This is a joke right?

Well. Alexis Developments (me) bought (3) 1024sq plots "on the water" Mainland Ocean View (they were underwater and I'm building 'on stilts' haha) and they were only 18K each, front view is Linden Protected.

The plot behind me which I guess you could call 'waterfront' is a 2048sq, I was going to go for that to but the owner want 60,000 for it!..

2 days after I bought my plots that 2048sq was sold at 60K..

As long as people are gonna pay that kind of money, land prices will stay at a super premium.

If I wasn't so in love with my location and the price I got it for I might be tempted to put it up for 125000 like the person across the bay is for the same amount of land..

I am glad you can hold the land for months and not worry about making tier payments, i sure do see LOTS of yellow on that map, more than ive ever seen in the years ive been in SL, so best of luck in your land sales.

Hi there.

Because the population of SL has been growing a good deal, although not as fast as the main page stats may show (LL has said that only about 10% of people who register and try SL actually stick around) and because these new members demand land, combined with the fact that LL is not releasing much First Land AND because islands now cost more via tier & initial cost making it impossible to arbitrage new island land via rentals, more members see it worthwhile to buy their own plot rather than renting from a virtual land arbitrageur, we see an increase in mainland land values. Tier is also a good $100/month cheaper to own a full sim of mainland rather than a new island, which has further increased demand for mainland plots. Some people think that LL will up tier rates of mainland sims and may "grandfather" old plot owners the old rate, which again has driven up demand. If LL were to release more land, prices would fall, but not to their old levels, as humans are rational and know that in the future and even now it is cost efficient to own your own land rather than renting it from an island owner, this drives up demand for mainland and so price. (It is also probable that LL will eventually raise island tier for even "grandfathered” islands.) There is also a backlog of Sims "pending" that LL still needs to add to the system. There are a lot of people and corporations who want land NOW and so are renting or buying Mainland while they wait or are renting sims from people further lowering supply. I don’t know if it is true, but I hear NBC or someone is renting a few Sims while they wait for their own sim orders to go live.

If things are left as they are (LL changes things VERY often), eventually equilibrium will be found and renting will cost approx the same as owning. As the land prices rise, the thought of renting (even at higher prices than before) will once again become attractive, which will slow demand for mainland. I believe LL is trying to balance the market and eliminate any possibility of arbitrage. Thus a main reason for island price/tier increases. (Example: Buying an Island + tier for 1k and renting it out for 1.2k, while the same amount of land + tier on the mainland would cost 1.3k, making everyone demand the rentals. No risk + return + taking advantage of a market situation = arbitrage)

The higher island prices and tier also drives down demand for new islands and so drives up demand for mainland, as less can afford/have the utility to own a whole island and so demand smaller plots via mainland.

There are other things to consider such as preferences, the snob effect and irrational behavior, but to make things easy; we'll focus on the main issues of our model found above and assume our market is perfectly competitive and efficient.

Some people further insist that "land barons" are snapping up plots of land to drive up prices. I find this unlikely as it has not happened much in the past and today we have a higher volume of land transactions and a more efficient market making it less possible for any one or a collusion of a few land barons to be able to manipulate prices, thus we will follow the model above and assume the market is efficient and free from manipulation.

I hope this helps!
Cheers!

Then why is most all the land for sale at these ridiculous prices held by the "land barons" ? From what I'm seeing its what we call in the good ol US of A, as price fixing, but since that's the way of life in the USA, Exxon-Mobile has gotten away with it for years, i would suppose there's not much we can do except ride bicycles

Hi there

With oil, they have "cartels" like OPEC, which collude large oil suppliers together to set supply and thus prices. In SL almost ALL of the land sellers would have to get together to influence the market price. All it takes is one or two people to defect from the scheme and prices go back down.

Lets say, for example that five land barons want to buy up all the land they can. So, they tell each other that they will only sell 512 m of land for 10k. Eventually one of those involved gets greedy and defects and sells their land for 9,999L$ for 512. That or another land trader enters the market and sells for less. Then another person undercuts them at 9,998L$ and so on until equilibrium is found.

Now, I'm not saying that it is impossible for a bunch of land barons to collude and manipulate market equilibrium price, but it would not be very effective and would be risky as the above defect would be very likely. The prices could be changed by a small % by such a scheme in such a market. Not to mention that in a market such as this, LL could add TONS of land at anytime, thus killing such a scheme. The risk to return ratio is simply not there. What we are seeing is caused by what I have talked about in my original post, not by a large scale SL land collusion effort.

When I look around LL I do see land sold by land traders, but I see many many land traders selling. I don't see just two or three land sellers selling the land. As you get more traders, it becomes even more difficult to collude.

I hope this helps!
Cheers!

With all of the alts in SL, how do we really know there are "many many" traders ?

Yes, you found us out. We're all actually one person. I myself keep outbidding all my alts for land at auction.

It's ok Stephen, I know a Psychiatrist just started up nearby

Hello again

To be able to trade land you need a "premium account." Those accounts cost extra USD$ and so would cut further into profits and thus it would be unlikely to be used to simply "trick" people into thinking there were no land barons colluding to sell land. They would also miss out on tier fee reductions as the more land you own, the less tier you pay (although this "savings" is limited)

I'd LOVE (and I mean for real) to discuss this issue further, but after the SL forum changes, this forum is a "resident answers" forum and it is against LL's TOS to have an actual discussion here and so I'll have to refer you to my previous posts as my answer. Feel free to contact me in world via IM if you wish to discuss further and have a great day!

Cheers!

He's one of my alts

You could, of course, take it to one of the third party forums, like Stratics Second Life and discuss it without restriction. The 'Real Estate' forum, for example, would be an ideal place for this.

Broccoli

Damn! .... thought he was one of mine!