Have I got an office tower for you
LVT Blasts Thru Connecticut General Assembly Onto Governor's Desk
As the real-estate led recession at last begins to engulf commercial land, one state starts to turn its fate around. We trim, blend, and append three 2009 articles from: (1) the Associated Press, May 23, on skyscrapers; (2) Australia’s Land Values Research Group, June 1, on beginnings by Gavin R. Putland; and (3) Urban Tools on Connecticut legislation.
by the Associated Press, by Gavin R. Putland, and by Urban Tools
Have I got an office tower for you
In New York city, a 40-story skyscraper sits on a prime corner in the country's wealthiest commercial market, steps from the Museum of Modern Art and a few blocks from Rockefeller Center and Central Park. After its owner defaulted on a $130 million loan, it recently sold for $100,000. The building was sold for close to $500 million three years ago.
A month before that, the John Hancock Tower -- Boston's tallest skyscraper -- sold at auction for just over $20 million. The 60-story tower was bought in 2006 by buyers who valued the building at $660 million.
The new buyer takes on the enormous amounts of debt connected to the properties.
Loan defaults have created tens of billions worth of distressed properties across the nation, sometimes forcing cut-rate auctions of landmark skyscrapers.
Developers are falling behind on mortgages as tenants leave and can find no financing to cover payments.
"Just imagine in a residential market, if everyone had to buy their houses in cash, the values of houses would plummet everywhere," said Dan Fasulo, a managing director at Real Capital Analytics.
The National Association of Realtors said its index of commercial brokerage activity fell almost 13% from a year ago.
David Geltner, research director at the Massachusetts Institute of Technology Center for Real Estate, said sales volume is "historically low. It has never been this low.”
JJS: So even if, as some say, the price of residential land is a year away from bottom, the sine wave of commercial site prices still needs to fall far.
Shifting from consequence to incidence, here’s a survey of when various nations’ recessions began to determine if the cause is American or local speculators.
From the subprime to the terrigenous: Recession begins at home
The word “subprime” is a distraction. Yes, loose lending helped to pump up the US housing bubble; but rising collateral values came first, and loose lending was the response. Moreover, not all of the loose lending was to subprime borrowers.
Describing the present global disaster as a financial crisis is a further distraction. Yes, British and European banks were exposed to repackaged US subprime loans. But more importantly, they were exposed to their respective domestic property markets. Most of the current recessions in European and Asian countries were preceded by bursting domestic property bubbles.
The claim that later recessions were fully imported from the USA, although convenient for certain political and pecuniary interests, strains credulity.
A downturn in the property market, especially in turnover (sales) of properties, is a leading indicator of recession, with a lead-time of up to 9 quarters for turnover, or up to 8 quarters for values.
In the property market, a fall in turnover is a leading indicator of a fall in prices, and the lead-time is usually one to two quarters.
See the whole survey at click here
JJS: Because we need land, and pay so much for it, as long as we allow speculation in land, we must have recessions. But once we adopt geonomics and recover and share the annual rental value of sites and resources, then we all benefit from nature equitably and nobody has any reason to speculate in our common heritage. Some states are taking steps toward this geonomic solution.
LVT Blasts Through Connecticut General Assembly Onto Governor Rell's Desk
A unanimous vote by the Assembly puts an Land-Value Tax pilot program one step away from legislative reality.
Ironically, Mayor DiStefano of New Haven testified in favor of SB379, but his city was shut out of the final wording of the bill.
The organizers, led by Philadelphia’s Center for the Study of Economics and the on-the-ground troops of ReNewLondon Council, forged a coalition of local leaders that included elected officials, builders, business groups, labor groups, farmers, environmental groups, and media.
A major early step was when New London City Council unanimously passed a resolution to have the New London delegation to the state legislature sponsor an LVT bill.
See the whole story at click here
JJS: Margaret Mead was right. A dedicated band can beat “city hall”. Would your city or state follow the Connecticut model?
Jeffery J. Smith runs the Forum on Geonomics.
A housing-launched crisis needs a property tax shift
Economist calls bottom in 2010, based on US cycle
Economic deja vu all over again
Email this article Sign up for free Progress Report updates via email
What are your views? Share your opinions with The Progress Report:
Page One Page Two Archive Discussion Room Letters What's Geoism?