[avar]

People have spent more than 5 minutes thinking about it. There's a 2018 book called Radical Markets[1] that explores alternative models for various entranced economic systems, such as property ownership, voting etc. There's a free podcast interview with the author online[2].

The tl;dr is that you'd decide what your $500k home is worth. You could choose to say it's worth $80k, $500k etc. You'd then pay property tax as a function of what you decided it's worth.

The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up.

In economics lingo one thing you can optimize for is "investment efficiency", or "allocation efficiency". Traditional land ownership is the canonical example of the former, someone else might be able to make better use of your land ("allocation efficiency"), but they don't own it, so tough luck.

Turning all "land ownership" into what's basically a mandatory bidding system is a way of maximizing allocation efficiency, you'd optimize for (re)allocating land to someone who can most efficiently use it.

The authors spend a lot of time discussing the various edge cases, and in particular the normal knee-jerk responses someone might have.

In particular you can set a system like this up in such a way that a "mandatory buyout" would be a fantastic deal for a given homeowner, e.g. the equivalent of having someone offer you $1 million for your $500k house.

1. https://press.princeton.edu/books/hardcover/9780691177502/ra...

2. https://www.econtalk.org/glen-weyl-on-radical-markets/

[anshorei]

To me my house is worth a lot more than it is to the market because to me it has an emotional value. A mandatory buyout assumes that people do not have emotional bonds with their homes. Do you suggest one adjusts their estimate of the value twice, or thrice as high to prevent a mandatory buyout? How is that fair to those people?

[Jiro]

You also end up taxing actual value that can only be used by one person. If your house is close to your job or your parents, or if your children or if your children have gone to school the previous 5 years in the neighborhood and don't want to leave their friends, you'd be willing to pay more to keep it. Now, you actually have to pay more to keep it.

We shouldn't be taxing people on the fact that their house is near their job. And if they don't raise the price of their house, someone will eventually buy it at the market value of the house, and the value will simply have been destroyed.

[webstrand]

It also sounds like a great way to harass people. Don't like your new black neighbor? Just force him out by buying his house for the tax price. Ideally he'll have a little more money than he started with, but I could see other social institutions, like trouble obtaining another loan, preventing the re-homing of "undesirables".

[avar]

I think you and others in this thread are missing that the proposed mandatory bidding price is a multiple of the "real" value.

So yeah, don't like your new neighbors who just bought a $500k home next to you, you can give them $1.5m (or whatever) to get their house. How are they now worse off exactly?

That family can then probably buy the larger house next to yours for $1m, and have $500k in cash left over. A bank that was willing to give them a loan for a $500k house is less likely to do so when they've got an extra $1m in cash?

The system the authors proposed is mainly intended as a clean way to get rid of things like eminent domain and the holdout problem. Most real estate transactions would take place between "willing" sellers and buyers, just like they do now.

[Jiro]

>I think you and others in this thread are missing that the proposed mandatory bidding price is a multiple of the "real" value.

That doesn't work. People will set the "real" value to be lower than the real value, in order to reduce their taxes, but high enough that someone who wants to buy the house has to pay barely enough, after multiplying, to make it worthwhile to sell. The tax rates will then be raised accordingly and we'll just have "the mandatory bidding price is the real value" with extra steps.

[avar]

Right now we don't live in a world where such a bidding system exists, because it's a rather obscure (but interesting) idea. Even if people were widely aware of the details the political will to implement it probably doesn't exist.

But you seem to be arguing that if such a system were implemented the very structure of it would lead to a race to the bottom?

I don't see why that would be the case, if there's political reluctance to implement such a system to avoid certain outcomes, why wouldn't there be the same reluctance to raise the relevant taxes?

In any case, the book I cited upthread doesn't argue for some sort of "shock therapy" introduction of a system like this, but e.g. starting with commercial real estate.

Even people who'd argue that they should never have to sell their ancestral family home would probably find it hard to extent that argument to their neighbourhood Starbucks never having to accept a bid from a competing coffee company.

[tekknik]

You could’ve left the color of the skin of the neighbor out and still made your point. People of all skin colors face discrimination these days, not just blacks.

[webstrand]

I am curious why you called this out. Is there a social reason I should not use such specific examples in the future? In my mind, giving a concrete example that the reader has some familiarity with help them to develop the story in their mind.

For example, one could misinterpret the neighbor as having the same socio-economic status, making it far less clear how losing the house but gaining an equitable amount of money causes hardship. And blacks specifically have been targeted by such policies in the past, so it's a lot easier to imagine how other social policies align to make becoming un-housed even more problematic for that neighbor.

[avar]

You're just focusing on the downside without considering the upside.

Maybe you want to go see a movie you've been dying to see tomorrow, and you've got your $100 tickets in hand.

But there's someone else in the same situation, but they'd really like to see it. If a market exists they could offer you $1000, and you'd both be happier, as you can now afford something you'd prefer more than the $100 activity.

The same goes for real estate, it's just a less liquid market currently.

[avar]

You're assuming that emotional value cleanly maps to current real estate ownership. What if you'd like to re-purchase a house your family lost in the last recession, but which your family had been living in for generations?

The status quo effectively leaves you without a recourse if the current owner isn't willing to sell, the system noted upthread assumes that emotional bonds to real estate can be priced.

[benj111]

Or you could do the opposite. Declare a value of $1 and keep selling it between 2 people.

House purchases aren't quick so you'd only need to do a few a year.

[LadyCailin]

Surely each offer round becomes a bidding round, rather than a simple purchase.

[lelanthran]

> Surely each offer round becomes a bidding round, rather than a simple purchase.

No:

1. There's no requirement to list the house - who would even know if you sold it twice a year?

2. There's no requirement that the seller has to take the highest offer. The other bidder will have to bid again next year when taxes are due.[1]

[1] You can't set the tax based on what the bid is, because the bidder may not have the money (or may not be granted the bond) when time comes to actually do the transfer. The tax has to be based on what the actual selling price is.

[girvo]

I wonder if under that system the culture that leads to emotional connection to some particular spot of land and home on top of it would decline?

It’s not universal worldwide to have the emotional connect we do to our homes

[tekknik]

How would it? The emotional connection comes from the memories made in that home. You’re still raising kids, still growing up in these homes. So my guess is no.

[PhasmaFelis]

> The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up.

Forcing people to sell their home and get out, any time some rich guy comes along and decides he likes the neighborhood, seems like a terrible idea.

[yourapostasy]

> The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up.

A modification to that I read somewhere which I like is the buyer has to put in a cash over the barrel offer. Completely unencumbered cash for a period too long for any leveraged investor to tolerate. And enforcing that "cash"'ness is the courts will not enforce claims upon the property based upon pledging it as collateral for say, 2X median population lifespan years.

I'd also want to see a natural person exception and a bounty. If you are a natural person (non-corporate entity, real human), then your home is exempted from the bidding system. But if someone figures out a natural person individual claimed two or more properties under the exemption for some period (say a year and a day) or longer, then that someone gets their choice of properties illegally claimed under the exemption, with instant eviction enforced by the state immediately after the court-supported decision.

The intent of the modification is to disallow hacking the bidding system by tapping credit markets far beyond the reach of median homeowners and systematically outbidding them.

[avar]

If your nightmare scenario is that credit markets are going to offer you your arbitrary asking price for your house I'd like to live in your nightmares :)

[Dylan16807]

Huh? All the nightmares are around forced moves, not offers.