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Almost all property people buy and sell is productively used, and separating the value of land and improvements is practically impossible. Edit: As a weird exa

Almost all property people buy and sell is productively used, and separating the value of land and improvements is practically impossible. Edit: As a weird example, subtracting what it would cost to build my California house from its current market value gives a value for the lot far lower than the actual market price of an empty lot in this location. This isn't just due to the depreciation of the construction (2012) but to market inefficiencies. It's actually the norm in our town. Only developers with economies of scale can really afford to build here, modulo a few wealthy families who are building their dream home without concern for ROI.

kspacewalk2 4y ago
>separating the value of land and improvements is practically impossible. is routinely done in countries in which variants of land value tax are implemented.
- beefman 4y ago
  It's routinely done in appraisals where I live too. Doesn't mean it's in any way accurate, as required to make the mechanism in the grandparent comment work.
  - zip1234 4y ago
    Valuing a building+land is already done and used for property tax purposes. Why do you think it would be worse or less accurate to just remove building part?
JumpCrisscross 4y ago
> gives a value for the lot far lower than the actual market price of an empty lot in this location Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.
- beefman 4y ago
  There's no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town. Spec home development ceased here in 2019.
  - zip1234 4y ago
    What area is this? Are homes being built anywhere in the area?
  - JumpCrisscross 4y ago
    > no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town. Lots of people want to design their own homes. For them, paying up for an empty lot is worth it. Put another way: those buying empty lots are developers or rich. With rates rising, the latter set marginal pricing in desirable places. So no, there is no teardown required. But a teardown is desirable to some people. They bid up empty lots. Hence the deviance you notice, which is well documented in other places rich people like building designer homes. (Hamptons, Jackson Hole, et cetera.)
    - beefman 4y ago
      Not sure how you're using the term "teardown" here. Earlier, you mentioned the cost of the tearing down being a factor. And as I said, I already factored it out entirely. I mentioned the custom home premium upthread. It's not the cause of the deviance either.

kspacewalk2 4y ago

>separating the value of land and improvements is practically impossible. is routinely done in countries in which variants of land value tax are implemented.

beefman 4y ago
It's routinely done in appraisals where I live too. Doesn't mean it's in any way accurate, as required to make the mechanism in the grandparent comment work.
- zip1234 4y ago
  Valuing a building+land is already done and used for property tax purposes. Why do you think it would be worse or less accurate to just remove building part?

JumpCrisscross 4y ago

> gives a value for the lot far lower than the actual market price of an empty lot in this location Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.

beefman 4y ago
There's no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town. Spec home development ceased here in 2019.
- zip1234 4y ago
  What area is this? Are homes being built anywhere in the area?
- JumpCrisscross 4y ago
  > no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town. Lots of people want to design their own homes. For them, paying up for an empty lot is worth it. Put another way: those buying empty lots are developers or rich. With rates rising, the latter set marginal pricing in desirable places. So no, there is no teardown required. But a teardown is desirable to some people. They bid up empty lots. Hence the deviance you notice, which is well documented in other places rich people like building designer homes. (Hamptons, Jackson Hole, et cetera.)
  - beefman 4y ago
    Not sure how you're using the term "teardown" here. Earlier, you mentioned the cost of the tearing down being a factor. And as I said, I already factored it out entirely. I mentioned the custom home premium upthread. It's not the cause of the deviance either.