Can someone explain land auction prices?

I realize that at the moment land prices may be in a bit of a flux, but all the same. I looked at the auctions page, and some plots were going for prices significantly higher than ordering up a new sim of your own. Why would people pay so much? For the money, I'd rather have a fresh new sim to play with. Is being on the mainland that useful?

The comparison to islands is moot. Pretty much every full sim bought at auction is bought by a reseller who divides it up with the intention of selling it on at a profit (remembering to take tier and lindex fees into account of course)

Before last week (when the bot started influencing peoples opinions), people were prepared to pay (say) 16.5L/sqm, which on a full sim is 16.5 * 65536, or 1081344L. At an exchange rate of 266L/US$, that equates to US$4065.

Now, overheads like tier fees and lindex charges of 3.5% to convert the income in L$ into US$ to buy new sims at auction will impact that, but you can get a rough idea.

Of course, you always run the risk of being left holding a lot of land if prices move against you.

And there is always the suspicion that the only people who seem to buy land off you is other resellers, each hoping to make their won profit on it, instead of people actually looking to use the land. Which is pretty much the definition of a bubble, and is what I was seeing last week.

I'm still seeing a bubble

And those sim prices... People are paying just as much today, even with news that LL will be intentionally crashing prices... Mindboggling to say the least!

I'd probably still be seeing a bubble if I had anything to sell

I've noticed over the past week or so some new faces have popped up in bidding on auctions, perhaps they don't know about what else is going on (bots, then the new continent) and are just jumping on the bandwagon. Amusingly, they haven't actually won many of them, all they've done is pushed prices back up for the 2 or 3 major barons who are each determined to win at least one sim out of each batch.

Lindens Didnt create the Bubble and it is up to the Lindens to make sure that Land prices stay reasonable, they are just catching up with mainland sims since most of their effort has been on getting all the new islands ordered delivered. Paying anything over 10Ls per meter is just stupid at any time. A fair price for land is betwen 5 and 10 Ls per meter unless it is a fantastic location and in the world of Instamt teleport to any location that isnt even as big a factor as it was in the past. Ok Flame away Barons

My rationale is not based on what's "fair" (for some definition of fair)

My rationale is based on what it costs to buy and what people will pay for it, taking associated costs into consideration.

In times of a shortage of a given commodity, you would expect prices to go up. In times of an excess, you would expect prices to come down. People reselling land made no more profit at 15.0L/sqm than they did at 7L/sqm, they just had a higher risk with more money invested for the same profit.

The people who made a lot of money were the speculators - those who bought land at 7L/sqm and held onto it, crunching supply even further and hence driving prices even higher, then selling at 15.0L/sqm.

I think this is a pretty irresponsible and ignorant statement, given that the market is currently supporting prices well above this level. Yes, prices are going down. Yes, that is LL's goal with the increase in supply. Will we get to 5L per sq m? I doubt it.

I doubt it also -- mainly because I'm certain that should prices get that low, many of us will start investing in Second Life rather than RL investments. The possibility of it returning to 15L+/sqm is all too tempting for many of us and I'm sure those of us with large investments in SL will do everything in their power to make it as difficult as possible for prices to go that low. Perhaps we'll even see some of the big island players get into mainland since low mainland prices deters people from buying island properties...

Agreed. Anshe's been laying low on the mainland lately. She saw this coming well in advance.

And I also agree that SL is a legit investment that can be compared to RL ones. I took $2000 out of my brokerage account to start trading land in SL. This turned out to be the best investment I've ever made, ever! My happiness was tempered a bit when I realized these gains are taxable, but SL can still offer a very attractive return compared with more traditional investments. That said, you have to know what you're doing, and weigh the risks appropriately.

Good luck, fellow residents!

Well, also don't forget the lack of first land to all the people that sign up now and since they don't know how to go about it you might just find their names on the auctions.

I saw it coming in advance, and I'm nobody!

Well done Stephen, you get a gold star for today!

Nobody is a nobody .. even in SecondLife!

Does this statement apply to those that bought at that price for personal reasons....I bought a bit of land a lot lower than that 3 years ago for personal reasons, Kept the land because I liked it and liked my location and only sold it recently because my time allowance for SL did not support my $40 tier. So does this qualify me as a speculator?



Honestly I think that statement was right on. I think the ignorant ones are the poor noobies who buy at those prices well above that level because they don't know any better and don't think they can negotiate.



that is sad that people would puposely make it more expensive and difficult for others to get a piece of land in SL for their own profit. Try to remember that this is a game to some people, and all they want is a small piece of land to call home and shouldn't have to pay hundreds of US$$ to get it. Hopefully LL will start selling land at low prices specifically for these people who don't want to play the "SL is an investment" game.

Ok I guess flame away as well.

I don't consider CP Costello, JR Unknown, Sarah Nerd, Wrestling Hulka, Delicious Demar, Tryxtr Kraken, Reece Gunawan, Brazil Comet, PR Hollwood, and myself to be so called "poor noobies" - even though we all bought sims at auction above 10L per sq m. We made money on these transactions. If you don't know who these people are, please do not continue to comment on the land market.

No, I'd say a speculator is somebody who buys and holds onto land with the specific intent to profit at a point in the future, not somebody who happened to have some land and took advantage of the high prices to make some money.

Ooh, shiny!

And pointy too... ouch... now it has blood on it, hope you're happy...

Granted that 5Ls per meter is on the low side but 10 is the high NOT 20.
The only reason land became so high is because Lindens couldnt release land quickly to market because of Island orders and a huge influx of people. Thankfully Lindens will release land and in a massive outlay. this will put land prices where they should be. Affordable for the masses. Like it or not Land is nessesary for the survival of Linden Labs, Alot of people have signed up. logged on, see how much it costs for a small piece of land and leave. one more unhappy customer who then tells their friends "You know what they want me to pay for land that doesnt exist?" How much better is it for the Lindens if they have people who have a good experience here and then tell their friends to check it out?

Im personally glad that Lindens are considering releasing selling plots of land themselves

"saw" or another verb

What are you saying, Brazil?

it doesn't matter what I say. there is no reason to fight in words , we are all residents in here, with different perspectives of SL, as it should be.

Buying and reselling land is one aspect of this economy. If Lindens can't control the market then they might think to stop this activity and land ownership become absolete.
As soon this is no near to happen, then nobody can stop anybody else to buy and sell land. Most residents in here have done this for their own land.

At a bigger scale you have realtors. Same thing. With the increased demand in users , i think we need not 1 continent but 1 every month. If we see this then we might see prices to 5l/meter. 2 months ago population hit 1 million. end of december we saw 2 million. 1st of January 2,3 million and now we are at 3,1+ million. An increase of 300% occured in that time.

Land didn't follow and it's not easy to follow. If SL can scale and hit 1 million each month, then for sure we need 2 continents for month to bring the prices down enough to the old levels.

They will drop a bit (they have already) but don't expect miracles. As land prices coming a bit down, then the demand will start increasing again. At 5-7l/meters, if we would be able to see that, i suppose many ordinary users will think to buy land as an investment.

this is my understanding.

I'm not saying you guys didn't make money, I'm just saying you would be able to if the newer members were educated in SL's land history, converting the cost in $L into $US and then figuring how much $US they are paying per prim and then deciding if it is reasonable. THEN deciding how many prims per $US they would like, and reverse converting it back into $L and then "offering" that amount. And then not giving in and purchasing at the over-inflated rates.

I don't need to know those people to comment on the land market. I have looked at prices and done the math and decided that it's way too high. Good for all of you, you made money due to the lack of education and research of others. I had planned on moving to a new location and selling all of my land to downgrade but when I saw the prices I decided to stay, chance a bad neighbor, and keep part of my land. I sold my land at $10L/sq.m and still made a profit because it was $3 or 4 L/sq.m when I bought it. I felt ok selling it at the high end of "reasonable" because it was linden protected, waterfront land. Unfortunately it went through at least 4 other people before I got a great neighbor who unfortunately paid about $23 L/sq.m for it.

Too bad there isn't a way to sell the land to a specific type of person. Sell to "anyone", or "sell to user" or sell to "land seller" Land sellers or anyone could sell the land whenever, but a "user" would have to keep it for 90 days before being able to sell it or something like that. I'd have advertised for an end-user to begin with but what guarantee do you get that the person won't lie to get the good price and then turn around and sell it for way more.

That's the sad part, I can't even give someone who wants to use the land a good price because the land barons get to it first and price it through the roof. Even if someone thought they wanted to use it, knowing what they could get for it they'd probably still sell it just to make a profit. It's like the first land...people buy it, not to use their first land, but to make a heap of $L.

The whole point is that when one group uses SL for making money and another group uses SL purely for entertainment, one group will be happy and the other not so happy. Why not have 2 grids...a business grid and an entertainment grid...well the businesses only work becauses of the entertainment group....

Sorry to be so off topic, but the whole business aspect of SL makes it very not fun for people like me. Over my time here I've seen us loose dwell bonus, rating bonuses, stipends reduced for one group and removed for another. I've seen LL start to sell hundreds of millions of $L making a profit, I've seen camping chairs on relatively small plots take over entire sims making the other residents miserable. I've seen the world get more and more buggy and laggy daily, i've seen land prices go through the roof, worst of all the cost of rating someone is so high nobody does it anymore. Worst of all, in my opinion, is that the people are just not nearly as friendly or helpful as they used to be. Everyone wants to make money, make money, so nobody helps for free anymore, and just about everyone over-charges.

As far as improvements, things that make the experience more enjoyable, lots of well scripted gadgets, the ability to make animations and poses, and ptp teleportation.

I'd happily loose 90% of the population and return to my nice simple, friendly, reasonable world...no offense meant, but it's just not fun...I stay hoping it will get better but every change seems to make 10 things worse...so I really stay for my few close friends and seeing what they can accomplish.

Wow. I don't even know where to start with that tirade, MR. All I can say is thanks for the amusement while I'm stuck here at work. You seem opposed to the free market. Are you a communist?

You seem opposed to communists. Are you Prok?

Would you not agree with the proposition that LL makes more money (i.e. tier) when land is in more hands. More people paying 25$ tier will generate great cash flow than residents at the highest tier level.

The only way LL makes money on "old" land is when they collect the tier on it. I would think that in the ideal scenario, there would be lots more people owning land at higher per/sqm tier rates than when you get to high levels of land ownership.

I do not think the idea is that far fetched that the goal of this "experiment" is to get premium members willing to buy say a 1024 parcel.

Just a thought. One thing I think you will see if prices decrease much more is more people buying land to use for non-revenue generating purposes. For furniture sellers like me that is good news. I would think the pre-fab house guys have to be feeling pretty good right now as well.