Glen Weyl's "Radical Markets" proposes that houses are constantly for sale. In this world, owners set a price for their capital assets (e.g. their residence) and they have to sell if anyone offers that price. If they set a price that the market deems too high, then they get to keep the asset - but there's no free lunch because the price they set also determines how much tax they will pay.
It's a neat idea - it means that there is always an incentive to turn property over to its most valuable use.
But in the case of residential properties, it may not have much of an effect on property turnover. And to the extent that it does, the welfare effect could well be negative.
These thoughts came to me as I was chatting to my neighbour yesterday. He told a story that turned out to include as a key player a very distinctive looking local man whom I have never spoken to, nor ever spoken with anyone about, but who intrigues me. The story was so much better for being about THAT guy!
One of the benefits of living in a place for a while is that you get these little moments of joy as your disparate stories and associations start connecting. There is reward in this and in Weyl's world, people will value their properties as such. So, they will set their property prices at a level where nobody else wants to buy from them. The net result is that houses will remain with their current owners - very much like the status quo.
But, one of the powerful devices employed in Weyl's proposal is mental accounting. It feels bad to be paying a huge tax each year on a property that the market says isn't worth it. So, there is a novel and salient incentive to sell the house, which is not present under the status quo.
Now imagine that the resident of the house is an older person, and those responsible for setting the price are the adult children. In Weyl's world, filing tax returns will be a de facto conversation about whether its time to put Pops in a home.
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