7 ms·

"Oddly, those same single family home owners would become rich if they could subdivide their properties for intensive development. I have never understood this

by patja 8y ago

"Oddly, those same single family home owners would become rich if they could subdivide their properties for intensive development. I have never understood this paradox." They are already rich by virtue of the property they own, so you would have to revise this to be "would become even more rich", which is more illuminating. These folks are already well above the "food, housing, basic needs" level of Maslow's hierarchy and are working towards self-fulfillment, part of which (to them) relies on preserving their current experience in their current home and neighborhood as it is (like living in a museum, as another commenter labeled it). They bought it for what it is, and that's what they want to preserve. It isn't about the money, it is about the experience they want to preserve. Or put in monetary terms, the market may value their home at $2m, but they put a personal value of maybe $3m or $5m on it in order to compensate for the cost of moving (people who have put down these kind of roots hate moving) AND finding an acceptable substitute or upgrade from what they currently have.

LanceH 8y ago
Going in on land development is a great way for the amateur to go broke.
Flimm 8y ago
The paradox you talk about is well-known. Property owners often don't sell their property even when it seems advantageous to do so, both for them and for the economy in general. This reminds me of an episode of EconTalk, interviewing the author of the book Radical Markets, which includes new and radical ideas for how an economy could be run. One of the ideas is to allow anyone to buy a property at its set value at any time (giving a reasonable notice period, I presume). The property owner is the one who sets the value of the property. To stop property owners from gaming the system and pricing the property too high, all property owners would be required to pay a tax periodically on the value of their property. (Of course, the lower the price set, the more likely it is that the property will get bought, so the property owner can't set the price too low either.) The goal of this idea is to allow land to be used the most efficiently, the way the market is supposed to work for most goods. Of course, this idea has a lot of obvious drawbacks, but I thought it was an interesting thought to discuss. - Podcast episode: http://www.econtalk.org/glen-weyl-on-radical-markets/ http://www.econtalk.org/glen-weyl-on-radical-markets/ - Article from website of the book: http://radicalmarkets.com/chapters/property-is-monopoly/ http://radicalmarkets.com/chapters/property-is-monopoly/
- ttul 8y ago
  A very interesting idea, which will never gain political traction.
  - tormeh 8y ago
    Yeah, it's very neat, but having to sell your house because you mistook the value of your home? Not gonna fly.
  - patja 8y ago
    I listened to that podcast episode and had the same reaction. Their counter-argument is to start with markets where there is not so much personal emotion wrapped up in the price setting and valuation, such as broadcast spectrum rights. Then you could work out the logistical details of how it would work, people would get comfortable with it, and then years or decades later you expand it to housing. Part of their proposal relies on a huge mental shift in how we think about housing and property rights, to treat it as a shared public good rather than something any individual owns. That's the kicker, which realistically would take a few generations as the mental model shift required probably exceeds the capacity for change in anyone over the age of 40.
    - watwut 8y ago
      Moving every time someone else decide you have to would sux for anyone except very young people. It would also make it even harder to keep social ties and networks. In particular those people who care about elderly or sick relatives who live nearby. It is also pretty cool when your kids can have stable set of friends, stable school and what not. Having to pack everything and look for new place to live just because some asshole decided he wants your living place now must be real pleasure.
      - briandear 8y ago
        So set a high price. Problem solved. You wouldn’t be forced to sell for any less than the value you, yourself have assigned. Nobody gets exploited: people get exactly what they want.

by patja 8y ago

LanceH 8y ago

Going in on land development is a great way for the amateur to go broke.

Flimm 8y ago

The paradox you talk about is well-known. Property owners often don't sell their property even when it seems advantageous to do so, both for them and for the economy in general. This reminds me of an episode of EconTalk, interviewing the author of the book Radical Markets, which includes new and radical ideas for how an economy could be run. One of the ideas is to allow anyone to buy a property at its set value at any time (giving a reasonable notice period, I presume). The property owner is the one who sets the value of the property. To stop property owners from gaming the system and pricing the property too high, all property owners would be required to pay a tax periodically on the value of their property. (Of course, the lower the price set, the more likely it is that the property will get bought, so the property owner can't set the price too low either.) The goal of this idea is to allow land to be used the most efficiently, the way the market is supposed to work for most goods. Of course, this idea has a lot of obvious drawbacks, but I thought it was an interesting thought to discuss. - Podcast episode: http://www.econtalk.org/glen-weyl-on-radical-markets/ http://www.econtalk.org/glen-weyl-on-radical-markets/ - Article from website of the book: http://radicalmarkets.com/chapters/property-is-monopoly/ http://radicalmarkets.com/chapters/property-is-monopoly/

ttul 8y ago
A very interesting idea, which will never gain political traction.
- tormeh 8y ago
  Yeah, it's very neat, but having to sell your house because you mistook the value of your home? Not gonna fly.
- patja 8y ago
  I listened to that podcast episode and had the same reaction. Their counter-argument is to start with markets where there is not so much personal emotion wrapped up in the price setting and valuation, such as broadcast spectrum rights. Then you could work out the logistical details of how it would work, people would get comfortable with it, and then years or decades later you expand it to housing. Part of their proposal relies on a huge mental shift in how we think about housing and property rights, to treat it as a shared public good rather than something any individual owns. That's the kicker, which realistically would take a few generations as the mental model shift required probably exceeds the capacity for change in anyone over the age of 40.
  - watwut 8y ago
    Moving every time someone else decide you have to would sux for anyone except very young people. It would also make it even harder to keep social ties and networks. In particular those people who care about elderly or sick relatives who live nearby. It is also pretty cool when your kids can have stable set of friends, stable school and what not. Having to pack everything and look for new place to live just because some asshole decided he wants your living place now must be real pleasure.
    - briandear 8y ago
      So set a high price. Problem solved. You wouldn’t be forced to sell for any less than the value you, yourself have assigned. Nobody gets exploited: people get exactly what they want.