are typically not seen in scenarios where transfer taxes are prohibitive. Enhanced government revenue can be a result of high taxes, but this does not indicate a positive effect on market behavior or transparency.