midnight Target: LAND is non-renewable and for sale. What could possibly make it worthless?
Oh, I would never argue that, especially in so general terms.
I only said that housing (and by extension the land for residential use) may decrease in price considerably due to many, many reasons:
Changes in land-reclamation technology making more land available for housing (dynamite, dykes).
Changes in technology freeing land from other uses due to increase in productivity - agriculture, factories, warehouses, forestry.
Changes in infrastructure making more land available for housing (new bridges, highways).
Changes in political arrangement making more land available for housing (removal of artificial restrictions on building).
Changes in economy making the existing housing less affordable (inclease in costs of heating/air conditioning, property taxes).
Correction for previous overspending and overborrowing not supported by increase in production and buying power.
Decrease in the numbers and or buying power of population.
Appearance of alternative investments that are more liquid.
Changes in government tax policies that make alternative investments more attractive by taking value outside of taxmen's reach - property taxes are asessed on the land and house but not on gold hoard or bank balances.
Change in government fiscal or monetary policies - which are largely to blame for the current sharp increase in prices.
The demand for land is greatly influenced by demand for housing, including rental land - not all of which is linked to the ownership of land.
If a high-rise is built with a lot of appartments, the need for housing for many people in that area will be satisfied while the attractiveness of housing/land in the area will be diminished due to increased traffic and overcrowding.
Many more reasons can be named. How about reasons why the housing prices suddenly shot up so abruptly over the last few years?
There are specifics to owning a house that mislead some people without economic understanding. A lot of factors like risk and deprivation are not included into total cost of the house/land.
Most people are heavily mortgaged when owning a house. Say, you owe a $300 mortgage on a $400 house. When the price drops to $250, you would have to add $50 in order to sell the house and get even with the bank. Many people cannot do that, so they keep the house on the market at $300 where nobody buys it - while possibly suffering all kinds of deprivations and losses becasue they cannot move somewhere else and get a better-paying job. They would wait 10 years for a comeback and proudly claim that the investment in the house pays off with a bit of patience - forgetting the financial and quality of life loss they suffered in the process.
There are some rare cases where land is really limited - like in Brooklyn, but even here the downturn in economy or city fortunes or taxes can - and did - drop the prices.
Even in Brooklyn the old 2-storey houses are being demolished and replaced by 3-story ones with smaller backyards, so the total amount of housing can increase a lot.
We have a bumper crop of relatively high-paid elderly retiring soon and being replaced by less-paid and fewer in number generation. There may be a run on the retirement properties but there will be glut on houses and stocks once the retirees sell their prmary residences close to former work and stop contributing to the retirement accounts. It's plain demographics.
capt. apathy: anything someone produces intentionally is a product
Labor theory of value. I cannot believe you've read Marx, so I'll assume you've got it by hearsay. It was disproved before Marx was even born.
And you do the typical mistake of only concentrating on narrow - and artificial - aspect.
When you on the market offering a potholder for which people have so much need, where did that need come from? How did people cope before? Why nobody else came with a solution or substitute? Do your potholders actually worth to the a buyer more than $100 or equivalent amount of his labor - otherwise he would get no advantage from the transacton?
Even if your potholder saved lives of desperate people, there would be a price beyong a person would not be willing to pay, even if he had money available. And if he does not - well, there is no demand for it, hovewer great is the need.
Anyway, you make a good point that if you have stuff nobody needs at a price you want, you will not sell any.
Why would the housing be any different.
miko
