Land absolutely would stay a good investment. Land that can house more people, in a city where more people need housing than used to, isn't less valuable than land that can house fewer people. Development's goal is to increase property value, that's the whole point of it. Nobody would spend money to develop if they were going to lose money on it. That's going to continue as long as population rises. When talking about land-owners (which zoning discussions, especially around single-family zoning, often means), the land value isn't what's protected by zoning. Development may reduce the desire of a new owner to live in a single family home next to an apartment building, but now you have another developer willing to buy your land to build their own multi-unit building, and that's gonna be some good money.
The cities that have had less crushing affordability problems are the ones that have been able to continue expanding outward - the outskirts land that used to be empty now has housing (and got more valuable as a result of this development) and the inner areas (slowly) has been getting denser, especially as old industrial property gets redeveloped and such. But many of those cities have just as much zoning and restrictions around density as NY or SF (usually more!). The difference is that they were able to go outward to better keep up with demand increases. I don't think any US city has been able to address rapidly rising demand through upzoning and density alone - redevelopment of existing residential will always be much harder and slower than of empty perimeter land. Density, on the other hand, has seemed to ultimately cause demand increases in NYC and SF greater than the supply increases it has provided.
If population growth stops, though... all this changes. Or even if just the net migration to various cities shifts around!
People who say that have never owned land and have a simplistic fantasy in their mind.
Listening to people that have owned land you hear things like:
- A creek was at one edge of our property right outside of it, and the state required us to build a bridge, getting the license for the bridge was costly and time consuming
- The creek changed course and cut across our property, the federal government had new requirements that had costs and approvals necessary
- We lost money on the property, despite land being a finite resource and all the dreamers being perma-bulls on land ownership, there was no way we could turn this into an income generating property that would be profitable.
Sure, we have anecdotes about how not every property is a profit bonanza, and that there are often a bunch of surprise costs.
That's why there are big development companies. The advantages of scale apply here as much as anywhere. Lose money on one, make money on others to offset the risk. What you call a "simplistic fantasy" is a century-long phenomenon in the US at this point of increased population in major urban areas leading to rising land values and the conversion of empty fields into developed areas.
There's no guarantee that population growth will continue to increase demand, or even that demand in developed areas will stay high - there have been a lot of cycles in that time as well, with extreme examples like Detroit to balance out the SFs of the world - but that's a very different argument than "we need to increase development so that we make housing less of a good investment," which I'm claiming is a blatant contradiction when it comes to the value of the land that is being developed. A shitty house in NYC is worth more than a nice house in Austin not for the building, but for the value of the slice of land it sits on, because the area has been developed more which has resulted in more demand.
owning land in a high demand city is a wildly different experience than owning land in a rural area with creeks. The issue is not just that "land is a finite resource so any piece of land will increase in value" the issue is that "vacant urban land has very few alternatives for people who need it so the price consistently rises in areas with growing economies".
Land often has a lot of strings attached. For example you need to maintain it, make sure there is no wild foliage, people don't start camping, it is safe (someone gets in and breaks leg? Nightmare), then maybe you need to build a specific thing or cannot build anything at all and so on.
> For example you need to maintain it, make sure there is no wild foliage, people don't start camping
You really don't. Dirt lots coated in rusty chainlink, gang tags, weeds, and tents are traded hands all the time, even in Downtown Los Angeles, for top dollar. Maybe you hire a crew to weed wack once a month if that. Even land zoned for a single bedroom bungalow goes for a lot of bread, because one day in the future that zoning can change and there is always demand in a big city with a lot of jobs near a major harbor and airport for more units, and parcels in big cities are finite.
This is not true. Maintenance is necessary for dirt lots in downtowns. I own a few parcels in the middle of dense cities. You have to deal with soil erosion, animals digging up soil which blows away, problems with trees (due to storms, pests, hanging into other properties), property line encroachment, and vandalism.
95% of land owners don't have creeks running through them
The point is that you have to be as discerning as a homeowner or even more, and this can limit the supply of decent land to own or highlight how impractical it is or how it isnt a solution to anything
Even the other sister replies shifted the goal post, this is a thread about housing supply and people talk about squatting on land in urban environments as a rebuttal to just owning land in the vast expanse of space available, which further reduces the possibility of alleviating the housing supply
> Development may reduce the desire of a new owner to live in a single family home next to an apartment building, but now you have another developer willing to buy your land to build their own multi-unit building, and that's gonna be some good money.
A portion of a constructed apartment building on your lot may be more valuable than your current house is there, but...
A) There's no guarantee that the value of your land to the apartment developer exceeds the value of your current use... after all, they have to pay to demolish and then improve it, and...
B) You and your neighbors may have put down roots, that have a substantial value, if difficult to directly economically measure.
C) Moving, itself, has substantial economic costs.
D) If an apartment building built next-door decreases the value of your single family home by 20%... there's no guarantee that there's demand or the possibility to build another one on your lot... and even if there is, the apartment-builder's estimate of your land value will be 20% less. You'll meet in the middle between (0.8 x your previous home value) and (the apartment-builder's estimate of the value of your land to him before improvement).
I think the intangible aspects here aren't relevant because the original poster was talking about the financial investment aspect itself being a reason to oppose development. I completely agree that qualitative reasons will cause people to want to control development, and personally am fine with this, versus just letting the people with the most money dominate the market.
For (D), though, I think this is generally overblown. There are no guarantees, and situations vary, of course, but trend-wise, I don't believe "partial" in-transition up-zoning has been a value-killer overall. In parts of the US that are densifying, these sorts of things are generally radiate outward from high-demand areas. But the single family homes in the high-demand city core areas still have more value than the ones further away, and if you look at the appraisal reports, it's because of the land value, not the structure. In the long run, that development cycle creates the demand that pushes up your own land value even if yesterday vs today, it was more attractive in isolation as a single family home next to another single family home. "Location, location, location" is a cliche but a valid one.
As long as your location stays in demand - and in our current city planning paradigm that's not been something that's been threatened before potential post-COVID reorganization - you're more likely to hit a virtuous cycle for property value here than a vicious one. The types of developments/apartments that are gonna be put up are gonna be determined in part by how much it cost to get the land, so if it was already valuable land, building a slum next door won't make any sense to the developer.
E) In the USA, if it's your residence, it's a taxable event for the capital gain, which can cost 6 figures in federal and state income taxes in a place like CA. Plus, in CA, until this year, you usually lost your Prop 13 basis forever.
Land has operating and maintenance costs. But let's imagine a vacant lot of land which doesn't have those, and it's mortgaged or not any more. That still has property taxes.
So unless land is generating revenue to offsets the ongoing costs like taxes and operating/maintenance costs, it's a loser, operationally speaking: it has a negative cash flow.
If the asset doesn't generate revenue, it has to go up in value to offset costs, as well as to account for inflation, in order to just break even for its owner.
Land is a great cash cow for the state. People are permitted to "own" a parcel of land, but they are really just renting it from the state. Secondary, it's great for landlords.
People have to live somewhere, so if they don't pay for their own maintenance costs and state rent, they have to pay some landlord. Thus they mentally discount those things in order to justify the buying of land. When their property goes up a little bit, they think only of the difference between the new value and original principal, forgetting to looking at how much they sunk into the property, because all that time they had to live somewhere, and they take it for granted that you always have to pay people and cover costs in order to live somewhere.
The only owners who unconditionally profit from landlords. If you own just one property that you live in, that's good for you only in a climate in which properties are appreciating. If you own multiple residential or commercial properties that generate rent, then you're laughing to the bank; you generally don't have to care about whether they go up, or not nearly as much. You are more affected by vacancies, during which you have to cover maintenance, taxes and other costs like mortgage, without any revenue. That's particularly true about commercial properties in a recession.
The cities that have had less crushing affordability problems are the ones that have been able to continue expanding outward - the outskirts land that used to be empty now has housing (and got more valuable as a result of this development) and the inner areas (slowly) has been getting denser, especially as old industrial property gets redeveloped and such. But many of those cities have just as much zoning and restrictions around density as NY or SF (usually more!). The difference is that they were able to go outward to better keep up with demand increases. I don't think any US city has been able to address rapidly rising demand through upzoning and density alone - redevelopment of existing residential will always be much harder and slower than of empty perimeter land. Density, on the other hand, has seemed to ultimately cause demand increases in NYC and SF greater than the supply increases it has provided.
If population growth stops, though... all this changes. Or even if just the net migration to various cities shifts around!