Upvoted for an interesting idea, but I’m not sure who would want to make bids on houses through this system. It seems like bidders are at an information disadvantage versus owners, so to be safe (i.e., not make a bid that the owner knows is too high because they have more information) they can only make bids that are substantially lower than what they expect the market value of the house to be, but then the owner would almost never want to sell through the bidding system, unless they want to move for reasons like changing jobs, in which case they’d “list” their house and invite people in for tours etc. similar to selling a house today. But this means at any given time only a few houses (the ones that are actively being sold) have accurate bids with the rest having no bids or very low bids. Can your system handle this? Am I misunderstanding anything?
You’re definitely not misunderstanding anything. I guess I was imagining that the highest bid usually wouldn’t be less than ~75% of the true property value, and this is fine. But you may be right that the highest bid could be much lower than that, if it’s just not worth people’s time to bid.
but then the owner would almost never want to sell through the bidding system
I guess I never clarified that I’m imagining this is the only legal way to sell property.
A few ideas:
For any given house, in any given year, there is a 1/1000 chance that the house is given to the highest bidder at the price they’ve bid, and the government pays the owner double that price as well (so they get triple the price).
Predictors try to predict the what price the property will have when it is next sold. (And maybe the number of years of price history and the number of neighbors has to be increased)
The government supplements long-standing bids (at say 1% a year), so if a property has had a recent inspection (which is tax-encouraged), and you can lower bound its value, you may as well put in a bid early at around that lower bound, in the hopes that it’s not much more valuable than that, and by the time the owner want to sell, your bid will be inflated for free.
Do you think any of these are workable?
ETA:
Or I guess the property owner could set the price, and anyone could buy at the listed price. Absent game theory stuff, this price could be way too high, since they’re not paying property tax according to this price, which is why I didn’t go for this in first place. But if people do this, they’d incur the wrath of their neighbors, whose property taxes would go up. If the social pressure isn’t enough, the fear that their neighbors might retaliate by setting their own property prices way too high could encourage people to set more appropriate prices for their property. This might have costs to social cohesion… I guess you could also add a 0.1% tax on the listed value of the property.
ETA:
I’m liking the last possibility more and more. I think the fairest way for a homeowner’s association to make sure no one is overinflating the price of their property would be to recruit an independent consultant to estimate the value of everyone’s properties, and then require that nobody set the price of their property more than, say, 30% higher than the consultant’s estimate. That outcome would, of course, be excellent for the government.
I think that’s a feature. We don’t want to distort the market valuation or increase actual turnover. We mostly want actual transfers to happen at about the same rate, and for the same reasons, as today—because the buyer values it significantly higher (enough to cover transaction and moving costs) than the current owner.
It _does_ depend on speculators being willing to have open bids that are below the “true market value” (whatever that means) but above the last-sale or current-tax-valuation-system amount. I strongly suspect that this would occur.
This is simply a mechanism to make the market more visible, to let the tax authority get closer to “true” value in the periods when no actual sales occur.
Upvoted for an interesting idea, but I’m not sure who would want to make bids on houses through this system. It seems like bidders are at an information disadvantage versus owners, so to be safe (i.e., not make a bid that the owner knows is too high because they have more information) they can only make bids that are substantially lower than what they expect the market value of the house to be, but then the owner would almost never want to sell through the bidding system, unless they want to move for reasons like changing jobs, in which case they’d “list” their house and invite people in for tours etc. similar to selling a house today. But this means at any given time only a few houses (the ones that are actively being sold) have accurate bids with the rest having no bids or very low bids. Can your system handle this? Am I misunderstanding anything?
You’re definitely not misunderstanding anything. I guess I was imagining that the highest bid usually wouldn’t be less than ~75% of the true property value, and this is fine. But you may be right that the highest bid could be much lower than that, if it’s just not worth people’s time to bid.
I guess I never clarified that I’m imagining this is the only legal way to sell property.
A few ideas:
For any given house, in any given year, there is a 1/1000 chance that the house is given to the highest bidder at the price they’ve bid, and the government pays the owner double that price as well (so they get triple the price).
Predictors try to predict the what price the property will have when it is next sold. (And maybe the number of years of price history and the number of neighbors has to be increased)
The government supplements long-standing bids (at say 1% a year), so if a property has had a recent inspection (which is tax-encouraged), and you can lower bound its value, you may as well put in a bid early at around that lower bound, in the hopes that it’s not much more valuable than that, and by the time the owner want to sell, your bid will be inflated for free.
Do you think any of these are workable?
ETA:
Or I guess the property owner could set the price, and anyone could buy at the listed price. Absent game theory stuff, this price could be way too high, since they’re not paying property tax according to this price, which is why I didn’t go for this in first place. But if people do this, they’d incur the wrath of their neighbors, whose property taxes would go up. If the social pressure isn’t enough, the fear that their neighbors might retaliate by setting their own property prices way too high could encourage people to set more appropriate prices for their property. This might have costs to social cohesion… I guess you could also add a 0.1% tax on the listed value of the property.
ETA:
I’m liking the last possibility more and more. I think the fairest way for a homeowner’s association to make sure no one is overinflating the price of their property would be to recruit an independent consultant to estimate the value of everyone’s properties, and then require that nobody set the price of their property more than, say, 30% higher than the consultant’s estimate. That outcome would, of course, be excellent for the government.
I think that’s a feature. We don’t want to distort the market valuation or increase actual turnover. We mostly want actual transfers to happen at about the same rate, and for the same reasons, as today—because the buyer values it significantly higher (enough to cover transaction and moving costs) than the current owner.
It _does_ depend on speculators being willing to have open bids that are below the “true market value” (whatever that means) but above the last-sale or current-tax-valuation-system amount. I strongly suspect that this would occur.
This is simply a mechanism to make the market more visible, to let the tax authority get closer to “true” value in the periods when no actual sales occur.