For some time I have been wondering why there just never seem to be any small or older houses for sale for anything less than a ridiculous price. Well, at least not in our area...
Then I happened to find myself in a conversation with a local realtor and finally understood that part of the reason is that these days you're actually paying a sort of "speculative value premium" on that run-down shack.
What is speculative value? Well, it is something that is priced into a sale price of a basically worthless piece of property where part of the price includes the fact that you would knock down the old shack and build a new house there, at the end of which it would be worth a million dollars therefore the Shack Seller is going to charge you an extra $300,000 simply for the opportunity to knock down what's already here!
"Oh," I said, "so you just mean price gouging!"
In essence, the seller - who has a piece of shit property - is trying to "profit share" in the buyer's efforts to improve the property. Every heard of "pay it forward?" This is pay it backwards.
Which gets us to the part of free market capitalism I really don't like: this tendency to milk every last cent out of every last square inch of any kind of product or land or idea that you can, at all times.
Let me hurry to add here that I'm a firm supporter of the theoretical ideas of free-market capitalism, but those don't always represent the tangible ways things play out.
In theory, supposedly you know we should end up with something called a "fair market value" which is allegedly dependent on a willing buyer and a willing seller meeting at some price point. That, of course, assumes "rational" market participants, and that's where things start to fall apart.
And the more I study that, the more it looks like a lie. Instead, the "fair market value" is actually set by the point at which the most desperate seller is willing to give up something to the most generous buyer.
Which also sheds a little light on why so many things are inherently not at "fair value" at all, and instead consists of the intersection point of greed and desperation.
Having worked in sales for much of my life — often as a self-employed contractor — I have repeatedly encountered this pattern. When I was a dealer in rare old postage stamps for collectors, I would look at an estate lot to buy for resale, ballpark it's selling price if I were to parcel it out, and make an offer accordingly.
Apparently, it has become increasingly common for prospective buyers to think "I see that person has something worth $1000; I would do quite well if I could buy it for $400, but let me offer them $10 and see if they take it!"
Some might argue that it is simply the way of the world, and how markets work, and "what's the problem?"
The "problem" — at least as I see it — is that it's based in the core ideology "Exploit, if you can get away with it" rather than any kind of ethic that assumes any kind of fairness and integrity.
The bigger problem is that rampant greed can actually be very destructive in marketplaces because it tends to give rise to monopolies and market dominance by just a handful of participants, obstructing entry for those trying to create a more equitable environment.
It's also one of the challenges the whole idea of decentralization faces. In principle it's a cool concept, but there will always be those who want to try to control the entire situation — just consider "Hive 1.0" in our own community's recent history.
Thanks for reading, and have a great week ahead!
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Created at 2023-10-02 23:58 PDT
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