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This is not accurate outside of a handful of broken housing markets. In Philadelphia[1] land is often 1/5 of the total value. There are definitely some parcels

This is not accurate outside of a handful of broken housing markets. In Philadelphia[1] land is often 1/5 of the total value. There are definitely some parcels that are undeveloped[2] or underdeveloped[3], but most properties are more balanced. [1] I chose Philly because of a good clickable property tax browser https://property.phila.gov/?p=881576550 https://property.phila.gov/?p=881576550, and because it keeps separate land vs. improvement assessments. [2] This is in no way a statement that Rittenhouse Square should be developed. Parks are good. https://property.phila.gov/?p=885705260 https://property.phila.gov/?p=885705260 [3] https://property.phila.gov/?p=881520352 https://property.phila.gov/?p=881520352

rovolo 4y ago
Your [1] example is a 100+ unit apartment building. In the context of this thread, we're discussing single-unit buildings like your [3] example.
- timerol 4y ago
  Single-unit buildings close to downtown can have higher land costs. But single-unit buildings in single-unit neighborhoods are, again, around 1/5 land cost. https://property.phila.gov/?p=492129100 https://property.phila.gov/?p=492129100 https://property.phila.gov/?p=581427500 https://property.phila.gov/?p=581427500 https://property.phila.gov/?p=212348000 https://property.phila.gov/?p=212348000 https://property.phila.gov/?p=344136100 https://property.phila.gov/?p=344136100
  - rovolo 4y ago
    These are definitely better examples than you previously used. That said, I think the tax assessments don't accurately state the value of the land vs the building. I don't think OnlineGladiator is correct about the universality of >10x land:building, but I don't think you're right about ~0.2x in these neighborhoods either. I do think OG is correct about housing as an appreciating asset being primarily about the land value. 1) The nominal land cost has huge jumps up and down. From 2016->2017, all of these properties had their land value lowered 60-70%: $150k->$44k; $166k->$59k; $75k->$32k; $279k->$96k. I find it hard to believe that property prices swung that much, especially since the total appraised value remained constant. 2) The price of the land depends on the zoning of the land. A lot which can't be subdivided further or which can't have multi-unit housing will be constrained by what a single family is willing to pay for the lot. If you compare the last property ($140k land assessment / 19k ft2) to a smaller lot nearby [0] ($50k land / 2.4k ft2), you can see a huge difference in the land price per ft2: $6.7/ft2 vs $20.4/ft2. This price difference reflects legal constraints on what can be done with the lot. If the larger lot could be subdivided, it should be closer in price per ft2 to the smaller lot and would be worth ~$390k. If the total assessed value remained constant, that would be 1.25:1 for land:building. [0] https://property.phila.gov/?p=344121100 https://property.phila.gov/?p=344121100 3) Furthermore, the price of the building itself depends on the scarcity of housing. With plentiful land to build new housing, old housing loses value quicker. An old house in a constricted market has more value because it's existing housing on a scarce plot of land. Even though the value is assigned to the building, that building is more valuable because of the plot of land it's associated with.

rovolo 4y ago

Your [1] example is a 100+ unit apartment building. In the context of this thread, we're discussing single-unit buildings like your [3] example.

timerol 4y ago
Single-unit buildings close to downtown can have higher land costs. But single-unit buildings in single-unit neighborhoods are, again, around 1/5 land cost. https://property.phila.gov/?p=492129100 https://property.phila.gov/?p=492129100 https://property.phila.gov/?p=581427500 https://property.phila.gov/?p=581427500 https://property.phila.gov/?p=212348000 https://property.phila.gov/?p=212348000 https://property.phila.gov/?p=344136100 https://property.phila.gov/?p=344136100
- rovolo 4y ago
  These are definitely better examples than you previously used. That said, I think the tax assessments don't accurately state the value of the land vs the building. I don't think OnlineGladiator is correct about the universality of >10x land:building, but I don't think you're right about ~0.2x in these neighborhoods either. I do think OG is correct about housing as an appreciating asset being primarily about the land value. 1) The nominal land cost has huge jumps up and down. From 2016->2017, all of these properties had their land value lowered 60-70%: $150k->$44k; $166k->$59k; $75k->$32k; $279k->$96k. I find it hard to believe that property prices swung that much, especially since the total appraised value remained constant. 2) The price of the land depends on the zoning of the land. A lot which can't be subdivided further or which can't have multi-unit housing will be constrained by what a single family is willing to pay for the lot. If you compare the last property ($140k land assessment / 19k ft2) to a smaller lot nearby [0] ($50k land / 2.4k ft2), you can see a huge difference in the land price per ft2: $6.7/ft2 vs $20.4/ft2. This price difference reflects legal constraints on what can be done with the lot. If the larger lot could be subdivided, it should be closer in price per ft2 to the smaller lot and would be worth ~$390k. If the total assessed value remained constant, that would be 1.25:1 for land:building. [0] https://property.phila.gov/?p=344121100 https://property.phila.gov/?p=344121100 3) Furthermore, the price of the building itself depends on the scarcity of housing. With plentiful land to build new housing, old housing loses value quicker. An old house in a constricted market has more value because it's existing housing on a scarce plot of land. Even though the value is assigned to the building, that building is more valuable because of the plot of land it's associated with.