RE: [LandCafe] Re: Detroit Land Grab
- I don't see the fact that land values are low in some parts of the USA and inflated ( by speculators) in others is that difficult to get your head around. As a, by no means partisan,supporter of the JS Mill land tax which suppresses inflationary land price rises ( and is really an anti HPI mechanism and ,I admit, not a lot else) this is IMO what is pretty much to be expected.(I once suggested a mechanism by which increasing LVT receipts in areas of the USA receiving people should be tranferred back to places losing them and so losing possible LVT revenue.This suggestion was received with customary land cafe courtesy ( irony).As the UK is beset with speculative land value inflation all over , this all- -American bickering about land prices in places we've never heard of,strikes me as out of order in a forum set up by a left wing Englishman to discuss matters of common concern.eTo: LandCafe@yahoogroups.com
Date: Sat, 1 Sep 2012 06:14:46 +0000
Subject: [LandCafe] Re: Detroit Land Grab
--- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:
> Just so that we are clear here (and I suppose I'll have to now go through
> the posts: found it: Fri Jul 8, 2011 11:12 pm topic started off about
> "Greece" and as usually degenerated), it was you Roy NOT ME who pick the
> location Lanham, MD (which happens to be PG county.
You're right. I was wrong, and I apologize unreservedly for accusing you of cherry-picking data. Mea maxima culpa.
I remember now that you had mentioned appraiser friends in MD who said land value was 20%-35%, and I just took the first MD SFD list I saw; but somehow the list I saw was different from the one my browser gave the link for. I never did figure out how that happened.
> BTW, it really does
> not have the worst schools in Maryland - there are worse counties
Well, this ranking has PG at 23 out of 25, even lower than Baltimore, and the only two lower ones are one small, rural county and a single school in Baltimore that somehow gets its own listing:
> and it is the location of the fastest growing suburbs of DC.
Lots of new housing of course also increases the improvement value fraction, but the effect is probably not that big.
> Pick some other county. Let's see where the data leads us.
I'll have to think about it, as I'm not sure the methodology is valid. E.g., listings of SFD building lots may be weighted to the lowest-value lots because they are so undesirable that no one wants to build on them, and they consequently stay vacant and stay listed for a long time. No one wants to spend a couple hundred thousand dollars building a house on a SFD lot in a bad neighborhood, with lousy schools, no transit service, etc., whereas a desirable location will likely sell quicker, removing it from the listings. Building lots also tend more often to be in new subdivisions where land value is low because the surrounding area is mostly still undeveloped, so there are no amenities.
Listings of finished homes are likely also weighted to high improvement value fractions both because there are so many new homes listed as they come on the market and because realtors are unlikely to want to list homes with low improvement value: a shack makes the rest of their listings look bad. There is also a vast number of low-improvement-value homes that are rented out long-term, are abandoned, or are being held vacant long-term for speculation, few of which ever make it onto the listings.
> Residential land is typically 20% to 40% of total value SO LONG AS THERE is no speculative bubble.
Then what is it for new homes? 5%? 2%? _1%_? 20%-40% is simply not consistent with plausible numbers for land value fraction of new homes, land appreciation rate, improvement depreciation rate, and typical age of improvements at the time of demolition when their value has reached zero.
> I have a proffessional appraiser (commercial and residential and many years
> of experience) in my bldg and asked him (he said 20-35%). I've talked to
> other professional appraisers over the years and have looked at assessment
> data from Maryland, Indiana, NJ, NY, ME, CT and PA and elsewhere over the
> decades. I've seen assessment and appraisal training documents over the
> years. I'm forget now the authors name but he was/is the assessor for
> Lucas County (Toledo,OH area) he wrote a paper about statistical methods
> for land value assessments, but his data was in line with what I am talking
> about and his methodology was sound and I'm sure a guy like Gwartney knows of the paper.
I'd definitely like to see Ted Gwartney's take on this, as he implemented the BC Assessment system that has consistently measured land value at 2/3 of total real estate value. Anyone know Ted's work well enough to point us to a source?
> Take a look around pages 11 and 12, in this document, for example.
Well, the average construction cost of a new home in MD is $207K:
While the median new home price is $381K:
Even allowing for profit, costs and sales commission totaling 10% or $38K, that leaves land value of $136K or _36%_ for a _NEW_ home. The 20%-35% figure for all homes therefore can't be right.
The current average market value in MD according to Zillow is $225K:
Exponential depreciation implies the average value of improvements is about $52K, leaving a typical land value of $173K or 77%. Even straight-line depreciation would imply average improvement value of only $104K, or 46%, leaving 54% average land value.
> Here is my thesis, when you start seeing Residential Land Values being
> more than 40% of Total (we could actually use for example "a control chart"
> (Deming/Shewhart) and show this) you have a speculative bubble OR you have
> a situation where fast gentrification is in effect and you have a mixed of
> crap abandoned or crap rentals amidst gentrification/renewal of
Well then Vancouver has been in a speculative bubble for 30 years, and shows no sign of leaving it. Same with CA.
-- Roy Langston
- --- In LandCafe@yahoogroups.com, "walto" <calhorn@...> wrote:
> The main point of resorting to natural law pronoucements of the kind you have bellowed is that they are supposed to help us determine what the various human-made laws SHOULD say. That is, if we have a question about know how some law should be constructed with respect to, e.g., who should receive various benefits and for how long or which protections of person or property must be enforced, or whatever, natural law claims are sometimes made--just as you have confidently made them in this context. It is, thus plainly circular to respond, when asked to specify the characteristics of some claimed natural law, "You'll have to consult the local legislature and courts--they'll tell us."Which might be why I haven't done so. Citizenship self-evidently isn't a question of natural law, and I've explained why residence defined as six months + reflects the relevant natural law principles.
-- Roy Langston