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The way you think markets work don't always apply to land. Land (distinct from buildings) is one of the few resources for which ownership without utilization or improvement is not only profitable but sometimes optimal.


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Land has usages that create demand, which creates a market value for it. I'm not sure I understand what you're getting at.

The unimproved value of land is still a function of its proximity to other desirable things. Barring remodeling, it's not generally the value of the building on a piece of land that goes up over time.

Often the market isn't for land, but for land + property. It might help, but overall there is more room for subjectivity/untethered valuations.

Looking at real estate prices, land is far from worthless.

Not really because investors are committing resources to the business which, it is hoped, will deliver value greater than the amount put in. Merely owning land doesn't help the land improve and deliver any value.

You don't buy a house, you buy land. That's why it appreciates in value.

But isn’t land ownership and renting free markets? If there is profit to be made by renting out land, investors should look to buy land to rent out, since both the land market and pool of renters are limited this should naturally drive up prices of land while driving down rents. And as such you should move towards buying land to rent out becoming a very low margin business and renters end up paying only marginally more than they would if they bought the land themselves.

That’s in theory though, so what’s keeping this from happening in practice?


If we're talking about the US, the problem is almost never that land is being utilized too efficiently (too much house and too little land).

There’s technically a market, but they experience insane amounts of depreciation. If they’re sold with land, most of the value is in the land.

Land/location is not a capital good and isn't affected by the same market rules as capital goods, because it is unique and possesses monopoly properties. It's essentially impossible for land and other natural resources to have a free market, by nature.

Probably why it is smart to buy a property where most of the value is the land. If you can!

Land is extremely limited in supply. If there is one thing that should not be openly bought and sold in markets (apart from humans) it is land.

You can't mass produce land, and that's the dominating component.

Land being lived on by its owner is being used to live on, not for investment.

Land isn't valuable because there is a finite supply. Only certain land is valuable because there are buildings and people nearby, which is why land out in the wilderness is nearly free. The prediction is based on the fact that individual cities grow, not that the total fraction of land occupied by humans becomes nonnegligible.

Not when the majority of the price is in the value of land.

In densely populated areas, the value of real estate has very little to do with what's built on the property, and everything to do with the land it is build on.

GPs point is that owning land is not creating value. It is, however, very profitable.


The free market doesn't work when there is extreme supply inelasticity, as is the case with land in desirable areas.

Yes, but I'm talking about housing rather than land.

Most housing suffers from use and age.

(Note where I conceded the point about some land having value due to location or such)

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