Economics of land value Part 5

[mozidigital]

"In theory the price of land should reflect the discounted stream of returns from its most productive/valuable use."

[ourearthhome]

mozidigital: the theory is correct but this is only the base value, the "real" market value of land, and then because this value increases and because it is wholly unearned by the "owner" of land and can be pocketed upon sale of land, speculation occurs which drives the market value of land way beyond its "real" value. Land price speculation is then subject to collapse when it gets too high and people can no longer afford to buy as we have recently seen in the so-called housing price bust.

[mozidigital]

Thankyou, it has been a real eye opener! I'm doing a thesis on "Market and Policy impacts on Land Use decisions"... it is clear now where this whole poverty issue arises from now. Any sites and links would be greatly appreciated : ) Keep up the good work and all the best!

[ourearthhome]

mozidigital: thank you for the encouragement. I always got enormous value out of any time I spent delving into the land issue. The money issue is equally worth of attention. I recommend googling anything to do with Henry George and land value taxation. I especially recommend googling the website for Prof. Mason Gaffney who has written extensively and profoundly on the issue. For the money question I recommend Richard C. Cooke. Also Steven Zarlenga's Lost Science of Money.

[mozidigital]

"if the community wasn't there the land wouldn't have any value" What about resource value? mining, use for agriculture???

[ourearthhome]

mozidigital: what I mean by land having no value when there is no community is that it would have no market value, no cost of purchase because there is o one there to purchase it. That is merely stating the obvious although it was not obvious to me until it and its implications were pointed out to me years ago. The value you are talking about is "use" value and that value always exists even only as a potential until people/community show up and begin to make "use" of the land.