Comments on: Not Making Any More Land?

By: G.T.M.T.T.P

G.T.M.T.T.P — Fri, 06 Mar 2009 17:52:11 +0000

What we all need to worry about is the rapid Over population of the world. It is not just a question land….it is a question of natural resources, water, food, and wealth to support all these people. This is not even addressing the pollution problems of the air, water and land fills, as well as overfishing the ocean and pollution killing off fish or causing mercury poisoning.
What jobs will be available for all these people. Many jobs are disappearing or going to countries that pay slave wages. We really don’t have plagues anymore, so war or birth control seem to be the only way to reduce these ballooning numbers. In my family, I chose to have only one child….my two sister had no children and are really happy with their decision. I think having kids is over rated and everytime I am with adults that have children, they are always lamenting that their kids don’t respect them, are contantly out of work or in debt and borrowing money or have moved back in with their families. With the tax deduction for having MORE kids, it seems like the poorest and least educated people are reproducing the most. This has to stop or we will have a even larger ‘dumbed down’ and poorer population of people, who can’t support themselves because there just aren’t that many unskilled labor jobs out there.

By: Baby Boomer Week in Review - Pre-Inaugural Edition | Go To Retirement

Baby Boomer Week in Review - Pre-Inaugural Edition | Go To Retirement — Sat, 17 Jan 2009 16:47:46 +0000

[...] interested in real estate as an investment, Four Pillars argues that the rationalization of “they are not making any more land” is a myth. I had to partially disagree, pointing out that they are not making any more [...]

By: The Well-Heeled | Creating Wealth Through Knowledge

The Well-Heeled | Creating Wealth Through Knowledge — Fri, 16 Jan 2009 19:19:12 +0000

[...] Four Pillars: Not Making Any More Land? [...]

By: jesse

jesse — Fri, 16 Jan 2009 01:53:45 +0000

Love the article. What the “running out of land” argument boils down to is convincing one’s self that it is acceptable to pay a speculative premium to own a property when income from rents is sub-par.

Hogwash. The only two ways property can have a premium (a price higher than what is expected from a series of discounted cash flows from net rents) is by: future development that will make the land more productive, or rising incomes. Based upon population growth rates and roughly flat real wages, the absolute MOST this premium can be is about 1-2%. This would be for undensified properties. In practice densified properties will have significantly less premium because of the high capital costs involved in densifying further.

We hear the “running out of land” argument every boom but when you look at it more closely, it’s as simple as discounting future cash flows, including risk and future utility, that determines fundamental price, not an increasing scarcity as the “running out of land” argument implies.

Also, in the long term, city centres change so an area once considered “prime” real estate eventually must compete with other newer areas that have gentrified because of high prices in other locales. This is a long process, typically decades, but it really does cap prices to incomes in the long run, even with future densification potential.

You may luck out and buy in a “desirable” area and have incomes increase to drive up prices but with every desirable area you pay a premium for comes another area that must absorb the discount to keep with average incomes. Either way you are speculating, not on lack of land but on future incomes. You are speculating on increased separation between rich and poor and the next 20 years may just as easily see a reversion as it could a continuation of this trend.

By: Traciatim

Traciatim — Thu, 15 Jan 2009 22:16:02 +0000

I’ve been shopping for prices on land around my province as I would really like to own over 10 acres of good land that could be cleared and farmed. I think of it more of as a contingency plan in case I need somewhere to go that I could theoretically sustain my family off of my land if I need to. There are some pretty good deals on land within a couple hours drive of cities.

I would prefer it on water somewhere for the recreational purposes, but it isn’t a requirement. Beyond the contingency plan it would be more of a recreation spot for friends to be able to set up a tent and all having a camping weekend.

I will not buy it for an investment, and considering how much land Canada has I am certainly not buying it because there may not be any left in the future.

By: Mr. Cheap

Mr. Cheap — Thu, 15 Jan 2009 20:34:09 +0000

Mr. Goto: You might enjoy watching the first Superman movie (with Christopher Reed) and seeing Lex Luthor’s solution to this limit.

A case could easily be made that waterfront property (or any specific class of property) *can’t* consistently appreciate faster than the market as a whole (otherwise it would eventually cost too much for anyone to purchase).

BTW – I love your username. All of us in computer science *HATE* you!

[if you're not a programmer, goto statements led to really awful program structures in the past and have been pretty well banned in most civilized development groups]

By: Mr. GoTo

Mr. GoTo — Thu, 15 Jan 2009 20:14:43 +0000

I agree with your critique of the generalization. On the other hand, there are certain types of land that they are not making any more of – waterfront comes to mind. (I don’t count those island builders in the mid-east.) I own some and I can assure you it has held its value quite well.

By: Four Pillars

Four Pillars — Thu, 15 Jan 2009 18:24:28 +0000

Yah, “no more land” is just another one of those stupid rationalizations people use to buy their dream house they can’t afford.

You could use the same argument to invest in oil companies (as you mentioned), mining companies, buggy whips etc.

By: James Miller

James Miller — Thu, 15 Jan 2009 10:39:34 +0000

I have felt this very same way about that saying for some time. Man has been reclaiming land for quite some time. As an example, in the Netherlands the Dutch have been working for over 2000 years to reclaim land from the north sea.

http://geography.about.com/od/specificplacesofinterest/a/dykes.htm

I also think that despite some of our densely populated cities, there is a lot of land still available. As technologies improve for moving and improving the quality of water we could very well see communities taking root in desert areas. This was actually the case with one troubled real estate development I have looked into across from Needles AZ in the Mojave Desert.
The company has a long term agreement with the local native American tribe to deliver water to there gated community. Besides irrigating the plant life and providing drinking water, the water is used to create a man made lake in the middle of the desert.