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Comment by jrockway | Hacker News Reader

Something went wrong here. The price of the house should have been raised until only 1 person wanted to buy it. If you're first in line, the incentive is to sell it at a higher price to the person who's second in line, right?

I have to imagine some sort of regulatory thing was going on here, like they have to provide X% of units at Y% of market rate in order to get some tax concession or something.

I know there's not going to be a lot of sympathy for higher housing prices here, but it does feel like something went wrong in this specific case.

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In a big development I imagine clearing inventory in a straightforward way at prices that'll net you a good profit margin anyway is more appealing than trying to run bidding wars for each unit individually. Depending on the market it's also possible that the gap between "price four people are willing to pay" and "price nobody is willing to pay" isn't very significant.

There's also a goodwill aspect in other cases: Sony kept selling PS5s at MSRP even when scalpers were getting $800+, because better for them that people are pissed at the scalpers than dealing with the bad PR of such a huge price hike over previous generations.

Yeah, for established brands like Sony who expect to have long recurring relationships with customers, it wouldn't make sense to run auctions on products because you're just going to upset people and no one will think you're making mass-market products any more. The same goes for some popular musicians: they could make more at a particular show by auctioning off tickets, but they often go out of their way to have a lottery and prevent people from re-selling tickets at higher prices.

It seems possible that a large housing developer has similar incentives.

It's like how event tickets are routinely scalped. The thing that is going wrong is that the additional bid isn't worth the reputational drama.

Homo economicus would understand that the seller is simply being efficient. Homo sapiens gets all emotional about it.

For the people selling, it is often more profitable (or at least less hassle) to sell quickly with minimal fuss and move onto the next one.

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