3 ms·

Nah, it's really easy to calculate the value of the land. Once you calculate the value of the land, then it's pretty much applicable to the whole neighborhood

Nah, it's really easy to calculate the value of the land. Once you calculate the value of the land, then it's pretty much applicable to the whole neighborhood too. It's a one-and-done analysis. This isn't my opinion. There's lots of economic research to back this up. EDIT: some support: https://www.progress.org/articles/the-implementation-of-land-value-taxation https://www.progress.org/articles/the-implementation-of-land...

AnimalMuppet 5y ago
Some evidence would be more convincing than a glib "nah, I'm right"...
- deleted 5y ago
  [deleted]
- epistasis 5y ago
  Oddly enough there was no evidence provided for the original claim, either. This despite there being many sources of this estimattioj laid out directly in the original article. The comment didn't mention why the original articles' various methods do not work.
  - AnimalMuppet 5y ago
    Fair point. But to me, I hold the reply to a higher standard. Why? Because a claim can be interesting (in the HN sense), even without evidence. A "no it's not" is less interesting, even though it's also a claim. Maybe that's just me...
aeternum 5y ago
This really doesn't make sense. Views matter for example, land with a blocked view should be worth less than land without the blocked view. Land immediately adjacent to a golf course or park is often valued higher. Land immediately next to railroad tracks or industry, not so much while the discount drops off steeply just a few blocks away. Water rights, drainage, soil quality, contamination, roadway access all matter a great deal for more commercial land.
- MrPowers 5y ago
  I agree that different factors cause some land to be more valuable than others. I'd argue that the factors you've listed are relatively easy to factor into an appraisal. Property taxes, in comparison, are really hard to compute. Each jurisdiction has different rules. There are different valuation methodologies. If you add a 2 car garage, what the useful life. What depreciation schedule should be used. How should inflation be accounted for. I agree with your comment generally and am not sure what part of the original comment doesn't make sense to you. EDIT: Reread my original comment and see your point now. I phrased the "easy" part too strongly. I mean "easy" in relative terms... compared to what's being done currently, but agree the wording wasn't great.
  - dsizzle 5y ago
    Yeah, and these features are easier to track than the interior of the house. As an aside, I've often been surprised how little some of these features get valued. For instance, I've looked at neighborhoods where one side of the street backs to other houses and the other side backs to parkland. The nicer side is generally more expensive, but it's not a huge effect, and often homes on the bad side go for more money (because of the building itself).
    - gbhn 5y ago
      Ultimately wouldn't these rates be set politically? As in, there'd be one politician who says "raise the tax and do this" and another who says "lower the tax and stop doing that" and voters just pick what they want to happen.
      - dsizzle 5y ago
        Aren’t all tax rates set politically?
  - dnautics 5y ago
    > Property taxes, in comparison, are really hard to compute Mark to market. If you sell your home, then that value is the fixed price of the home until the next sale event.
dsizzle 5y ago
This quote from your link contradicts a "one-and-done" whole neighborhood analysis: >There would be an annual value assessment for each plot of land It seems the OP has better examples of how it would be done than that link.
pdonis 5y ago
> it's really easy to calculate the value of the land. No, it's really easy to wave your hands and come up with a number that you claim is "the value of the land". But since that number is not based on actual sales of the land in question, it's just hand-waving. Not to mention that if you ask five different economists to do the estimating, you'll get more than five different answers. Much of the article that prompted this thread is trying to deal with this problem: there are so many widely varying estimates of land value, and no compelling reason to believe any one more than the others, because none of them are based on actual sales of the land whose value they're trying to estimate.
- MrPowers 5y ago
  I'm not sure I agree with this: > since that number is not based on actual sales of the land in question, it's just hand-waving Actual land is sold in a lot of markets. That sets a great benchmark for "comparable transaction" types of valuation analyses which tend to be the most reliable. If one acre of land is sold, there is a great baseline for the whole surrounding area. I passed all 3 CFA exams and agree it's not an exact science, but as far a valuation analyses go, this one is pretty easy. Valuing something like intellectual property, goodwill impairment analyses, 409a valuations are much harder.
  - pdonis 5y ago
    > Actual land is sold in a lot of markets. But much more land with improvements on it is also sold, and that's the land that all these hand-waving formulas claim to be determining the "value" of--not the total value of land + improvements, but just the value of the land itself.
    - theluketaylor 5y ago
      The local cost of construction per sq ft to replace an improvement is reasonably easy to arrive at. So is the annual cost to maintain an improvement. Then simply subtract from purchase price. The toughest part is making sure the process isn't corrupted and some people get an assessed land value far less or more than it is actually worth. It likely wouldn't work with real estate, but low cost motorsports has a simple solution to this problem. If there is a $1000 limit on the value of the car before all the standard safety additions, then the owner has to accept $1000 from any other competitor for the car. This massively disincentives anyone from undervaluing their race car as it will simply be purchased for way less than it's worth. In real estate this would just result in wealthy people snapping up anything they thought was even slightly undervalued. Maybe value purchases can only happen when challenging a valuation with strong court-backed protection for the owner to ensure the valuation has been applied justly.

AnimalMuppet 5y ago

Some evidence would be more convincing than a glib "nah, I'm right"...

deleted 5y ago
[deleted]
epistasis 5y ago
Oddly enough there was no evidence provided for the original claim, either. This despite there being many sources of this estimattioj laid out directly in the original article. The comment didn't mention why the original articles' various methods do not work.
- AnimalMuppet 5y ago
  Fair point. But to me, I hold the reply to a higher standard. Why? Because a claim can be interesting (in the HN sense), even without evidence. A "no it's not" is less interesting, even though it's also a claim. Maybe that's just me...

aeternum 5y ago

This really doesn't make sense. Views matter for example, land with a blocked view should be worth less than land without the blocked view. Land immediately adjacent to a golf course or park is often valued higher. Land immediately next to railroad tracks or industry, not so much while the discount drops off steeply just a few blocks away. Water rights, drainage, soil quality, contamination, roadway access all matter a great deal for more commercial land.

MrPowers 5y ago
I agree that different factors cause some land to be more valuable than others. I'd argue that the factors you've listed are relatively easy to factor into an appraisal. Property taxes, in comparison, are really hard to compute. Each jurisdiction has different rules. There are different valuation methodologies. If you add a 2 car garage, what the useful life. What depreciation schedule should be used. How should inflation be accounted for. I agree with your comment generally and am not sure what part of the original comment doesn't make sense to you. EDIT: Reread my original comment and see your point now. I phrased the "easy" part too strongly. I mean "easy" in relative terms... compared to what's being done currently, but agree the wording wasn't great.
- dsizzle 5y ago
  Yeah, and these features are easier to track than the interior of the house. As an aside, I've often been surprised how little some of these features get valued. For instance, I've looked at neighborhoods where one side of the street backs to other houses and the other side backs to parkland. The nicer side is generally more expensive, but it's not a huge effect, and often homes on the bad side go for more money (because of the building itself).
  - gbhn 5y ago
    Ultimately wouldn't these rates be set politically? As in, there'd be one politician who says "raise the tax and do this" and another who says "lower the tax and stop doing that" and voters just pick what they want to happen.
    - dsizzle 5y ago
      Aren’t all tax rates set politically?
- dnautics 5y ago
  > Property taxes, in comparison, are really hard to compute Mark to market. If you sell your home, then that value is the fixed price of the home until the next sale event.

dsizzle 5y ago

This quote from your link contradicts a "one-and-done" whole neighborhood analysis: >There would be an annual value assessment for each plot of land It seems the OP has better examples of how it would be done than that link.

pdonis 5y ago

> it's really easy to calculate the value of the land. No, it's really easy to wave your hands and come up with a number that you claim is "the value of the land". But since that number is not based on actual sales of the land in question, it's just hand-waving. Not to mention that if you ask five different economists to do the estimating, you'll get more than five different answers. Much of the article that prompted this thread is trying to deal with this problem: there are so many widely varying estimates of land value, and no compelling reason to believe any one more than the others, because none of them are based on actual sales of the land whose value they're trying to estimate.

MrPowers 5y ago
I'm not sure I agree with this: > since that number is not based on actual sales of the land in question, it's just hand-waving Actual land is sold in a lot of markets. That sets a great benchmark for "comparable transaction" types of valuation analyses which tend to be the most reliable. If one acre of land is sold, there is a great baseline for the whole surrounding area. I passed all 3 CFA exams and agree it's not an exact science, but as far a valuation analyses go, this one is pretty easy. Valuing something like intellectual property, goodwill impairment analyses, 409a valuations are much harder.
- pdonis 5y ago
  > Actual land is sold in a lot of markets. But much more land with improvements on it is also sold, and that's the land that all these hand-waving formulas claim to be determining the "value" of--not the total value of land + improvements, but just the value of the land itself.
  - theluketaylor 5y ago
    The local cost of construction per sq ft to replace an improvement is reasonably easy to arrive at. So is the annual cost to maintain an improvement. Then simply subtract from purchase price. The toughest part is making sure the process isn't corrupted and some people get an assessed land value far less or more than it is actually worth. It likely wouldn't work with real estate, but low cost motorsports has a simple solution to this problem. If there is a $1000 limit on the value of the car before all the standard safety additions, then the owner has to accept $1000 from any other competitor for the car. This massively disincentives anyone from undervaluing their race car as it will simply be purchased for way less than it's worth. In real estate this would just result in wealthy people snapping up anything they thought was even slightly undervalued. Maybe value purchases can only happen when challenging a valuation with strong court-backed protection for the owner to ensure the valuation has been applied justly.