Effectiveness of Housing Price Controls

[sCrax]

This will only make market prices go crazy. We saw it on ls-rp when there were no restrictions. Houses in the hood were selling for tens of millions just because there was a shortage of houses and people were taking advantage of it to farm the most money they can.

[Topinambour]

4 hours ago, Brofessor said:

This won't change with a free market though. We're only getting more people on the server so the issue of supply and demand will always be there, even if its a free market. Houses will still run out eventually and their price will skyrocket even more. It's not going to solve the issue at hand. It's just going to make the economy even more messed up than it is now.

Basically yeah. If we're only talking about houses specifically, it's funny because it's also a very commonly-known mechanism IRL. If houses are scarces, there are no constructions, and prices are left unchecked, then they skyrocket to hell and beyond. Most RL politics are attempting to build more in order to avoid the problem while keeping a free market (it's not working that well), but on the server it has been worse in the past since we can't even build ^^' And it's not a question of making hypotheses or "I think" or "It feels like" or whatever. It's the actual stuff we actually saw over different servers and different periods of time - every time, it went like clockwork. Keep house prices unregulated on a server => boom they become beyond insane. 

 

The delay is there for one reason: to avoid house flippers, who bought a place and then sold it a week or two after, in order to make profit. Those flippers have long, long been a COMPLETE PLAGUE on every single server where they existed, so it's pretty nice to see a way to calm them down. 

Edited April 1, 2022 by Topinambour

[Power]

4 hours ago, Topinambour said:

Basically yeah. If we're only talking about houses specifically, it's funny because it's also a very commonly-known mechanism IRL. If houses are scarces, there are no constructions, and prices are left unchecked, then they skyrocket to hell and beyond. Most RL politics are attempting to build more in order to avoid the problem while keeping a free market (it's not working that well), but on the server it has been worse in the past since we can't even build ^^' And it's not a question of making hypotheses or "I think" or "It feels like" or whatever. It's the actual stuff we actually saw over different servers and different periods of time - every time, it went like clockwork. Keep house prices unregulated on a server => boom they become beyond insane. 

 

The delay is there for one reason: to avoid house flippers, who bought a place and then sold it a week or two after, in order to make profit. Those flippers have long, long been a COMPLETE PLAGUE on every single server where they existed, so it's pretty nice to see a way to calm them down. 

Ok but here is the issue. What purpose does regulating houses prices serve if the houses will never be on the market for the regulated prices because the seller isn't going to sell the house for a major loss. They just will wait the 6 months and sell it for whatever they want. You can still address house flippers while allowing people to sell what they want. And what we have IRL was way more complex and not free market because you have things like Central banks buying mortgage backed securities to prop up housing markets and artificially low interest loans that allow people to continue to bid up the prices.
 

  

6 hours ago, sCrax said:

This will only make market prices go crazy. We saw it on ls-rp when there were no restrictions. Houses in the hood were selling for tens of millions just because there was a shortage of houses and people were taking advantage of it to farm the most money they can.

Again this point doesn't hold up because houses are still already scarce and the houses that go on the market after 6 months of ownership where owners can charge whatever they want haven't been selling for tens of millions of dollars. 

[verrevert]

Price control does work as intended within our game server. In real life, it's generally agreed as being a negative because it impacts new supply, a problem we do not have on this server as we are limited by the amount of houses within the game world. You remove the restriction, you have the same problem in the future except the prices are even more. I'd say the rules as they stand are there to make people think twice before they purchase a house, but maybe there should be an adjustment to allow someone to sell it for the price they bought it for.

[RedRover]

17 minutes ago, Power said:

Again this point doesn't hold up because houses are still already scarce and the houses that go on the market after 6 months of ownership where owners can charge whatever they want haven't been selling for tens of millions of dollars. 

Already addressed this point which you seemingly ignored. Not everyone will wait 6 months to sell a house nor does every character even last six months. The timer works as intended to filter out the small group who actually keep a character around more than 2 weeks and keep in check people who would sell a property for millions after two weeks just because they can. We’ve already had multiple houses sell in the multi-million price point. The reason why it hasn’t happened a lot yet? Again, not everyone’s character lasts 6 months nor does everyone want to wait 6 months to sell it. The control is working as intended. 
 

If you remove these controls, it won’t be just the small group of people who actually last 6 months on one character selling these properties for millions, it will be EVERYONE. The market would be even more ruined than it is now. You must see the distinction. 

Edited April 1, 2022 by Brofessor

[Power]

19 minutes ago, Brofessor said:

Already addressed this point which you seemingly ignored. Not everyone will wait 6 months to sell a house nor does every character even last six months. The timer works as intended to filter out the small group who actually keep a character around more than 2 weeks and keep in check people who would sell a property for millions after two weeks just because they can. We’ve already had multiple houses sell in the multi-million price point. The reason why it hasn’t happened a lot yet? Again, not everyone’s character lasts 6 months nor does everyone want to wait 6 months to sell it. The control is working as intended. 
 

If you remove these controls, it won’t be just the small group of people who actually last 6 months on one character selling these properties for millions, it will be EVERYONE. The market would be even more ruined than it is now. You must see the distinction. 

Can you find me any listings of these houses you claim are being sold within 6 months. Because every single house I see on the market is atleast 5 times the market price which would only be possible after 3-6+ months. Say you reduce the limit to 3 months that house could of possibly been on the market twice in the 6 month period the owner had to wait to sell the house for what he wanted. And guess what if there more houses on the market people cannot get away with charging as much because people will actually have choices. Right now the incentive is just to hold a house for 6 months until you can sell it for what you want again. 
 

 

This causes houses to go on the market more infrequently and makes houses even more expensive since they are even more rare then they already are. You are right characters often get cycled through fast but when you create the incentive for people to hold onto houses for 6 months guess what they are going to do?

Edited April 1, 2022 by Power

[Nervous]

We're also thinking of adding a weekly offline tax on each houses that wouldn't be huge but could be a major burden if you decide to keep the house for 6 months without using it.

[CertifiedKiller]

Set a price cap on a houses worth based on factors like the condition, location and interior. Add more houses to the server, there's tons of properties that could be used as homes, but they're not.. and remove any time limit on selling houses.. maybe add a mortgage system or something.

[Power]

5 minutes ago, CertifiedKiller said:

Set a price cap on a houses worth based on factors like the condition, location and interior. Add more houses to the server, there's tons of properties that could be used as homes, but they're not.. and remove any time limit on selling houses.. maybe add a mortgage system or something.

People will just hoard the houses or sell it to their friends if their only choice is to keep the house or sell it for a massive loss.

 

  

9 minutes ago, Nervous said:

We're also thinking of adding a weekly offline tax on each houses that wouldn't be huge but could be a major burden if you decide to keep the house for 6 months without using it.

Don't think this is going to work. You aren't going to compel people to sell houses for prices they don't want to. And here is my issue with this..

This example I mentioned before if this guy wanted to sell this house say at 3 months he would only be able to sell it for like a million. Is this tax going to be substantial enough to be enough to remove the incentives waiting for the 6 months so you can sell it for twice the price. Because if you do the math the extra 1 million that could be made by waiting after 3 additional months for a total of 6 to sell the house that is like making 75k per week for 3 months. Is this Tax going to come anywhere even close to that. Because say I pay 250k in taxes in that time period but still made an extra million if I waited to sell the house, then its still a winning proposition. So this tax would have to be MASSIVE to have your desired effect. People don't seem like to complete deregulation so I would also suggest maybe half all the waiting periods. Instead of 6 months do 3 months. 

Edited April 1, 2022 by Power

[Chuckles]

The easiest and most effective solution would be to remove the ability to sell the properties for whatever they want after an XYZ amount of time. This is the reason properties are held on to rather than sold because people are willing to sit on them for months if it's going to make them a couple of hundred grand extra. I don't see the benefit to it at all and it's what is currently making the market so inaccessible. As far as a weekly offline tax goes, that won't really be a deterrent because after sitting on it for so long they'll just add whatever they lost in tax to the overall sale price.

 

If there is no reward for holding on to properties then there is no reason to hold on to them. Another problem is that people are willing to pay these ludicrous prices which adds to the inflation if everyone's buying high and selling high.

 

Edited April 1, 2022 by Chuckles