Real Estate Crash

Good luck! Apparently the land moves enough that the same people can buy 10-20k worth of sims apiece and resell quickly.

It appears that the current price level is not only due to the decrease in land production
we experienced while LL acquired and set up new servers to handle the massive population
increase, but that the demand for land remains strong despite the addition of new land.

In order to decrease the general market price in a deliberate fashion LL may have to increase
the rate and amounts of land being created to levels previously unseen.

I heard a few land barons stressing out about the release of 40 sims of land.

But due to the massive increase in residents who among us really has an idea how much land
will need to be created to make a significant impact on prices.

That 40 sims may actually be kibble compared to the rate at which SL is growing.

If indeed that is the case, what a problem to have. In attempting to keep prices low LL
may need to engage in a land creation race to try to sell regions fast enough to get ahead of
demand.

Completely agreed. There was concern among the traders that they'd release 40 sims a day for a month. Although it always seemed likely that they wouldn't be able to do that. Apart from 8 more sims over the weekend the supply has dried up and as you said 40 sims is a drop in the ocean when our population has tripled in just a few months. Hopefully LL will be able to release 8 sims a day for a few weeks or else prices are going to bounce right back to where they were and a lot of land barons are going to be very rich.

Geez - prices really are rocketing back up - most everything's double was it was on Thursday again. Yes, a lot of people are going to get rich off this! (Wishing I bought more on Thursday...)

Looks like there's a lot of support at 10L per sq m...

you know...I don't see that land selling to end users very quickly. I think word got out that land was cheaper and now people are holding out for lower prices. Perhaps some of you selling at 11L/sq.m and higher should reconsider lowering your prices!


To anyone looking for land DO NOT BUY ANY LAND MORE EXPENSIVE THAN $10L/SQ.M!!!

But what if barons stop buying land? Well, then maybe people will be able to buy it for a reasonable price straight from LL!

I don't know how you go about seeing land selling to end users. How do you compile this data?

MR, you got your chance to buy land on the cheap a few days ago. I saw prices as low as 6.2L per sq m (being sold by CP Costello, no less). Snooze you lose. I didn't take advantage of the panic as much as I should have, either.

Barons to stop buying land? NOT BLOODY LIKELY!

It's not at all a scientific observation but I've hung out around the new sims a bit the last few days and I see one person cut up the land and set it for sale, and then another come in buy a few, join them, set them for sale, rinse, repeat, etc...

I'm not in the market for land, did't loose anything. I have a very nice bit that I bought several years ago for $4L/sq.m. I just hate to see people get ripped off.

re: the land barons to stop buying land, I was suggesting that if the prices go too low then they might stop because they'll loose too much money, I forgot though, then new ones will be born.

The best time to buy is when everyone is panic selling. If prices go much lower, you'll see me in there scooping up all the good deals. That is if I can beat Elan's bots to the bargains!

Also, it doesn't matter what you paid for land a few years ago. Tier fees have added up by now. It only matters what you paid for land if you're going to flip it quickly before tier starts to factor in.

It does matter what I paid because I had to save up the $L to buy it. That is why I can't afford anything now, because I don't have the $L for anything now. I don't buy $L's because this is a game not a business investment. And that is what one of the PP's meant by not pricing land out of reach of end-users. I only buy what I can save up my stipend for. If stipends didn't exist I wouldn't buy anything. I pay my $10 a month membership fee, I pay my $15 a month tier, and that is all I'm willing to pay.

So, yeah, if your goal is to turn the land over quickly for a profit then it doesn't really matter what past prices were, but if you are just looking for a place to put up a house, it sure does matter, nobody wants to pay tripple or more what they paid a couple years ago for less. Hence, me keeping my current land rather than moving.

Every resident's willingness to pay is different. I'd say yours is at the low end of the range. This is fine, but you have to keep in mind that some people want land more than you (i.e. will pay more). Also, most people weren't here a couple years ago.

Rockwell, I have some RL condo's to sell you in San Diego, Las Vegas and Miami. They are exorbitantly overpriced, but if you are lucky, another really stupid speculator will come by and buy from you because they cluelessly think that house prices are just in a temporary lull and are going to start rising again any minute now. You know, they are aren't making any more land in RL.....

True... but the population in RL isn't doubling every few months like it is in SL. It'll take a lot for Linden Labs to create enough land for everyone with the population growing at that rate. There are a lot of differences between real estate markets in SL and RL.

Well for all the hullabaloo about land prices yoyoing up and down the plots up for sale round my way in Sprawler have stayed at a steadfastly undesirable 20+L$/m. It's a butt-ugly sim with nothing but camping casinos, strip clubs, 'for sale' spinners and malls around. I did what I could to improve the place but gave it up as a lost cause, ripped down my treehouse and put up a skyscraper instead. No-one in their right mind would touch that land with a barge-pole.

Whatever...

I'll continue to make money trading mainland regardless of whether you think it's overpriced or underpriced. If there's land to be traded - I'll trade it.

I never have a problem with good old fashioned capitalism. More power to the land barons. Are land prices any more ridiculous than charging 800L for hair or 1000L for a skin?????? Its not like there is an inventory cost. Each skin you sell cost you exactly what the last one did..... nothing. There is 100% profit on the sale.

In fact, land businesses (rental and resale) are the only businesses in SL where there is an actual real world cost to doing business.

I suppose its all relative. I make and sell hats....... yet the most expensive one I sell is 45L. Most are between 35 and 25L. Yet I am still making enough to cover tier. (and my tier is really an extravigance since I could easilly just rent space somewhere and skip the premium membership all together.) On the other hand, I have ZERO risk. I didn't have to buy raw materials or pay for warehousing. I paid nothing and turn 100% profit on every L I earn.

Land sellers though have real risk. They did pay for their inventory and they certainly have hefty warehousing cost (Tier). The more risk you take, the higher the reward should be.

Long live Milton Friedman.

Thank you for adding that perspective, Lincoln. You hit the nail on the head. Too often, people bad-mouth "land barons" for driving prices up. But land barons serve a unique function in the land market by providing much needed liquidity and keeping prices competitive. The more land barons there are, the less any single land baron will profit or be able to control prices. Free market all the way!

I've been messing with land every since the crash. I now wish that I put in massively at L$6.3 per meter, but don't we all? Ah well. 35% profit instead of 50.
Now let's see what happens when/if the Lindens release another huge block of autioned sims all at once.

That's a very flawed analogy for many reasons. Content has a production cost, whether it's the software used, or the amount of time spent creating.
There's also nothing stopping you from finding a different store where similar items are on sale far cheaper, or in other words, you actually do have a choice in what you buy and in how much you're willing to spend. There's something for every budget.

Land barons on the other hand restrict choice to "buy or don't buy" and remove variety because anything that's sold under market price will be snatched up and repriced, artificially inflating prices.

Unique function? One resident puts a plot up for sale, land baron snatches it up and reprices it to a multiple of the original price making sure to plant those lovely "for sale" signs to grief the neighbours, later another resident buys said plot.

How exactly is the land baron required for this transaction? Take him/her out of the picture and the only thing that changes is that the consumer pays a lower price.
The arguement that the land baron is necessary in case the land doesn't sell quickly enough also doesn't have any merit. If that were the case, the seller would be forced to lower the price, creating a much better deal for any prospective buyer.

Musicteacher,

If you pay $15/month tier, that means you have at most 2048+512 = 2560 sq.m.

At current exchange rates of L$ 277 / US$ , this means you are paying tier to LL at a rate of L$ 19.5 / sq.m. / year (15 * 277 * 12 / 2560). And that's only if you own the full 2560 sq.m. ... if you owned only 2048 sq.m. for instance, you'd be paying L$ 24.25 / sq.m. / year.

You say you bought the land several years ago. Now, granted, exchange rates have fluctuated over the years. But still, you've surely paid at least L$ 50 / sq.m. in tier, cumulatively, in that time.

You bought the land for L$ 4 /sq.m. at the time. But it would hardly have made any difference in the long term if you'd paid double the then market price.

It makes no sense to focus too much on the intial purchase price, because if you're buying and holding instead of flipping, the dominant cost by far is the tier.

PS,
You can save money by paying US$ 72 annually instead of US$ 9.95 monthly for premium membership. At current exchange rates, you'd save L$ 13130 annually by doing so, or L$ 252 / week. It's like a free additional weekly stipend.

I wouldn't doubt that should they release another 'block', we see an even more widespread panic as people attempt to manipulate the market by convincing others this will become 'normal'. I for one certainly don't believe 4 will be the most per day we will see (those 8 were released on 2 day auctions, no auctions the day before)... That seems like quite an overstatement if LL was calling 4 per day nothing and now, 4 is all of the sudden a 'massive boost'? Four per day won't do anything with how much the current population is going up... So, does LL really want lower land prices or did they just need a quick 80k when they sold those 40 at once? I guess we'll see soon... I still don't see this "new continent" anywhere. I made the prediction a few days ago that if LL stayed at current production levels, mainland prices would bounce back to 11 on the low-end. Well, they're already there...

The release of those 8 was obviously timed to begin just as the 40 were coming to an end.

I counted about 20 sims up there that weren't part of the 40, I predict we'll see another batch of at least 8 and probably 12 tomorrow just as those 8 finish. That will take us back to Thursday, just in time for a load of the sims in that big gap to come online.

I agree with most of that and also commend your common sense. Although many view the technology behind Second Life as a new type of platform or an evolvement of the usual 2D web, the business model is by no means proven.

The only thing I would say (at this stage) on Second Life as a first life business platform is that it does offer some advantages that a standard web site does not. Therefore clearly it is in Lindens commercial interest to grow the business and the least risky way is to farm out some aspects of software development, which they are doing via the economic system built into SL, at no risk to themselves except the weekly stipend to premium account holders.

However most people could earn more money at less risk to themselves by unskilled labour in the real world. It is a hard thing to say and I intend no disrespect to people here. Having said that there are quite a few skilled content creators, some longer-term successful businesses, and a very few very successful ones. For the latter two groups Second Life is not a game.

Kitty you may be right that if no one speculated on land prices, prices would be lower.

But the point here is that you CANNOT remove speculators from the land market. If you had your way, the average resident who buys first land would not be able to sell it at a profit when they are ready to move onto a bigger plot.

Your vision of what Second Life should be and the reality of Second Life are two totally different things.

There's a big difference between land that changes hand only to instantly be put up for sale, and land that serves its purpose .

If someone buys first land, plays with it for a few hours, discovers that 117 prims just won't do and puts it up for sale the same day, then I wouldn't consider that reselling, because of the intent when the land was purchased.
However, if the same person bought first land with the idea that "hey, it's there, and I can resell it for a good profit" then the intent is quite different.

You're right that there's no way to judge intent, but my problem was with the "land flippers are your friend! we are a positive influence on the community!", because it's simply not true.