Real Estate Crash

Buying land should be seen as an investment, not a cash cow.

Anyone who has ever invested money in anything will be aware that "the value of investments can go up or down, and you may not necessarily recover the initial sum".

Land barons have had it good for a while, now some of them are going to find out that there is a converse side to "making an easy profit". It's called "an open market".

Some people make a gain, some people make a loss. If you don't want the risk of making a loss, don't complain when it happens. Just be grateful for the profit that you have left after you sell the land at a loss from the over-inflated prices you paid for it, set by the same free market that you had when you were making a profit.

Broccoli

Well, months ago I wanted to move to a new location and tier down, so I wanted to buy a smaller plot. I ended up cutting a piece off my current plot and staying put because land was too expensive. Guess I made a good choice, maybe soon I can consider moving to a new location.

This has been forcast for some time now and people have been warning of this happening becasue the recent SPIKES in prices were caused by a severe shortage of land which is NOT the norm. NORMAL land prices are not even a third of what they have been. If you paid more than 10Ls per meter for land you paid too much PERIOD unless u sold immead for more.

LL has been talking about a new continent for some time and new sims have been released so slowly in the recent few months becasue of the huge numbers of islands that were ordered. Now its time for LL to keep releasing land so that people have the opportunity to get land for a fair price instead of paying an arm and a leg for land.

Well, there were plenty of people asserting that the rise in land value was due to increased demand ("citizens" went from 1 to 3 million) while supply lagged behind, and warning that after processing all the orders for new private sims LL would do some catching up with mainland sims. It made sense to me, so I limited the amount of land I bought for resell. I made a lot of profit, so that even if I have to abandon the land I'm left holding to moderate my tier (of course if it came to that I'll actually realize some L$ for the land) I'll come out ahead. I took the profits then, I'll take any losses now, and keep right on dealing in land on my own modest level. (I lowered my prices the other day in reaction to LL's announcement, but bought more land to resell earlier today.)

Others attributed the spike in land value to stupid speculators buying land from each other at ever-increasing prices, warning that at some point some would realize they were paying too much in tier and bail out, bursting the bubble and leaving the rest with overpriced land.

Either way, I'm not hearing much whining from those buying land to sell at a profit (well, maybe a little irritation at those chortling over their turn in fortune). Everybody agrees that we all benefit from a stable and cheap land situation--more noobs get to own land, and our community grows and thrives.

Just like in real life, no citizen in SL controls the economy, and any kind of business is risky. At the same time, anyone who is going to make real money in SL will do so by taking risks. (I guess that applies to anyone who is going to lose real money as well.) The smart money is on those who have a clue how to calculate the risks.

One thing to bear in mind is that land barons can take advantage of a low market, too.

When I moved to my island, I had 8192 in Sundana to sell. But I needed to sell it quickly, because if I wanted too long, the land would be held into my next tier period. So I sold it to a well-known land baron. I got less than the market value of the land, but I got more than I would have netted if I'd waited for a sale at the market value but then paid another month's tier. The land baron resold it for a profit, of course - but at the end we both won.

The cheaper land is, the more valuable fast sales become, because it takes less time for tier to wipe out the value of the sale. And the more valuable fast sales become, the more profit you can take as a land baron who enables them.

I knew this news would make you happy, Musicteacher

A lot of "land barons" are hurting today - but the blog post was fair warning.

But, as with the stock market, the best time to buy is when everyone else is in a panic.

Good luck out there! And be careful!

-Rockwell "In Cash For The Crash" Ginsberg

You present a very interesting point, something which I believe will lead to great market instability nover the next couple weeks. Granted how many sims are on the auction block, it is conceivable that many people will have trouble selling them even at the current market rates. Will they in turn sell the sims they bought at a loss? That $195 tier you're instantly put in (at a minimum) upon buying a sim will certainly prove to be a killer to "holding land until the market recovers" for many should the situation get worse.

I'm anxiously watching at the sidelines, having sold 100k+ sqm of land last night and earlier today. Sure, I got considerably less than I could have gotten had I had this "hindsight" everyone seems to have had, but the bottom line was I'm giving myself kudos for realizing I made a mistake and selling at a loss so as to be able to get out of the market with as little damage as possible. I ended up losing $750usd on my trades versus if I would have gotten my initial 12.5 price offerings, something which may sound like a lot of money, but when you factor it in with how much land I had to sell, it only amounted to 2L/sqm, having sold my land for an average of 10.5.

What I'm most interested in is whether people will do like me, accept they made a mistake and sell it off at a loss or if they will play it as if it were the stock market and hold out hoping it goes back up. Only time will tell I guess, however we'll have a *very* interesting situation if all the buyers of those sims suddenly start undercutting each other in a panic...

Lol I knew if would make Musicteacher happy also He's the first person I thought of when this all happened lol, followed by myself and how much I stood to lose...

It's easier to hold onto a losing stock position - you don't have to pay tier fees

Good point lol. I personally never like sticking with losers... They remind me of my mistakes I'm all in cash ready to cash in on this crash also, although I'm going to give it a couple days, I think it'll crash some more

*counts fingers and toes* Yup, it looks like people can't buy first land anymore and make a real dollar profits! Maybe some nice real newbie people will be able to get theirs now! Yay!

Or you could just wait a bit and mainland just might not set you back all that much more than First Land Seriously though, I'm happy for you new players. I was very fortunate to get a piece of first land on my second day playing and I remember how happy I was when I made my first profit in SL reselling my first land parcel for L10,000. I see no reason why you shouldn't be entitled the same opportunity and this crash in prices will give it to you

Aww come on MT don't move. You're too great of a neighbor!

Yikes, the bottom market was around 8.3 when I was last online merely some 4 hours ago... It's already crashed to 7.8. I guess we can expect 7.0 fairly reasonably by the end of today (PST timezone) should this situation continue. If I was someone holding onto substantial land holdings at the moment, I would seriously consider selling, it's not likely to get better anytime soon with 40 sims coming out shortly...

http://blog.secondlife.com/2007/01/30/new-continent-coming-to-second-life-mainland/

This should really explain what is happening. No conspiracies. No evil intent to destroy people (other than maybe the land bots). Just a timing issue related to the pricing changes and demand for private islands.

This was a short lived bubble and some gamers cashed in on it. But the watchful ones were slowly bailing out last week. I talked to a few of them that saw this coming as early as last Wednesday and Thursday and were starting to dump their holdings.

Sorry folks, that may sound cheesy, and I'm not particularly fond of land flippers that seem to do nothing but buy from eachother and drive up prices for the people that really just want to own a piece of the virtual world. But in the end, it truly is just a game. And earning L$ is part of it.

I've now seen a block of 512's at just over 3900L$.

There is another big area of new land (not on world map yet) on the southern continent, north of where all the new sims are. If you don't believe me, try teleporting into the sea and when you land, fly north until you find coast and then follow coast. It is a HUGE area!

Two or three weeks ago Murrimbigee sim was the NW rxtremity of the new land - now it's in the middle of it.

Just seen 3789L$ for 512m of mainland snow!

Anyone think we'll see below 3000L$ for cheapest 512 within 24 hours?

Actually, even at L$7 per M2, the land pirates that are raping first land with temporary Premium alts can still flip First Land for a $6 USD profit for every one-month Premium Alt that they are willing to create and burn before the month is out. Less profit than the $20 USD or more per flip that they were getting, but as long as LL allows them to steal First Land like that, they still profit, while screwing everyone else.

LL doesn't seem to care. Why should they, when LL rakes in money for all those alts, and someone eventually pays the tier on all that land? The ones who get screwed are the rest of us, paying higher land prices and unable to get legit First Land without pouncing on any undesirable scrap that the Land Barons haven't raped yet.

LL should make it impossible to sell First Land until you've held it for at least 90 days. That would halt the land-flippers dead in their tracks.

Now 3689 for cheapest 512m on 'search'

Even I have heard that, i don't believe it's serious for anybody who trade land to steal from new users first land, even for 6$ or $20. they can make more money from just trading land, withouht getting into this game with alts. It's not worth the time and the effort.

It's be suggested already that maybe there is 1 or 2 months restriction from reselling first free land as a measure to keep everybody not really looking for first land away from this type of land.

My question which arises from your opinion, is why Lindens, having the capability to release 40 sims every some days, don't give also 40 new sims for free land to new users.
I would only accept as a possible answer that they can't implement the first step(or an alternative solution).

Because newly released sims go onto auction and sell as a single lot.

For an auction sim, they need to find 1 buyer, who will probably be a land baron but that's OK because auction prices will still generally come out as allowing the land to be resold for a profit.

But for a first land sim, they need to find up to 128 buyers before the whole sim is gone. And that's allowing for the risk that one of those buyers puts up a 10x10x10m floating obscene poster and means that no-one wants other plots on that sim, so LL lose money on the untiered land.

Also, zoning and landscaping First Land takes longer.

You're right Ceera because they cancel, not downgrade. I was thinking about the downgrade fee. It would still need to drop more. BLAH!

I think the 90 day thing would be good too.

It's not exactly like that . They used to not put on auction some sims and they could geve them as free land. It can happen. they have done it before. That means they split the land of the new sim in 512 plots (without putting it up on auction) and then they slowly give it to the new users. But it is so limited it seems.

Each sim can have 128 512 plots. that means that for some hundrends of users who become premium members each and every day , lindens should need 10-100 new sims every day to satisfy the demand. Maybe they should think of that. Create new sims and assign to each unique user a parcel of land they choose with no right of reselling ever or every 2 -3 months as you said already.

That will be fair, since they say that premium users have the right on a 512 plot but they don't provide it till now, or they make it so difficult. SO instead of just adding new sims for auction, i would love to see them distributing also free land for new users , 1piece to every single user (but then someone will say they will loose money that way and can't afford it).

What is the right answer?

Did some land research. There about 45 sims above current sales. There's room for another 120 or so to the east. I assume these will be sold in normal pace as every month. Or maybe they intend to speed it up and sell 40 each day, who knows. Anyway, there's still 160 to go on same mainland. Note, this is very approximate, my game freezes every minute so I didn't have the patience to count every spot. Might be another 20 or so to the west. LL can still decide to slow down a bit but I bet they want to finish up this "island" so they can add their new continent.

So worst (or best) case another 40 sims everyday for a week!

Interesting to see is how the main land seem to be already layed on map. It seems to have been "decided" long ago.

So, my guess is, LL will add their new continent to the south. And how big that will be, we can only guess. Size doesn't matter really, but the pace in which they choose to relase new land does.

Maybe if the market crashes too much they will slow down on the new continent. Lots of questions here.