4 ms·

I recognize that this goes a bit against the spirit of the article, but I struggle to even conceptualize what land value means and how it can possibly be indepe

I recognize that this goes a bit against the spirit of the article, but I struggle to even conceptualize what land value means and how it can possibly be independent of its use. Land doesn’t really have inherent value, it comes from what you could do with it, but that depends a on a lot of factors including what it’s currently used for and who owns it. One problem to illustrate is that land value is typically calculated per area, but the value obviously depends on how you subdivide a particular piece of land. If I try sell a single sqft in my backyard it’s obviously pretty useless and so the value is low. But if I sell the entire plot the value of that backyard will be much higher, and a developer who manages to buy the whole neighborhood would probably value that even higher

petesergeant 1y ago
> Land doesn’t really have inherent value, it comes from what you could do with it If that's true for land, isn't it true for almost everything? Ultimately you just end up with what other people will consistently pay for it. > If I try sell a single sqft in my backyard it’s obviously pretty useless and so the value is low. But if I sell the entire plot the value of that backyard will be much higher This is true of a bag of a single pea from a bag of frozen peas too. I don't think is anything specific to land.
- thatcat 1y ago
  no one can sell 1 sq ft, they can sell the minimum zoned lot size for which the price would be maximum per sq ft price which would decrease as lot size increased.
ipnon 1y ago
In “Radical Markets” by Posner and Weyl they show that for any plot of land, if you run a continuous auction on it, meaning whoever pays the most tax on it gets to own it immediately, including all assets contained within, then you get both maximum tax revenue and maximum utility.
- immibis 1y ago
  Is this accounting for path-dependent utility? The utility of getting enough land to build a house to live in, and then losing it as soon as the house is built is severely negative. Does it also account for actors who aren't perfect economic calculators with infinite information processing capacity? In other words, does that system work for grandma?
  - MichaelZuo 1y ago
    A realistic system would definitely need to tack on an extra fee say 10% to account for real world friction. So the selling price would be 110% the highest bid.
    - immibis 1y ago
      It also gives rich people way too much power over anyone they hate. Suppose I have a billion dollars, you don't, and I hate you - I can buy your house, your next house, your next next house, and your next next next house, and you can't say no.
      - MichaelZuo 1y ago
        Isn’t already covered under other laws against harassment and so on?
        immibis 1y ago
        They're not really enforced very well AFAIK, and if they were, they'd only help you after you'd already been made homeless several times.
- thatcat 1y ago
  I think that model will fall apart when you include transactional costs
  - 1y ago
bjackman 1y ago
That's still value that's inherent to the land, it's just that you destroy/create value when you change the boundaries of the property. Land value is not supposed to be attached to what you use it for, but what you _could_ use it for. This is inherent to its location and the natural resources that are on/in it. (Plus, as I guess you have hinted, its shape and what it's adjacent to). The idea of land value is to separate those inherent things, which weren't created by the owner, from the things they actually did create. The main things we are interested in here are exactly what I mentioned: - Land in NYC is valuable because it's in NYC. Landlords didn't create that value so we want to stop them capturing rent on it (while allowing/encouraging them to capture rent on the expensive buildings they fund) - Some land has oil under it. Private individuals shouldn't be able to get rich just be owning that oil, they didn't create it (but they _should_ be able to get rich by funding drilling projects, if it satisfied a demand).

petesergeant 1y ago

> Land doesn’t really have inherent value, it comes from what you could do with it If that's true for land, isn't it true for almost everything? Ultimately you just end up with what other people will consistently pay for it. > If I try sell a single sqft in my backyard it’s obviously pretty useless and so the value is low. But if I sell the entire plot the value of that backyard will be much higher This is true of a bag of a single pea from a bag of frozen peas too. I don't think is anything specific to land.

thatcat 1y ago
no one can sell 1 sq ft, they can sell the minimum zoned lot size for which the price would be maximum per sq ft price which would decrease as lot size increased.

ipnon 1y ago

In “Radical Markets” by Posner and Weyl they show that for any plot of land, if you run a continuous auction on it, meaning whoever pays the most tax on it gets to own it immediately, including all assets contained within, then you get both maximum tax revenue and maximum utility.

immibis 1y ago
Is this accounting for path-dependent utility? The utility of getting enough land to build a house to live in, and then losing it as soon as the house is built is severely negative. Does it also account for actors who aren't perfect economic calculators with infinite information processing capacity? In other words, does that system work for grandma?
- MichaelZuo 1y ago
  A realistic system would definitely need to tack on an extra fee say 10% to account for real world friction. So the selling price would be 110% the highest bid.
  - immibis 1y ago
    It also gives rich people way too much power over anyone they hate. Suppose I have a billion dollars, you don't, and I hate you - I can buy your house, your next house, your next next house, and your next next next house, and you can't say no.
    - MichaelZuo 1y ago
      Isn’t already covered under other laws against harassment and so on?
      - immibis 1y ago
        They're not really enforced very well AFAIK, and if they were, they'd only help you after you'd already been made homeless several times.
thatcat 1y ago
I think that model will fall apart when you include transactional costs
- 1y ago

bjackman 1y ago

That's still value that's inherent to the land, it's just that you destroy/create value when you change the boundaries of the property. Land value is not supposed to be attached to what you use it for, but what you _could_ use it for. This is inherent to its location and the natural resources that are on/in it. (Plus, as I guess you have hinted, its shape and what it's adjacent to). The idea of land value is to separate those inherent things, which weren't created by the owner, from the things they actually did create. The main things we are interested in here are exactly what I mentioned: - Land in NYC is valuable because it's in NYC. Landlords didn't create that value so we want to stop them capturing rent on it (while allowing/encouraging them to capture rent on the expensive buildings they fund) - Some land has oil under it. Private individuals shouldn't be able to get rich just be owning that oil, they didn't create it (but they _should_ be able to get rich by funding drilling projects, if it satisfied a demand).