[harisenbon]

You are 100% correct. Land is valuable, houses & buildings are not.

The small house on my land has decreased to the point where I pay less than $100 a year in taxes on it.

The land that it's on has increased by around 30x in the last 50 years.

[hackerbabz]

What drives the value of the land if you are not able to build a valuable structure on it?

[brownbat]

Location.

It's valuable to be next to useful places. This value of proximity could be increasing so rapidly that it would wash out the value of any particular residential building you could put there.

[ShorsHammer]

A piece of land in a great location that you can't build a house/apartment or carpark on is still worthless for all intents and purposes.

The only reason someone would buy it is to speculate that one day you can build something there.

Zoning dictates prices, it's a struggle to get people to understand that sometimes.

[bostik]

As the article points out (but does not emphasise), the houses in Japan are by design transient. They are built to fit need, and demolished to make space for something new in their due time.

This makes the land much more valuable - a plot can be repurposed when necessary, especially when the zoning rules and taxation encourage it too.

[dillonmckay]

Sometimes people would rather live next to nothing, not other people.

[lawnchair_larry]

Houses and buildings are extremely valuable. Sure, sometimes the land is more valuable in some locations, but it still costs the average American a small fortune to build a home on it regardless of the land cost.

[Aeolun]

That doesn’t mean the house still has that value after it is built though.

[dzhiurgis]

The market inflates price (not value), because regulation is restricting the build (or inflate the cost of building process itself) of new houses.

In Japan it seems regulatory process is easy, hence price drops.

I'd add that probably building a lot of social housing inflates the market as well...

[lawnchair_larry]

Still not correct. Materials and labor costs dwarf regulatory costs, even in hot markets.

The market does not inflate price, the market assigns value. In a hot real estate market, prices are value-driven, not cost-driven. In quieter markets, where supply of land is high, and builders are not booked out 1-2 years in advance, prices are cost-driven.

[dzhiurgis]

Yeah but... Real estate market gets hot because of restricted supply...

And supply is set by regulation, regardless of cost...

[lawnchair_larry]

Supply is definitely not set by regulation.

[okcando]

Artificially restricting supply seems to be the function of zoning laws and similar. If laws governing a property preclude the building of and usage as, say, high-density housing, then the supply of high-density has been restricted by regulation. Consequently, prices for property that has been enabled for high-density goes up. And because the demand for high-density housing is driven by the greater pool of demand for housing of all kinds and there's less housing overall to go around, the price of low-density housing also goes up.

I don't know what's going on in any particular place but the potential for regulations to affect supply and demand is clearly there.

[kalleboo]

The context here is Japan, where houses and buildings are worthless, not America