Problem I see with price based rather than square footage is that it’s going to vary by location and generation. A human being, or a family even, needs a certain amount of space, and beyond that there is some threshold across which one could say this family or person is undoubtedly taking up more than they actually need.

For example, how much housing does a family of 5 people reasonably expect if living a middle class lifestyle in America? I think that’s something that changes generationally and regionally based on income and housing costs, but today I think such a family might expect ideally a house with five bedrooms, two or three baths, a kitchen, dining room, living room, laundry room, maybe also a den or other secondary communal room. I’m not saying all houses should be this big, or shouldn’t be bigger, but that a house about this big could be a fair measuring stick for determining how much square footage a house could reasonably be without the owner-occupant paying property taxes.

Or it could be based on the number of kitchens. If a house is cut up into apartments as an investment strategy, it has to have more than one kitchen generally speaking.

For price based limits I just don’t see how you avoid artificial inflation of assessments by governments or planned neglect by owners to keep houses on one side or the other of the threshold. It would also have very different impacts on different markets. And inflation and changes in the market would require whatever threshold you set to be revised fairly regularly or else fade into irrelevance.