Where will mainland prices go to ?

By End of November, the cheapest mainland was available at around 8 L$/m.
Now, 30 days later, the cheapest mainland costs around 14-15 L$/m ! This is an increase of around +85% in only one month!

If this trend goes on, then in one year, one single square meter of mainland will cost 1,560 L$ !! So what is your opinion - what will happen to the market ? Does Linden Labs try to do something ?

Land prices are inflated due to the first land/alt/resale exploit.

Linden Lab are working on catching these parasites, and hopefully implementing something to catch it.

Until then, first land is in short supply, and prices are going outrageously high.

When they do catch that, and land prices start to fall, there are going to be a lot of people very very out of pocket having ended up with a huge load of inflated price land, that they can only sell at a massive loss.

At that point, many people will be laughing at them for their greed and stupidity.

Just like real life, prices can't go up forever, and something is going to go "bang" (no, not the asset server again) - and a lot of people are going to get hurt.

However, the real players of SL, who aren't necessarily here just for the profit, will win.

Broccoli

Right now the cheapest pieces of land are about L$15/sqm. My opinion (which has changed several times in the last few weeks) is that land prices won't get much higher. Somewhere around the middle of January things will settle down to around L$14/sqm where they will stay for months. The end of the holidays will herald the end of the bubble but there's no reason for prices to fall since the monthly tier fee per sqm is pretty minuscule.

The first land thing is annoying and needs to be fixed but I don't think it's having a significant effect on land prices. Mainland mature sims are auctioning off at $3400 that's the sort of money you can't make from flipping a couple of first land plots for 10 bucks each every day.

Also I don't think a "bang" is likely. After all, what is there to cause it? You can sell land for any price if you're prepared to wait long enough. Even if market values drop to half what they are now most land traders could still get rid of all their stock in a few months.

It seems to me that this is what's happening now. It's being pointed out over and over here that all the greedy mini-barons who aren't real SLers are going to be sorry Real Soon Now, and are after all just stupid for putting down their cold hard cash for land at these grossly inflated prices. I can't imagine how future laughter will sting much more than the current name-calling.

Sounds like a lot of wishful thinking in this thread.

As it's clear that the massive inflation of land prices is affecting many, many residents, I think it's good that many are able to be concerned enough to bring the issue up as to whether there is something that can be done about the problem.

Which is, of course, more than those creating the problem. Those are the ones who want nothing done. They don't want to lose their profit, and don't seem to care about the future of SL.

Land ownership is the key to SL's success - without people providing content and places to do things, SL is just a glorified chatroom.

Broccoli

Yes, there is something that can be done. Don't buy land until the prices go down. I would love to have myself a nice little 2048 plot, or maybe even 4096, but I refuse to pay the current prices. I'd also love to have a small little 512 plot to create a game room in the sky for myself and friends to use. However, again, I refuse to pay these kinds of prices on it.

Right now, I rent a house. The sim is a bit laggy, yes, but otherwise very nice. The landlord is generous as the rent is pretty low, and he allows for more prims than I'd get if I bought that little sized plot of land. I will grant however, that not all landlords are good landlords. Many choose also to take advantage of those choosing to rent, for whatever reasons.

If we refuse to buy, it will only take one or two of the big land barons to lower their rates drastically before everyone else does also. They can set the example. Whether or not they will, that's another thing all together. Land barons right now are getting an awful rep for just wanting to rip everyone else off. That's gonna hurt them, in the long run.

What really gets to me though... I was land hunting a few weeks ago. I came across this little 512 plot that turned out to be first land. And there was a "realtor" there with two newbies. She was trying to convince them to buy the land, and sell it back to her for 2000 Lindens. She didn't explain to them that if they did that, they wouldn't have enough money to buy another plot. Hell, 2000 Lindens isn't even half of what they'd need! She also didn't explain to them that there seems to be a shortage of 512 plots. I think that I upset her just a small bit when I explained this to the newbies on her behalf. *grins*

The only way to fix the pricing problem is to just not buy. Period. Which really sucks, cause I really do want my own little piece of the SL pie too.

The obvious answer to the rising costs of land ownership - is not to buy any!!

Land should only be available on a Rental Basis from LL.

That way everyone can have some land. You have the right to build on your rented land and you can sell only the development - the land always belongs to LL.

LL would then be the land owners (Landlords), receive a monthly rental based on land size only.

This would stop the stupid escalation in land purchase costs.

Just like in RL, land prices are going to go up and down, but mostly up. In the neighborhood where I live, there was a huge house buying boon over the last 3 years or so, up until 6 months ago. Houses were selling within 2 weeks at really high prices. (For instance, when I moved to the neighborhood in 1991 prices were about $300,000 US. Now they're going for $800,000+ US. However, houses aren't selling very quickly now, and a lot of people have taken their houses back off the market. (BTW, yes I live in Way Over Priced Southern California, so the SL housing prices are nothing new to me... at least I can ACTUALLY afford to buy land in SL (virtual as it may be), there's no way I'll ever afford land in CA unless I win the lottery... LOL).

I think the same thing will happend in SL. Prices will stop going up, however, I don't see them falling back down very far. Those land barons that have been buying and selling up a storm, have probably made enough money to cover their tiers for a few months and not have to worry about money. If there are enough land barons that can control the market, I doubt prices will fall much at all. So, they'll wait out the people that don't want to pay $15L+/sm, and when those people realize that prices aren't going to go back to where they were 4 months ago, will start buying and the land barons will get what they want anyway.

I have 1,488/sm that I bought for $16,000L which included a main house and a guest house in a medieval themed neighborhood. Unfortunately, I think the person that was creating the neighborhood ran out of money and has sold off just about everything, if not everything. She didn't own the whole sim, but she owned most of it. Now, there's all types of houses popping up everywhere... so much for my themed neighborhood.

So, what I'm thinking of doing is taking advantage of these inflated prices, put my land up for sale, then buy into a themed private sim, with a covenant where you can't just put whatever type of house you want up, have less lag, more prims, and fun things to do in the sim.

Excellent!

And seriously, could you IM me in-world and tell me who this 'realtor' was? I like to make a note of whom to never in any way, shape or form do business with.

If not I understand

Seriously, I'm not so sure the baby barons are really to blame here. It's not like one day last month someone said, "Hey I could buy this plot of land and turn it over quickly for a tidy profit!", followed by someone else with the same thought, and then several others, etc. More likely something changed in the world that either increased the demand for land or decreased the supply; this created more opportunities for reselling land at a profit even for those who weren't students of land valuation. While the barons are assuming most of the risk in this speculation, landowners who need quick L$ have perhaps been the major beneficiaries (assuming prices drop back down sometime soon) along with those who both (a) have plenty of cash, and (b) typically find the land they want gets sold before they have a chance to see what's available (in today's market these people's buying competition is being priced out).

The main reason I feel this way is that there has been strong pressure for the price of L$ to go up as well. The opportunity for profit in this area is not as marked as in land speculation due to the massive interference of LL in selling L$ at a price lower than at what it would otherwise settle; if not for this LL intervention, we would probably be talking about rapacious currency traders as well as greedy land barons.

So what changed last month to drive up prices on land and money? Two obvious things: the number of residents skyrocketed, and the amount of private land sold spiked as buyers rushed to beat the increase in tier.

I don't think the latter event is our culprit; if anything, it should have worked to keep land prices low in that (a) some residents would have been selling mainland land to be able to afford new island sims, increasing the supply of land, (b) new island owners would be selling their mainland properties as they set up in new locations, and (c) others should be putting off land purchase, waiting for rentals on the new islands. In fact, as the 60-days-of-no-tier clock runs out on all those new sims, and private landlords finish island development and ignite a low-rent-price-war to finance their tier, I expect more of this downward pressure on land prices to become apparent.

This leaves the increase in SL population as the likely primary cause of higher land and L$ prices. It just stands to reason that with a hundreds of thousands of new residents, there will be a marked increase in the demand for both land and money. I'm not sure how long it will be before the rate of population growth slows down, but in terms of raw numbers it could easily hit over six million residents and several hundred thousand active residents, meaning I don't expect the demand for more and more land and money to go away too soon--certainly not over the next few months.

LL stabilized the cost of L$ by pouring millions of freshly-printed L$ into the currency exchange--by increasing the money supply. It could do the same in the land market, adding region after region of mainland land. But this is harder to do than simply creating more money; new land has to be terraformed, mapped, developed, and subdivided. Unlike money, land requires a bigger investment in hardware, meaning committee decisions, vision casting, bidding, etc. It may require relocating LL in the RL, or at least adding new RL locations. We've seen how they handled the release of new private regions, where much of the work can be left to the landowners; it should at the very least take longer to add a similar amount of mainland--and that's if they even decide to do it at all.

Another thing LL could do is increase tier prices. As land prices rise while tier remains fixed, tier becomes less and less of a factor in buying and selling land. By increasing tier LL could quickly lower demand for land. While this would cut deeply into land baron profits, it would hurt larger numbers of landowners, and would be very unpopular. Based on their track record, I imagine if LL increased tier existing landowners would be allowed to continue owning land at the current tier, however, effectively decreasing land supply again, as existing owners would be reluctant to give up their low-tier parcels, and the land barons convert their cheap-tier land into rental developments. I expect tier to be increased in 2007.

All of this is complicated by all those new residents. LL needs more grid monkeys, more customer service reps, more managers, more vision casting, etc. In addition to thinking about the mere price of land, they have to think about increased lag, customer satisfaction, public relations, corporate relations, international finance, international law (such as South Korea's proposed law against trading in virtual currencies), moving to open standards, etc. etc. etc. In other words, I'm not expecting a quick fix for land prices to be at the top of their agenda.

So, to answer the question posed at the top of this thread--"What will happen to the market?" I'm guessing prices will continue to rise throughout 2007, though not at a steady rate, not at the rate they have in December, and not without some temporary dips. The L$ will appreciate against the US$. The mainland will expand. Tier will increase. A lower percentage of SL residents will be landowners. A new world order is upon us.

If your vision for SL involves owning your own land, then, and you don't want to rent from other Avs, my recommendation is to find a highly-desirable parcel of land and be prepared to pay extravagantly for it (L$20/m2) now. You'll be glad you did if you're still in SL this time next year. But you might prefer joining the hundreds of thousands of residents who will be finding ways to flourish in SL without land at all.

Regarding real estate prices, I don't know the source of this quote that my dad used to often make... "The funny thing about land is that they aren't making any more of it."

Funny thing about land in virtual reality is that they CAN make more of it. Supply and demand...

If SL is the new browser... Then what's going to happen when content providers find alternative service providers? Will land go the direction of the web page... dime a dozen? I can put up hundreds of web pages for $10 a month. Why can't I put up hundreds of 512 lots and millions of prims? Answer... This is only the beginning.

Yes, people are riding the bubble. But it's gonna pop. Do a Google on "Bigger Fool" and read the Wikipedia article.

lol, I just got done with a Macroeconomics class.......I could actually answer this with a bunch of econ terms!

But really, it's a demand and supply issue, just as in RL. There is such a huge demand for land, and the supply is so little, that the prices will go up.

Really, the demand has to go down.....or people just need to WAIT to buy land or the price will never decrease.

Or LL can issue a large amount of first land but I don't think that will happen.

Prices will go as high as the market will bear. As long as someone is willing to pay out the nose for land, prices will skyrocket.

Just wait, prices will go back down!

Jenn

Sure. I remember her first name, but not her last. It will only be a quick search function til I have it again. If we ever get back into SL. lol

With so many new residents coming in faster and faster, and LL not keeping up with mainland creation, I don't think land prices will go down much. Sure they can make more land, but with so much land already for sale (even at inflated prices), I doubt they'll be making up a 512k plot for even every 10 new players. And if LL is seeing that there is a ton of land for sale (and selling), why would they make new land?

I think they have a lot of other items that need to be fixed before they add a lot of first land (like getting the grid back up... LOL). I know prices are due to supply and demand, and until LL can ramp up and create first land at a quicker clip, I wouldn't count on prices falling much, if at all. Price upswing may settle and slow down, and maybe even dip for a bit, but I doubt they will ever be under $10/sm again.

If you think there is not enough mainland out there for sale, when and if we can get back in SL, pull your big map up, wait a minute and watch all the yellow patches show up. There is more land for sale out there than i have ever seen before in the 2 years I've been in SL. Only problem is some ppl think we will pay thru the nose for it. OK there hasn't been a lot of land in auction lately, am guessing the land ppls are tied down to the island orders, but am sure there's plenty of repossessed land out there just waiting. As far as first land goes, that has always been hit or miss over the last year. We keep an eye on first land because when it gluts our rentals go down, so i know what I'm talking about here.

Think to me its just a price fixing situation, no land for sale shortages that i can see, thinking it was a good way to make some Christmas cash, but am sure as the tier bills come in, land prices will be going down, so just wait to buy...

That's a good point Cinda. Hopefully, that will happen.

The real estate saying is "Buy land, they aren't making any more of it". But in SL, LL can make as much land as is needed. I bought my first piece of 512 for 4995$L... I know it was drastically inflated as compared to First Land. At that time, I couldn't find First Land for anything, anywhere, anytime! My GUESS is that LL was too busy working on other growth issues versus creating land for the landless. Regardless, less than a month later, my land sold for double of what I paid for it. Why did I resale it at double? 1. Profit, 2. Fair market value. 3. It only sold becuase someone was willing to buy. Land isn't quite the commodity that it is in RL. Once LL creates more land, the prices will drop considerably as they already have in the past week. When I sold my 512 lot, I turned right around and bought a plot for the exact same price at which I sold mine; 10G's. again, the price was inflated. So what, I wanted the location and it was worth it to me. I could care less if the market drops tomorrow and my land is only worth 512L$. It holds value to me becuase of what I do with it and where it is.

Those who are buying lots of land only for profit, BE CAREFUL. The value per square meter is going back down as LL creates new first land. The average $L/sqm was about 19.5 a week ago when I bought my newest plot. Now it's gone down to 15.5 for some decent land. I'd ALMOST venture to say that whenever LL gets the growth issues sorted out and creates a vast amount of new land..(just guessing here, maybe a month from now..end of January) land will average at about 7.5$L to 9.5$L /SQM. If you follow the land market value, and the Lindex$...Watch the trend. As the amount of land increases and the value drops...the $Linden will gain value. But don't take my word for it...I'm a welder in RL ..just remember to sit back and mock the people who try to get 20G's for a a really bad plot of 512!

Good luck

The thing is... how do we know that they're going to make a bunch of land? Has LL posted anything to this effect?

I hope that they will make a bunch of new land, but 1. will that stop the land barons (I don't even know how many there are) from duping the newbies out of their land for $2,000 the second they buy it, the turning around and reselling it for $10,000? 2. will the new land created keep pace with the new residents? 3. with so much land for sale already, will LL see the need to make new land?

I've got 14 sims and I haven't raised rates. Everything is *still* at the same rates as before the 15 Nov. price hike.

Of course, I'm solid full with a waiting list, but that just stands to reason now doesn't it?


Short term greed is pretty stupid.

The best customers are those that have been around ages, are going to be around for ages. And they remember how various land barons act.

So those that overcharge during this little christmas rush bubble are going to feel the pinch later, when it's a buyer's market.


Personally, I get kinda nervous 'the other way' - when a new player rushes in, and wants to have a whole sim for any price. I've seen what happens in these cases too many times before, and it's not good for anyone.

They always make new land the question is are they going to make it fast enough. If the land market was saturated and people are getting duped out of money word gets around and yes people will not only stop selling they will stop buying as well. The rule for "scamming barons" (there are a few that are good) is the same for those that try to grief you to buy out and that is "they will move". Which I have seen often.

That's the best way to do it and I for one appreciate people like that, on the off and on times when I rent an apartment I've used the same person every time (IM me if you want the name) because he has very good rates and has earned a good rep with me at least... Unfortunately land sales don't have such a mechanism to keep people honest at least on the mainland.

The first "ZOMG Land Prices!" period was solved by the release of the first snow sims, and almost doubling the continent size.

The second "ZOMG Land Prices!" period was solved by the elimination of teleport hubs.

This "ZOMG Land Prices!" period will probably be solved by Lindens releasing another few batches of mainland to accommodate First Landers. It will be gamed by alts, but still ought to be enough IMHO to get prices down to $10ish.

Yeah I agree it will stablize out I think though we are all wanting it faster. Cause it is partly LL's fault for not releasing enough to compensate for these growing members.

I remember going land shopping with a good friend back when he went and was premium. His first land experience was beautiful. TPed into a mature sim that was already looking like it was being bought and had two plots bought. We thought we were gonna have ot move fast to get land. We moved fast and he got his first land. We later found out the others had bought thier land...6 hours or more before us. After we bought the land he didn't see any new buyers for like a day. Oh and the best part NOT A BARRON IN SIGHT! Infact he never once even saw a baron till he saw anche at the Mature Sandbox and Provoky just happened on his radar at a club he was helping on. I mean darn if ever there was a sight to behold a "dream home" he had it.

Now it's more like 32 people buying land all together and all figuring it out at the same time as 8 barons try to buy them out. Meanwhile others stare in dreaming about land cause they can't get to it cause the sim is full. I know cause I was kinda a bit of all of it. (and accidently scamming as well. I was unaware of the price increase for land.)