For months I've been hearing about how prices for plots keep getting inflated. I too have seen it, a plot starting at a reasonable price get bought and resold over and over until it's selling for way more than it should be. If the problem was limited to a few plots the solution would be simple, and would work itself out by way of competition from other plots. Then why do plot prices keep raising up and up, one might ask? If a plot's price is inflated, shouldn't competition force the price down? Oddly enough no, at least not in this server's case.
In my opinion, the problem is with circulation. A popular way to make money is to buy a plot, then turn around and resell the same plot for more. It's easy. If you've got the money to sit on it, profit will come eventually for minimal effort. Profit margins are boosted by a crazy amount if you're able to keep track of when inactive plots go up for sale, as their original prices are stupid low compared to the market average at the moment. This cycle of inflation is quite concerning in the long run for two reasons:
1. If left unchecked, there's really no way to stop it. Sure more plots could be regioned, in an attempt to increase supply in accordance to this fabricated "demand." But that just adds more currency to barter with in the case of the real estate agent. It's not a problem that works itself out organically because there's still a demand for plots/houses from the steady stream of incoming players. If the gap widens too much, it might discourage new players from playing and lose them. Sure not everyone is dying to get their own place, but it's definitely one of the key aspects of the server in my opinion. Now this isn't just an economics issue, but a server health issue in a way.
2. Economically speaking, it kind of contradicts an ideal environment. Ideally, a rough formula for making money in an ideal game situation is Skill x Time = Profit. The more skill you add or the more time you put in is rewarded proportionally. There's also consideration for creativity, as that is often times a separate factor from Skill. Before anyone says it, I fully realize that real life doesn't always work this way. Problem is, the concept of "having money makes money" isn't an ideal game mechanic. Because using wealth/awareness of inactivity to buy property in order to turn around sell it doesn't add anything to the environment. Whereas someone running a shop adds items people need, nothing is gained here. Playing the property game isn't as much productive as it is a form of playing the system.
Both of these reasons would indicate that the issue is with the system. But how do you fix it, you might ask. Simple. There needs to be equilibrium. Something to counter the inflation. The problem is with hoarding. A few players owning massive amounts of plots, all doing to the same practice. Or even with players who don't own that many plots but still drive prices up. But their impact is a little more negligible. Here's the solution: Property taxes in a bracket-like system.
Basically, the more properties you own the more tax you pay per property. A rough visualization would be:
1-3 plots: Low tax or No Tax
3-8 plots: Medium tax
8-20 plots: High Tax
20+: Highest Tax
This adds a tangible incentive to sell. This works to balance the environment, shifting the almost-monopoly of power from the sellers to a more even distribution between buyers and sellers. How exactly? Glad you asked!
By adding a bracketed property tax, now those who play the property game get burned after a while if their plots aren't selling. Oh man, you mean you're punishing people for owning plots? No, that's not what this is. It's adding a counter force in proportion the the inflation. By hoarding and raising plot prices (fueling the problem) one eventually has to consider how much money they're being taxed for in relation to the profits they were hoping for. Basically is the tax for sitting on certain plots worth the inflation that you the seller are trying to profit from.
Then the property gamer has to decide to accept a lower profit margin, or even a loss in profit by selling for lower than what they bought for. While that thought may be uncomfortable for some, it is both more realistic and contributes to an ideal game environment, where time, skill, and creativity are rewarded as opposed to working the system.
A drop in prices makes plots more accessible to newer players, given they do enough work and make enough money. Now adding this tax wouldn't send prices plummeting down. Making money via real estate would still be a viable and prominent option, perhaps still the best as it is now. However it adds a bit more risk and balance, which is something present in every real estate market irl. Those who are rich can take the tax, comfortable in knowing they have the money for it.
In summary, an ascending bracketed tax would stimulate circulation, cut down on inflation, and help equilibrate a lop-sided environment.
Questions, comments, further explanation desired? With more time and a group counsel a more detailed plan could be worked up, this is all just a rough idea. Part of my studies include economics, so these types of things are right up my alley.
In my opinion, the problem is with circulation. A popular way to make money is to buy a plot, then turn around and resell the same plot for more. It's easy. If you've got the money to sit on it, profit will come eventually for minimal effort. Profit margins are boosted by a crazy amount if you're able to keep track of when inactive plots go up for sale, as their original prices are stupid low compared to the market average at the moment. This cycle of inflation is quite concerning in the long run for two reasons:
1. If left unchecked, there's really no way to stop it. Sure more plots could be regioned, in an attempt to increase supply in accordance to this fabricated "demand." But that just adds more currency to barter with in the case of the real estate agent. It's not a problem that works itself out organically because there's still a demand for plots/houses from the steady stream of incoming players. If the gap widens too much, it might discourage new players from playing and lose them. Sure not everyone is dying to get their own place, but it's definitely one of the key aspects of the server in my opinion. Now this isn't just an economics issue, but a server health issue in a way.
2. Economically speaking, it kind of contradicts an ideal environment. Ideally, a rough formula for making money in an ideal game situation is Skill x Time = Profit. The more skill you add or the more time you put in is rewarded proportionally. There's also consideration for creativity, as that is often times a separate factor from Skill. Before anyone says it, I fully realize that real life doesn't always work this way. Problem is, the concept of "having money makes money" isn't an ideal game mechanic. Because using wealth/awareness of inactivity to buy property in order to turn around sell it doesn't add anything to the environment. Whereas someone running a shop adds items people need, nothing is gained here. Playing the property game isn't as much productive as it is a form of playing the system.
Both of these reasons would indicate that the issue is with the system. But how do you fix it, you might ask. Simple. There needs to be equilibrium. Something to counter the inflation. The problem is with hoarding. A few players owning massive amounts of plots, all doing to the same practice. Or even with players who don't own that many plots but still drive prices up. But their impact is a little more negligible. Here's the solution: Property taxes in a bracket-like system.
Basically, the more properties you own the more tax you pay per property. A rough visualization would be:
1-3 plots: Low tax or No Tax
3-8 plots: Medium tax
8-20 plots: High Tax
20+: Highest Tax
This adds a tangible incentive to sell. This works to balance the environment, shifting the almost-monopoly of power from the sellers to a more even distribution between buyers and sellers. How exactly? Glad you asked!
By adding a bracketed property tax, now those who play the property game get burned after a while if their plots aren't selling. Oh man, you mean you're punishing people for owning plots? No, that's not what this is. It's adding a counter force in proportion the the inflation. By hoarding and raising plot prices (fueling the problem) one eventually has to consider how much money they're being taxed for in relation to the profits they were hoping for. Basically is the tax for sitting on certain plots worth the inflation that you the seller are trying to profit from.
Then the property gamer has to decide to accept a lower profit margin, or even a loss in profit by selling for lower than what they bought for. While that thought may be uncomfortable for some, it is both more realistic and contributes to an ideal game environment, where time, skill, and creativity are rewarded as opposed to working the system.
A drop in prices makes plots more accessible to newer players, given they do enough work and make enough money. Now adding this tax wouldn't send prices plummeting down. Making money via real estate would still be a viable and prominent option, perhaps still the best as it is now. However it adds a bit more risk and balance, which is something present in every real estate market irl. Those who are rich can take the tax, comfortable in knowing they have the money for it.
In summary, an ascending bracketed tax would stimulate circulation, cut down on inflation, and help equilibrate a lop-sided environment.
Questions, comments, further explanation desired? With more time and a group counsel a more detailed plan could be worked up, this is all just a rough idea. Part of my studies include economics, so these types of things are right up my alley.
