5 ms·

The headline should read: "7900 sqft lot sells for $1.7M"... This was true for our house mid-peninsula: The appraised value of the land was 95% of the purchase

The headline should read: "7900 sqft lot sells for $1.7M"... This was true for our house mid-peninsula: The appraised value of the land was 95% of the purchase price; the appraised value of the structure was less than the cost to bulldoze. Given the proximity to Los Altos, this house will be purchased by a developer & razed, and they'll build a new 4000-sqft 2-story which will be listed for $5M+.

goodcjw2 2y ago
But that headline will not be interesting at all to be news worthy...
- smallmancontrov 2y ago
  Not news worthy, but definitely interesting. One camp says that the purpose of property rights is to incentivize value-additive economic activity by connecting investment to reward. A different camp says that the purpose of (asset) property rights is to pay rich people for being rich, thereby establishing and reinforcing a class hierarchy where the people on the bottom pay to exist and the people on top get paid to exist. Improvement value has a shape that mostly fits the former narrative while land value has a shape that mostly fits the latter narrative. Whenever you observe a sale that establishes a relative proportion between land value and improvement value, you are observing the market's revealed opinion on the relative validity of these conflicting political narratives. That isn't just interesting, it's fascinating.
Scoundreller 2y ago
do you skip various forms of property insurance (other than liability and contents) ? Or does the mortgage company (if you have one) require it anyway and you're basically paying for nothing?
- ProfessorLayton 2y ago
  Depends on the kind of loan. A conventional loan requires a home to be habitable and for the buyer to live in it for a specified amount of time, plus insurance. A developer may have their own financing arrangement.
- saalweachter 2y ago
  I can't speak with certainty on the topic, but my guess would be that you're starting -- assuming you're an individual buying this lot to build a house to live in -- with a building loan which will turn into a mortgage when the house is finished. A building loan is how the bank limits its liability on a property that cannot yet act as collateral to a mortgage -- you go to the bank with a plan for how you're going to build a house, and they only give you the funds to complete it as different milestones are met. You get so much money for the foundation, so much for the framing, etc etc etc. If you successfully build a house in the time period given, the loan converts to a mortgage, secured by the new house, if you don't ... I'm not sure actually. Probably they start expecting payments on the loan at the much less favorable unsecured loan rate, then take over the property when you fail to make payments, to auction off and minimize their losses.
llamaimperative 2y ago
Gotta love it because definitionally all of the lot owners’ new wealth was not created by them, but by the community around them and despite their withholding that land from anything useful.
- david_shi 2y ago
  georgism intensifies…
- beaeglebeachh 2y ago
  Nah it was created by them when they voted to make housing an NFT limited by very high barrier regulatory environment. They bought in before the minting cost was wildly raised at their own direction. In many cases in CA the non-property owning community drags the property value down because all those pesky people you made homeless through idiotic policy are shitting on your sidewalk, and rich potential buyers don't enjoy that.
- seanmcdirmid 2y ago
  If you've lived in the community for awhile and helped develop it, some of the community's value really could have been created by you. You paid property taxes, you frequented businesses, you participated civically. Conceivably, if a bunch of rich do gooders moved to Gary Indiana and...gentrified it...they created wealth (for better or worse, obviously).
  - smallmancontrov 2y ago
    > You paid property taxes Sure, back them out of the appreciation. > you participated civically ...by voting to block development that might have reduced your appreciation. Lol.
    - nickff 2y ago
      I thought the parent made some good points that I hadn’t considered before. Why are you “Lol”-ing (I assume derisively)? Did they disrespect you in a way which justifies rudeness?
jedberg 2y ago
> and they'll build a new 4000-sqft 2-story which will be listed for $5M+. Cupertino regulations won't let them build quite that big unless it's two stories and basement, but yeah, you're right about what will most likely happen.
lfnoise 2y ago
Here's a 352 sq ft house with a 4400 sq ft lot that sold for $1.7M on April 2. https://www.zillow.com/homedetails/420-Franklin-St-Mountain-View-CA-94041/19515177_zpid/ https://www.zillow.com/homedetails/420-Franklin-St-Mountain-...
philsnow 2y ago
> this house will be purchased by a developer & razed, and they'll build a new 4000-sqft 2-story which will be listed for $5M+ Reminds me of this empty lot that sold for about $4M https://archive.is/z9tru https://archive.is/z9tru , if you believe Zillow/Redfin, they claim the property is now worth $12M.

goodcjw2 2y ago

But that headline will not be interesting at all to be news worthy...

smallmancontrov 2y ago
Not news worthy, but definitely interesting. One camp says that the purpose of property rights is to incentivize value-additive economic activity by connecting investment to reward. A different camp says that the purpose of (asset) property rights is to pay rich people for being rich, thereby establishing and reinforcing a class hierarchy where the people on the bottom pay to exist and the people on top get paid to exist. Improvement value has a shape that mostly fits the former narrative while land value has a shape that mostly fits the latter narrative. Whenever you observe a sale that establishes a relative proportion between land value and improvement value, you are observing the market's revealed opinion on the relative validity of these conflicting political narratives. That isn't just interesting, it's fascinating.

Scoundreller 2y ago

do you skip various forms of property insurance (other than liability and contents) ? Or does the mortgage company (if you have one) require it anyway and you're basically paying for nothing?

ProfessorLayton 2y ago
Depends on the kind of loan. A conventional loan requires a home to be habitable and for the buyer to live in it for a specified amount of time, plus insurance. A developer may have their own financing arrangement.
saalweachter 2y ago
I can't speak with certainty on the topic, but my guess would be that you're starting -- assuming you're an individual buying this lot to build a house to live in -- with a building loan which will turn into a mortgage when the house is finished. A building loan is how the bank limits its liability on a property that cannot yet act as collateral to a mortgage -- you go to the bank with a plan for how you're going to build a house, and they only give you the funds to complete it as different milestones are met. You get so much money for the foundation, so much for the framing, etc etc etc. If you successfully build a house in the time period given, the loan converts to a mortgage, secured by the new house, if you don't ... I'm not sure actually. Probably they start expecting payments on the loan at the much less favorable unsecured loan rate, then take over the property when you fail to make payments, to auction off and minimize their losses.

llamaimperative 2y ago

Gotta love it because definitionally all of the lot owners’ new wealth was not created by them, but by the community around them and despite their withholding that land from anything useful.

david_shi 2y ago
georgism intensifies…
beaeglebeachh 2y ago
Nah it was created by them when they voted to make housing an NFT limited by very high barrier regulatory environment. They bought in before the minting cost was wildly raised at their own direction. In many cases in CA the non-property owning community drags the property value down because all those pesky people you made homeless through idiotic policy are shitting on your sidewalk, and rich potential buyers don't enjoy that.
seanmcdirmid 2y ago
If you've lived in the community for awhile and helped develop it, some of the community's value really could have been created by you. You paid property taxes, you frequented businesses, you participated civically. Conceivably, if a bunch of rich do gooders moved to Gary Indiana and...gentrified it...they created wealth (for better or worse, obviously).
- smallmancontrov 2y ago
  > You paid property taxes Sure, back them out of the appreciation. > you participated civically ...by voting to block development that might have reduced your appreciation. Lol.
  - nickff 2y ago
    I thought the parent made some good points that I hadn’t considered before. Why are you “Lol”-ing (I assume derisively)? Did they disrespect you in a way which justifies rudeness?

jedberg 2y ago

> and they'll build a new 4000-sqft 2-story which will be listed for $5M+. Cupertino regulations won't let them build quite that big unless it's two stories and basement, but yeah, you're right about what will most likely happen.

lfnoise 2y ago

Here's a 352 sq ft house with a 4400 sq ft lot that sold for $1.7M on April 2. https://www.zillow.com/homedetails/420-Franklin-St-Mountain-View-CA-94041/19515177_zpid/ https://www.zillow.com/homedetails/420-Franklin-St-Mountain-...

philsnow 2y ago

> this house will be purchased by a developer & razed, and they'll build a new 4000-sqft 2-story which will be listed for $5M+ Reminds me of this empty lot that sold for about $4M https://archive.is/z9tru https://archive.is/z9tru , if you believe Zillow/Redfin, they claim the property is now worth $12M.