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It's good for land to become more valuable. We want land prices to go up, and housing prices to go down. All that means is density is increasing faster than lan

It's good for land to become more valuable. We want land prices to go up, and housing prices to go down. All that means is density is increasing faster than land values. Nothing against allowing lot splits, but this is the wrong reason to be for it. The reasoning in the previous to replies reaks of "homeownership is more virtuous than renting" which is not true. And besides, if you really want more homeownership, the most important path forward is condos, and thus condo defect liability reform.

deleted 1y ago
[deleted]
ty6853 1y ago
On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. Low land prices are indicative of less restrictive zoning. In more restrictive zoning that punishes building houses on small plots, land becomes more valuable because the land is the license to build a house. i.e. where I live I had to buy more land than I needed because without it I could not build my house, which drives up land prices (increased demand). The reason why california ADU increase parcel prices is because it prints an additional house license while being illegal to split it off. Otherwise you would be left with two cheaper parcels, although in sum they may be more expensive, but you would still pay less for enough land for license to print a house.
- Ericson2314 1y ago
  > On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. > > In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. No I mean the land value of where the density is / right next to it. In your example, the land with the crazy tower / right next to it would be incredibly valuable. If other areas use land value, that's because the land value is being concentrated in/around the dense areas. When we talk about upzoning, we want to not only do less sprawl, but also increase overall population (growth will attract population). The exurbs will loose land value, but the cities will gain immense land value, and the suburbs will gain some land value too.
  - ty6853 1y ago
    At the time of creating the condo the 0.1 acres would be substantial cheaper. If I have thousands or millions of acres to choose from and I can pick whatever 0.1 acres I want my demand for housing is 0.1 acres and the supply is still all the available land. Pushed to the mathematical limit the housing value of the land approaches zero for the land you buy for your hong kong condo, since demand is now near zero and supply far outstrips it. That is, the cost of the 0.1 acres to the developer is about the same as all the worthless for housing land surrounding it. Since a large portion housing is currently locked up in 30 year mortgages in a once in a lifetime COVID era near 0% loan that people will not give up for less than a king's ransom, we should be especially sensitive of price of land for new construction, and that will continue to be a dominant factor in rental costs and home prices.
    - Ericson2314 1y ago
      You talking about the average price of all land. I'm talking about the price of built-up land. We're not talking about the same thing. Land in Hong-Kong and Manhattan is more expensive. And arbitrarily tall tour makes its tiny neighborhood of land arbitrary valuable. Your also assuming housing demand is exogenous to land use — e.g. that everyone that would live in SF but can't afford it lives in Tracy. That's not true. If you make SF contain 3.5 million people, at Manhattan density, you better believe we'll not suck all the people out of Palo Alto or Oakland, but also increase demand in those areas. Fremont would have more demand but less so, Pleasanton in not sure, and the central valley exurbs less demand.
      - ty6853 1y ago
        Suppose Hong Kong and Manhattan rezoned and made it illegal for half the density there to exist. That is, for any given population, the demand for land would now be double. Would you expect land prices to go up or down as some portion of the ejected people try to maintain a footprint there?
        Ericson2314 1y ago
alexb_ 1y ago
Big correction: we want the value of land to go up. Under our current systems, this corresponds with the price of land going up, but that does not necessarily have to be the case. Taxation of land values causes the value of land to go up while keeping the price of land down, solving both problems at once.
- Ericson2314 1y ago
  Oh yes total agreement of course :) But then we would actually be messing with homeowners capital gains, so I was going to bring this up separately. I fear the only way to get rid of prop 13 is to buy out the incumbents, in effect. We will compensate for higher property/land taxes with much higher land values, so the lucky incumbents gains are not threatened, but for later generations, the LVT already started high, and the prices low, and capital gains should not be expected.

deleted 1y ago

[deleted]

ty6853 1y ago

On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. Low land prices are indicative of less restrictive zoning. In more restrictive zoning that punishes building houses on small plots, land becomes more valuable because the land is the license to build a house. i.e. where I live I had to buy more land than I needed because without it I could not build my house, which drives up land prices (increased demand). The reason why california ADU increase parcel prices is because it prints an additional house license while being illegal to split it off. Otherwise you would be left with two cheaper parcels, although in sum they may be more expensive, but you would still pay less for enough land for license to print a house.

Ericson2314 1y ago
> On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. > > In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. No I mean the land value of where the density is / right next to it. In your example, the land with the crazy tower / right next to it would be incredibly valuable. If other areas use land value, that's because the land value is being concentrated in/around the dense areas. When we talk about upzoning, we want to not only do less sprawl, but also increase overall population (growth will attract population). The exurbs will loose land value, but the cities will gain immense land value, and the suburbs will gain some land value too.
- ty6853 1y ago
  At the time of creating the condo the 0.1 acres would be substantial cheaper. If I have thousands or millions of acres to choose from and I can pick whatever 0.1 acres I want my demand for housing is 0.1 acres and the supply is still all the available land. Pushed to the mathematical limit the housing value of the land approaches zero for the land you buy for your hong kong condo, since demand is now near zero and supply far outstrips it. That is, the cost of the 0.1 acres to the developer is about the same as all the worthless for housing land surrounding it. Since a large portion housing is currently locked up in 30 year mortgages in a once in a lifetime COVID era near 0% loan that people will not give up for less than a king's ransom, we should be especially sensitive of price of land for new construction, and that will continue to be a dominant factor in rental costs and home prices.
  - Ericson2314 1y ago
    You talking about the average price of all land. I'm talking about the price of built-up land. We're not talking about the same thing. Land in Hong-Kong and Manhattan is more expensive. And arbitrarily tall tour makes its tiny neighborhood of land arbitrary valuable. Your also assuming housing demand is exogenous to land use — e.g. that everyone that would live in SF but can't afford it lives in Tracy. That's not true. If you make SF contain 3.5 million people, at Manhattan density, you better believe we'll not suck all the people out of Palo Alto or Oakland, but also increase demand in those areas. Fremont would have more demand but less so, Pleasanton in not sure, and the central valley exurbs less demand.
    - ty6853 1y ago
      Suppose Hong Kong and Manhattan rezoned and made it illegal for half the density there to exist. That is, for any given population, the demand for land would now be double. Would you expect land prices to go up or down as some portion of the ejected people try to maintain a footprint there?
      - Ericson2314 1y ago

alexb_ 1y ago

Big correction: we want the value of land to go up. Under our current systems, this corresponds with the price of land going up, but that does not necessarily have to be the case. Taxation of land values causes the value of land to go up while keeping the price of land down, solving both problems at once.

Ericson2314 1y ago
Oh yes total agreement of course :) But then we would actually be messing with homeowners capital gains, so I was going to bring this up separately. I fear the only way to get rid of prop 13 is to buy out the incumbents, in effect. We will compensate for higher property/land taxes with much higher land values, so the lucky incumbents gains are not threatened, but for later generations, the LVT already started high, and the prices low, and capital gains should not be expected.