When Did Land Get So Expensive????

In the last few posts, we've discussed selling in anticipation of the land bubble bursting very soon. That kind of talk will encourage people to wait, if anything.

Uh no, it's called good business practice if it sells, bad business practice if it doesn't. You could do the very same, nothing's stopping you. Nothing at all. Except yourself.

It is not greed. Want to know why? Wrap your head around this simple fact.

IT

IS

CONSENSUAL.

If the buyer didn't want to buy then the seller would get nothing. Since they buyer did want to buy and found the price reasonable they got something they wanted, a parcel of land that they felt was worth it, and the seller got what they want, a profit.



You have a right to complain about land prices. I understand completely. But everyone else has the right to point out the idiocy of your position. BTW, some disclosure here.

I live in Las Vegas, Nv. I moved here 3 years ago. Anyone who's kept up with real world land prices will know that Las Vegas, Nv is one of the fastest growing cities/suburbs in the nation. On top of that in Nevada the land is controlled by the Federal Government, the Bureau of Land Management[1] to be precise. Every year a small portion of the land is auctioned off to the home builders in the region. Because of the large influx of people (2-3000/month) and the low amount of land made available for building real estate prices have skyrocketed. Again, anyone who's been paying attention would know this. Homes that sold for $125,000 a decade ago can go for close to $300,000 now.

Are we seeing the similarities here? Replace "Las Vegas, Nv" with "Second Life" and the BLM with Linden Labs and it's a dead ringer. But wait, there's more!

Most of the homes built in this area are built by one of several national home building companies. KB Homes, Pulte/Del Webb, etc. They buy the land at huge prices, develop it and sell it to individuals for much more than they put into it. I believe you and others call that activity "greedy" and would call those companies "land barons."

Know how much I'm complaining about that in the real world? Not a bit. And I'm sorry but the stakes are a tad higher where I live than they are in Second Life. But the forces that operate are exactly the same. The difference is instead of complaining about it I see it for what it is and am content to let the prices rise or fall and get into it when I see fit.

And right now that means my account is not premium, I'm renting a small 10x10x10 "apartment" in a tower and have a whopping 30 prim allowance. So my position is not one of the "greedy land barons". In fact, I'm one of the people that are being to told to "suck it up."



Nope. First off I ride a motorcycle (16 years, thanks) which gets great gas mileage. I do, however, complain about the same type of people who complain about SL land prices without bothering to understand the market that drives the price of gas. I mean I find it laughable that these people call on their Congresscritters to investigate the American oil companies for "price gouging" and "price fixing" when the two largest components of a gallon of gas are well known.

1: OPEC member nations choosing to lower production, tightening the market and drive up the price on the barrel of oil.

2: The Federal and State governments with their taxes double to triple that of the profit margin the oil companies only wish they had.

Might I suggest that anyone who wants to discuss the "problems" of SL land prices educate themselves about how markets work (they're not that hard to figure out) and basic capitalist (not communist or socialist) economic theory and practices before doing so. I highly recommend reading anything by Thomas Sowell. Do a Google search to find his work. Because until you do you'll continue to have a skewed view on how things "should" work (to your advantage) as opposed to how they actually do work. That ignorance only puts you at a disadvantage and leads to rather funny conclusions, like the above mentioned investigations into American oil companies business practices when OPEC member states announce publicly to all listeners they are meeting to voluntarily price fix and gouge the rest of the world.

[1] http://www.blm.gov/nhp/index.htm

As an American, I can honestly say that such methods are not *my* way. I do not choose to be the kind of people who try to take money from someone else without providing something of value in return, and when players grab a piece of land for sale at a reasonable price, hike up the price, and put it right back up for sale, they are attempting to make money for doing nothing. I wonder if some of them really think about what Second Life would be like if everyone operated that way. I'll bet these same people would scream blody murder if their cable or phone company slapped on an extra fee - not because they were providing an additional service, but just because they could. Think about it people. Wouldn't you want the people you give money to, to provide something in return?

(Never mind, not worth it )

Uhm, so?



That works for services, not goods.



So? It's called investing. You mean the fact that I bought a #1 issue of Spawn back in the late 90s means that today I would have to sell it for $1.56 (cover -20%, what I paid for with my subscriber discount at the local comic shop) to the next person instead of the $5 it is valued at currently? I mean I didn't do anything other than grab a piece of land, er, comic book at a reasonable price and put it right back up for sale, attempting to make money for doing nothing.




I wonder if some of the people who are complaining really think about what Second Life would be like if any of their foolishness were to come to pass. How about a much smaller member base and far less content.



This is a service. Now try to make the same analogy with goods. Land in SL is a good, not a service. Escorting would be a service, not a good. Those people are providing you with something. Land. An item, an object. They purchased it betting they can sell it before it becomes more costly for them to hold on to it. Nothing wrong with that except for those who are jealous they didn't get to it first.

BTW, just a general aside to those who are calling people "Greedy" and saying they are throwing things up for sale "far above market value." You misunderstand the concept of "market value". Market value is any price... ANY... price that the market will bear. The only time something is "above market value" is when it fails to sell. If it sold that means someone, somewhere, in the market valued it at that price.

It is amazing to me how many people make the same mistake in SL, in WoW, in AC and pretty much every other MMORPG I've ever been in. At least SL has a single world as opposed to traditional MMORPGs which have multiple worlds. That cuts down the noise by not presenting the opportunity of cross-server comparisons. "They're selling that for too much, on my old server it sold for much lower." Different... markets.... Simple.

*sigh*

I'm sorry you edited your post... I agreed with your arguments and think they were accurate please consider re-editing to restore your post.

Nope, that is by force. Choices made under threat of violence or duress are by definition not consensual.



Can they? All it takes is one person who plays in the land market to not go along with that scheme and there's competition again. Furthermore if the land didn't sell tier fees would catch up with them. So don't buy. What about the people who buy the low priced land and sell it for, oh, what a "greedy land baron" would sell it at less, say, 2000$L knowing the "greed land baron" would still snap it up. Are they only half as greedy? Not at all greedy? Or are they playing the game and just taking their cut a tad sooner?

Sorry, don't buy the cabal of land barons theory. Really, I don't. They have to move the product to keep in the black and the only way to move the product is to price it where it will move. Your problem is with the people willing to pay more than you are for land. Those greedy people who want land and a prim allowance of their own. Shame on them!



Which is an abuse of the system and, you'll note, LL's looked into it and locked down first land sales which leads us to where we are because of a shortage of new land. But we're not discussing abuse of the market, are we? Because, well, no first land, no abuse of it.

I explained in the next sentence that it's a hyperbole, so there was never any need to take it literally . As I mentioned its only purpose was to highlight that choice without actually having a choice is not a true choice. And it seems you agree.

Which is where they swoop up the cheaper priced land and reprice it. Competition eliminated.

They only need to sell 7 512m² plots at L$8k to make a sim's tier, meanwhile they can hold on to 140 of them (128 + 10%).

Depends really, if they offered it to their neighbours and sold to a reseller because (s)he was prepared to pay more, then yes, greedy (or at least selfish depending on your perspective).

Except that I'm not looking for land, if anything I'd sell since I don't really need or use my mainland plot but nice try. I also don't see what's wrong with letting people know that current prices are overinflated and to simply hold out a month or two. Once LL fills all the backorders on private sims, things will return to normal.

I think the problem with land prices and tier fees is not the biggest problem as such, but the biggest problem is that if the prices are too high, SL itself might get competition. Maybe SL is currently the only and or the best place, but virtual worlds will develop with time somewhere else too. If those other virtual worlds can provide their users with cheap land with no land hoggers, then the land hogger's land in SL will drop in value. But not only that. If SL fails to be one of the market leaders of virtual worlds, then its the beginning of an end for SL. How many of us can say that they will stay in SL if there was a better and cheaper option?

This is computer world. In computer world hardware does not cost much anymore and it gets cheaper and cheaper. And you can copy software so that the world expands almost free after you have built the virtual world engine. Software and virtual services are also a developing field of industry, where people invest a lot and make their living. SL is one good example. And there are a lot virtual world based business too like shops and clubs, which generates even more money. So I am very suprised, if SL will not get competition... And if SL prices are going up, then the competition would be even easier.

I think that free trade is good. But if Second Life is going to be more and more life like, then I would need to replace it with a dream life and/or get a additional dream life. Some people just want the dream life and do not care about second life.

I think Second Life is most people's dream life .... until they get caught up in the Real Life crap of being ripped off.

A suggestion: what if LL 'zoned' First Land plots. Single, Residential plots were price fixed so sellers were restricted to an index-linked pricing, but all-purpose plots could be joined/developed and priced competitivly?

It's called the perfect (or efficient) market hypothesis. If something is cheaper than the market believes is should be, the price margin will be eliminated. It's not specific to SL land by any means. It happens in RL currency trading, stock markets, commodities etc.

Without it, buying and selling land would become much like the process of finding first land at the moment. Slow and unpleasant due to the lack of liquidity.

Personally I find it rather sad and depressing that, with all the potential available out of Second Life and its tools... the most imaginative thing that some people can come up with unfeasibly large, talking genitalia.

Personally, I blame Linden Lab's one-track advertising campaign of "come here and make money" - which clearly isn't as easy as it's made out to be.

Broccoli

oh yeah, but its what makes SL sell, there is no morality or "wrong" for a board of directors when it'as about making money

A friend just set their first land 512 plot for sale at 20,000L to test the madness of the market and it sold within a day.

Geeze.














I dont see why you ppl just dont go rent a nice plot on a PI.

I don't go the private route because I'm at the whim of the owner, if they call it quits then my land is gone. Yes I know the same is true for the mainland, but if LL calls it quits then the whole game is gone so it doesn't matter anymore.

Yes that is true.


If youre going to rent go with someone who has a good reputation and has been around for awhile; not someone with a few things for rent who doesnt know wtf they are doing (which seem to be A LOT of people in SL lately)

Silly me, all this time I was thinking that it was reprehensible that resellers buy plots cheap only to resell them at a higher price a second later. But you're actually doing them an immense favour when you snatch that cheap 512m² away under the nose of a newbie?

Thanks so much for clearing that up.

What I think is reprehensible is the practice of buying that First Land for 512L$ and immediately reselling for more. That is by no stretch of the imagination what First Land is for. Subsequent development and reselling is an entirely different animal.
e.g. my neighbour offers me his 512sm First Land 5 minutes after he'd bought it for 3000L$ ... 586% profit.
The next owner reselling within the hour at 6000L$ .. 100% profit

I was quite ok with buying my second plot some time later for 7250L$. I don't know how many times that one had changed hands but general consensus seems to say it was a fair price. Fine ... but 586% for just a few clicks of the mouse ... they're taking the p**s!

Very, very simple solution - make "First Land" non-sellable for 45 days, to accommodate 2 monthly premium fees, which immediately stops the "buy then resell" landsellers which are causing a lot of the problems, and reduces land prices as they are no longer able to artificially inflate prices to their own needs.

Broccoli

The only people buying land at these insane prices are resellers. I'll bet every parcel that has been talked about in the last 5 posts is now for sale at a higher price. End-users are not the ones doing all this buying at insane prices, it is resellers (just like the RL real estate bubble.)

Don't buy overpriced land, it is that simple. At some point these resellers have to get out from under all that tier and prices will drop. Unlike RL where they aren't making any more land, SL is making lots more land and once LL delivers all those new islands and starts adding mainland sims again, prices will come down.

What do you mean by that if I buy land from some one's island the land is gone if the owner quits? I mean I would own that land. So how that land is able to be gone? And you can only abandon land, not quit totally. So if there are lots of islands, those islands would get abandoned at most except plots that some one else has bought. Am I right, or wrong? Abandoned land would go to Lindens and they would auction that land or set it on market with some price.

On "Islands" or private estates - which are sims purchased in a special way from LL, "sales" of land do not give the "purchaser" a direct right to the land in the same way that purchasing a plot on the mainland does. On estates, the owner of the sim takes on the role that "Governor Linden" provides on the mainland. This is what makes it possible for private sims to be "zoned" and have covenants enforced. If the owner of a private sim doesn't like you for some reason, they have the option of booting you off.

It's rather unlikely (given the high capital investment needed) that a private sim owner would just walk away without selling off the actual ownership (there's a process and fee to transfer the governance of a private sim) but when the new owner takes over, they may have plans that do not include servicing the needs of current residents.

You need to be careful and know whether you're in a private sim or on the mainland when buying, since now the process looks very similar, but the underlying mechanics of "ownership" are very different.

Aside from the statement about resellers, I'd agree with the above. (In truth you can't say that only resellers are paying these prices, clearly they must be selling it to someone. Plus you can't quantify the ratio of flippers (resellers) to end users). An even more philosophical question is: what is a reseller ? Are we all not at one time or another resellers of something ?

My perspective:

Ok I'm new here. But I find myself liking SL a whole lot. After about 10 days here I decided to stay and make a small house here. Looking at the land sales showed that 512 plots were generally north of 4000 depending on location.

Those who know me, can tell you that I have an affinity with water, so of course I wanted a plot overlooking (or on) the water. Plus selfish old me wanted an uninterupted view of the horizon, so it had to be next to a protected region. Bottom line, I ended up paying 12500 L$ for my little piece of SL.

Now according to many posters here I am: a) insane b) greedy c) an idiot. Problem is that these are your value judgements, not mine. Someone might choose to pay $35000 for a car in RL. From my standpoint that's about $28000 more than I would spend. But they "value" the car that much and that's just fine.

At the end of the day, I made my value judgement. Was it different than yours ? , for sure it was. Does it mean land is overpriced ?, well that depends on the aggregate of peoples value judgements (as compared to your own).

If my dream plot had been priced at 25000 L$ would I have bought it ? Probably not. Would I have been upset about it and cried like a babywomen on the forums ? No chance. I'd have accepted that my "value" of the land was less than it's price. I'd have accepted this with good grace and found something else to do.

In the end I realize that SL in general (and SL land in particular) are a luxury, like my Sunday Starbucks. They are nice to have but not essential to my life. I'm very lucky to live in a stable democracy and earn more than a subsistance wage. I count my many blessings daily. I humbly suggest some posters here should do the same.

Well said, Finora!

I'm a relative newbie as well. Been in SL just 2 weeks today I think. I was only on my second day in when I upgraded to premium and plunked out $L5000 for a 512m plot. I was new, I couldn't find any first land, and wanted somewhere to be my own place in-world. (Plus I thought everybody had land!) Knowing what I've learned since, maybe I dove in too fast, but I like where I am. The view isn't perfect but it's not bad. And I like building stuff, so I like having a place to put things and know they can't be removed or disturbed when I'm gone.

In fact, liking building things, I quickly started nearing my prim-limit. So when a few more parcels came available in the same sim, I went shopping for more. What astounded me was the prices had doubled in only 10 days! $L5000 had become $L10,000 - and for land I considered to be in a poorer location.

Nonetheless I bought another 512 anyways. Doubling my prim allowance was worth the $L10k to me, and I have some measure of confidence that if I choose not to renew my account next year, I will be able to sell my land for something. Whether I turn a profit or not, the bottom line for me is that this is entertainment. Instead of buying some DVDs or going to the cinema, I can while away time having fun in SL and the land that I bought is worth to me what I paid for it, for what I want it for.

Atashi

p.s. here's one question I have re. Mainland vs. private islands. How do you know if you're on Mainland? When I look at the big map I see two large continents. I'm on the southern continent. Is that Mainland? Do the continents have names?