What determines Land Values

I know Marx was working on figuring this out near the end of his life, but seriously has anyone ever figured it out?

For the life of me I can't even imagine where to begin. If it's something as stupid as supply and demand I'm just going to scream

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Are you asking about the capitalist system, or a theoretical post-capitalist one?

In capitalism, yes, it's supply and demand, because everything gets commodified under it. In a post-capitalist one, why would it even need a value?

Good question - I've wondered this myself.
I actually default to a supply&demand idea, but I'm curious of a way it could be more properly determined particularly with regard to resources, which I assume is what has you dizzy, too.

For tax purposes.

yeah I'm in the same boat unfortunately, I was considering that land values could be determined as distance from a watershed?
Or a concentration of population?

The closer the land is, the more valuable it is.


What do you think determines it? Use, or utility. In a practical sense it's the amount of money that the land can generate, and usually this is determined by the amount of people who want to live in the area. What determines where people want to live? Good schools, good hospitals, low crime, low noise, low pollution, fast commutes, natural views and close proximity to rich people is generally what most people use. Go play Simcity, that should give you a good idea - the most expensive properties in that game are giant towers built by banks, who will only build their towers in areas with good transit access to rich people neighborhoods and with a lot of other rich commercial stores/shops around them.

Seriously, just go play Simcity. If you get good at it you will intuitively understand what drives land value.

credit creation. see steve keen

Its complicated, speculation and corruption determines land value far more then anything else. For railways in the 19th century got stinking rich buying land through front companies for dirt cheap then flipping the land once the value rises with just the word of the railway servicing the area.

I know you're talking about value not price, but the increase in the price of houses is almost entirely correlated an increase in the price of land. House price increases are correlated to credit creation.

So practically speaking, from what I understand, developers price land based on what they think can be put on it. So what you're dealing with is a guess as to what the purpose of the land will be for an interested buyer, you try to discern what the costs of the development would be, and then you subtract that from comparable total sale prices on the market. So if you have a plot of land near a downtown area, likely to be converted into an office building, you look at other office buildings in the area that could fit in that space, you figure their sale prices and what the cost might be of building them and then you find your residual land price. Raising and lowering that price is going to be based on expectations about the economy, basically what is the demand for office buildings here? Or new houses there? That is the basic pricing decision, as I understand it.

What do you mean? Wouldn't credit creation and real estate prices kind of feed into each other? As in, somebody in an initial business cycle buys or develops land using credit in some area. They sell it successfully, and the bank maybe notes this about that local market. Other investors also see that a house was sold recently, and think they have a good chance of selling a house too. They go to the bank that agrees, and do the same thing. Demand is meeting these expectations, so that is all well and fine, but at some point the ratio of developers/investors to people living in the homes is increasing. The bank either doesn't recognize this or doesn't think it is a problem because of optimism. The market is becoming too hot, expectations are diverging with reality, etc. eventually real home buyers aren't there to carry the developer's bags, and some of them have to take losses or default on their loans. Which doesn't necessarily have to result in 2008, of course.

here you go lad

Well to a degree you can "create" land using human labour. If you have a wilderness, you can clear it, and you have virgin land. In a hip location, you can build a taller apartment.

Land is just another commodity within capitalism. Why would it have any special rules to it?

Because land doesn't behave like a commodity thus why LTV doesn't help you for land calculations. Parcels of lands can't be mass produced as they can't even be produced as they are function of nature where labor can only modify the land.
It would be more a commodity in a space economy where you can simply build artificial planets from raw materials thus could mass produce land yet that is beyond our current economic capability as you can't simply insert an extra acre of land to your property on Earth like could in space.

Supply and demand determine price, but price =/= value. Read Marx.


A bulk of Volume 3 is dedicated to Marx’s theory of differential and absolute rent. He spent a lot of time reading debates between Chemist and physiologist such as Liebnig and Haas to try and ground his theory in the materiality of production. Marx wrote the manuscript for Volume 3 in 1864-65, so it wasn’t towards the end of his life.

Would you mind talking about it at all? I'll gladly read volume 3, but I just want to know if there is a relatively simply overview of his ideas on it.

Because land technically can't be a commodity since no social labor went into it, and yet it has a price (and therefore, somewhere up the chain of the transformation process, a value). Marx was well aware of that issue, associated land value with rent and sought to address it in the third volume of Capital.

Georgist Gang Assemble

Read Henry George

Marx is a shit. Praise Henry George.


Praise Marx