Turnover of Land

Now consider the market for land titles. This is the more relevant market as to building, transferring land between uses, and changing parcel sizes. If the market for land services is slow, the market for land titles is viscous. There is no flow of supply, none at all. There is no real turnover in the sense of producing and using up. There is only ownership turnover: the market only transfers existing titles.34 (There is a supplemental market in long leases, not addressed here.)

There are few highly motivated sellers, as there are motivated sellers of spoiling produce and obsolescing computers and vehicles. Median home-owners are motivated, when transferred to another region. Few other land sellers come close to that degree of motivation (and the median home represents more capital than land). Capital depreciates; goods spoil and obsolesce; idle labor starves; but land silently rises in value.

The aggregate of all land changes hands slowly, with one or two percent turnover of ownership annually (measuring the stock by value, not number of parcels - smaller, cheaper parcels turn faster). But buyers often need adjacent land, or land in particular districts or with particular qualities, and find little or no land on the market, or land controlled by one seller.

The slow ownership turnover cited above applies to total real estate, i.e. land including any buildings on it. Ownership turnover is even slower for bare land. If the average building lasts 50 years, only 2% of the land is available for re-use in any given year. Only a fraction of that 2% is for sale; the rest is renewed by the same owner. Whoever wants to buy available land in any particular area is unlikely to be faced with the "many sellers" premised by the competitive model. Read the whole article

Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
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