Why do LINDEN let the land price drop continue ?

Two words: Global. Recession. People are tightening in expenses. Keeping land prices cheap helps make buying land less scary when people are cutting back expenses.

Totally agreed, check this out: http://cosyhome.org/cgi-bin/auc_statistics/auction-stats.html

LL banned gambling on 25th July. Look at the difference in number of sims auctioned during July and August. That massive bump in August caused the crash, nothing else.

But the gambling ban had a psychological effect in that it confirmed that LL was willing to screw the player base, although it really didn't have a choice in this instance. How many people became disgruntled and decided to spend less time here because of their freedom being squished? And then throw on VAT on top of that, which affects approximately half the player base in varying degrees. And then add to it the maddening instability and inventory loss (*knocks on wood*) that people were having, losing expensive items without compensation. It really was just a rotten time period, and I don't think we've really recovered.

In addition to purchasing land, there is the monthly tier. Regardless of how inexpensive land is, the monthly tier adds up fast. There has been mention on the forums before that one thing LL could do to spur land sales is to make more of a gap between tier jumps.

That being said...on my water sim, quite a bit of the land is for sale atm, but kind of seems to keep changing hands by land barons who create different sized plots. I haven't been in world today, but the last I saw, most of the plots bordering the oceans are priced at around 13L/sqm and the others are in the same ballpark.

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Hopefully this post made sense...just woke up.

In increase in price without an increase in demand leads to lower prices. My land didn't drop much after the gambling ban, but when LL started dumping new sims prices fell like a rock.

My land prices didn't drop much at all after the gambling ban. The economy was recovering nicely when the land dump hit.

How can that be? When their own economic statistics say

http://secondlife.com/whatis/economy_stats.php

Month Total Square Meters Avg L$ Paid Per
Sold by Residents Square Meter

October 2008 - MTD 67,252,032 1.6325
September 2008 125,226,848 1.7757

The only incentive I can see for LL to want a healthy real estate market is that it contributes to a healthy SL economy.

do you and phil belive the econimy is like a car , tv, computer or something/ you flip a switch and boom it comes on? please

we are still in the casino slump
it will sloly dwindle out of effect starting 13 months past the 25th of july as the people's who did not sell out and just left, yearly renueal comes up.

Do you think the persent us econey is the bush econey? it's not it the clinton econey and i wonder if bush and his people forsaw it was going to get like this and if his econemy will make much of a dent

The funny thing is, there was a land dump earlier in the year (March-April) that survived the crash, but this one was different.

It's prefectly simple. Gambling was banned on the 25th July 2007. LL dumped large numbers of new sims on the market straight after that. The disappearance of casinos meant that casinos disappeared. Dumping large amounts of new land on the market means that there was more land for the same number of people. I'm quite happy with my understanding of what caused the prices to drop at that time - the land dump. I don't believe that casinos had any effect at all. There weren't all that many of them to have a grid-wide impact.

LL abruptly stopped pushing new sims onto the market when the prices stated heading below their 7 target.
The new continent North of Corsica and Gaeta just stopped dead back in (when? - months ago).

There is no supply of new mainland sims, but there is a growing supply of land in existing sims.
I've been buying a small number of quality parcels here and there in the old continents. My impression is that a significant number of oldbies are selling up. Some are even abandoning.
It's possible to be fussy and only buy land that has both Linden paved road *and* linden water on the boundaries. When that sort of land is available for 15 to 20, you just know that parcels out in the wastelands are going for 1L and some coloured prims with bling.

There is simply more supply than there is demand.

That's my view as well. I honestly wonder if there is more land than is needed right now, and if there should not have been a Corsica or Gaeta in the first place. Between people leaving mainland for islands (or open spaces), people abandoning land, and the ouster of the ad farms clearing out chunks of mainland, even regions on Sansara and Heterocera are looking empty.

Land isn't exactly a commodity.

For a very rough analogy, consider suburbia.

Million dollar homes all up and down a street. 1 million each. Ask anybody. Long history of million dollar sales. Comps, stats, calculations - it's a million dollars a home.

Until it isn't.

Buying slows down, prices don't change but the time between sales grows. Longer and longer. Eventually there's a foreclosure and nobody wants it because the market isn't supporting million dollar buys any more.

Well, with that foreclosure, suddenly *all* the homes have their value exposed. It wasn't a sudden drop off - it just looked like one.

So this is different from selling bags of peanuts, wood planks &c.

Does this analogy hold for the mainland?

Sort of. There are different markets and different grades of land, to be sure. We don't *want* to be so supply-side that even the worst parcels are worth a lot. But we do want to watch the middle, and I think this is where Elanthius' business model comes in, mainly - why he succeeds. And I agree, the bleeding top end of the perceived land market, say $L 50/m and up isn't that relevant to the economy overall.

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What should be done... well, arguably not too much. Obviously, flooding the market with land isn't a great idea. I'd also say that stability is one of the biggest positive factors in the land market right now. The fact that it's not being subjected to experimentation or major changes. We can all see the effects of uncertainty in the global markets right now, and the grid doesn't need its own helping of that.

I don't think the overall spend is yet back to the level it was at when gambling was here, there were a lot of Linden dollars circulating on the back of gambling.

This graph here suggests gambling was quite a big factor:

http://lindenlab.files.wordpress.com/2008/04/userusertxn.png

However I personally believe that gambling money stayed largely in gambling circles and had next to no effect on the land market.

What is surely having an effect on the land market is the number of premium accounts, the number of Premium accounts in June 2007 was 94,607. In August 2008 that figure was down to 84,883.

I've seen 512m parcels sell this year for L$30,000 in auction, near our build in Noonkkot. We pretty much had to quit expanding the Coonspiracy because we simply couldn't afford those kinds of prices, and even recently a couple have gone for over L$10,000 in auction in the same sim. So *some* areas still have pretty high levels of demand.

I think Linden Labs may want land prices to stay low. The reason is simple. Cheap land is good for the distribution of wealth. I bought my 512 in Gaeta for 1999L (3.9/m) back in June. I pay $6/month ($72/year) for a premimum membership plus no tier. Averaged out I can be a premium member and have a home for a bit more than the cost of a combo at Subway or Blimpies each month and for less than the cost of a first run movie ticket.

I am not overreaching myself and will probably continue to make payments forever since I'm not paying what I can't afford. There are probably thousands of others like me who can afford to do what I do, many more than can buy islands or big plots.

It's in Linden Labs interest to create a "stable middle class" of small land owners. Cheap land is the way to do this. Cheap land means more "haves." It bows out something economists call the Lawrence Curve which is the distribution of wealth. Cheap land creates a society or should create a society with more equality.

Cheap land also undercuts the rental market. It is far cheaper to buy an inland 512 than to rent someone's apartment.

Now I could be blowing hot air for any number of reasons. Consumers for a plain 512 may be a different group than those to whom a prebuilt apartment appeals. Also, Linden Labs may lose money on small landowners or not make much money on them. All the money may be in islands and half and quarter sims.

Also Linden Labs does precious little to provide small landowners with amenities. Gaeta as far as I know has one small private sandbox. My land has road access until some jerk puts up bandlines. Not all land is going to be near roads. If Linden Labs wants to create and support small landowners, plenty of sandbox space and walkability are concerns. So too is education. Building for a 512 is very different than a big build.

The initial mainland price spike happened when in November 2006 they announced the private sim tier increase but let people order private sims at the old pricing for an additional two weeks.

It took them several months to fill those orders along with new ones while few mainland sims were auctioned off in that time period and they effectively halted first land sims then already.

Meanwhile the explosive boom was still going strong as millions pourred in, a few ten thousand of which became premium and needed mainland which LL had all but stopped creating.

LL failed to create supply when demand was high then - and a few other times after - and that's the sole reason why mainland prices skyrocketed. Pushing the price back down to what it had been before is nothing more than corrective action.

If you joined when mainland was at L$20/m² then it might look like they ruined mainland pricing, but it's just your perspective that's warped.

Linden is dropping prices and this is a problem, why?

Nobody is buying.

But would they buy if they raised the prices? Seems kind of backwards.

Jack has stated that they remove a lot of sales from the extreme fringes to get a "more accurate" picture of what is going on. For example, extremely low sales, like L$0 and L$1 are removed from those raw figures, since those are usually land transfers to alts or friends, and not really "sales". Likewise, they apparently remove ridiculously high sales from the pot, since those tend to skew the middle without the low sales to counterbalance.

Of course, I don't know what all they REALLY consider; I would LOVE to see the complete criteria for calculating their "average" where they come up with L$6 to L$7 per sqm. Would be interesting to poke holes in it.

Tier is the real killer and people work that out. People will open their wallets for the new land when that goes to auction, the upfront cost isn't the big barrier to land ownership.