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Has this always been the case? I remember hearing way back in the 80s various (and probably hyperbolic) stories about how the dollar value of the land in greate
by geebee 7y ago
Has this always been the case? I remember hearing way back in the 80s various (and probably hyperbolic) stories about how the dollar value of the land in greater Tokyo was greater than the dollar value of the all the land in the entire United States, how if you dropped a $10,000 bill in Tokyo it would be worth less than the land it covered, that sort of thing.
It's possible for land to be valuable and worth owning while buildings are not viewed as investments. I'm not convinced that SF owners of single family properties would necessarily be financially harmed by a major relaxation of density restrictions. It's entirely possible that the value of living space per square foot could go down while the value of land per sq foot goes up.
- harisenbon 7y agoYou are 100% correct. Land is valuable, houses & buildings are not. The small house on my land has decreased to the point where I pay less than $100 a year in taxes on it. The land that it's on has increased by around 30x in the last 50 years.
- hackerbabz 7y agoWhat drives the value of the land if you are not able to build a valuable structure on it?
- brownbat 7y agoLocation. It's valuable to be next to useful places. This value of proximity could be increasing so rapidly that it would wash out the value of any particular residential building you could put there.
- ShorsHammer 7y agoA piece of land in a great location that you can't build a house/apartment or carpark on is still worthless for all intents and purposes. The only reason someone would buy it is to speculate that one day you can build something there. Zoning dictates prices, it's a struggle to get people to understand that sometimes.
- bostik 7y agoAs the article points out (but does not emphasise), the houses in Japan are by design transient. They are built to fit need, and demolished to make space for something new in their due time. This makes the land much more valuable - a plot can be repurposed when necessary, especially when the zoning rules and taxation encourage it too.
- dillonmckay 7y agoSometimes people would rather live next to nothing, not other people.
- lawnchair_larry 7y agoHouses and buildings are extremely valuable. Sure, sometimes the land is more valuable in some locations, but it still costs the average American a small fortune to build a home on it regardless of the land cost.
- Aeolun 7y agoThat doesn’t mean the house still has that value after it is built though.
- kalleboo 7y agoThe context here is Japan, where houses and buildings are worthless, not America
- dzhiurgis 7y agoThe market inflates price (not value), because regulation is restricting the build (or inflate the cost of building process itself) of new houses. In Japan it seems regulatory process is easy, hence price drops. I'd add that probably building a lot of social housing inflates the market as well...
- lawnchair_larry 7y agoStill not correct. Materials and labor costs dwarf regulatory costs, even in hot markets. The market does not inflate price, the market assigns value. In a hot real estate market, prices are value-driven, not cost-driven. In quieter markets, where supply of land is high, and builders are not booked out 1-2 years in advance, prices are cost-driven.
- dzhiurgis 7y agoYeah but... Real estate market gets hot because of restricted supply... And supply is set by regulation, regardless of cost...
- lawnchair_larry 7y ago
- seanmcdirmid 7y agoJapan went through a huge multi decade housing bust after the 80s, which brought down much of the USA/Canadian west coast with it for 5 or so years in the early/mid 90s.
- zzzzzzzza 7y agocheck out princes of the yen for an explanation of japan's housing bubble (and a lot more).
- oska 7y agoThis book looks good. Thanks for mentioning it.
- ohyes 7y agoThe value of the land would go through the roof. Houses would absolutely be getting torn down to build high density apartments. There is more to it than monetary considerations however, communities will be destroyed, the feelings and romantic notions people have about the area will be stepped on.
- wbl 7y agoBerkeley has a ridiculous number of nonconforming buildings. Clearly they did not destroy the community.