home prices silicon valley ground rent china property

US land prices back to 2003 -- except for top spots
korea india new zealand

UK Editors say it's Time for a Property Tax

Where owners pay land dues, there prices stabilize. We trim, blend, and append five 2012 articles from: (1) AP, Jan 31, on prices; (2) New York Times, Feb 8, on Silicon Valley by M. Cooper; (3) Telegraph, Jan 18, on London by Graham Ruddick; (4) The Economist, Feb 4, on a tax; and (5) Fairfax NZ News, Jan 14, on pizza by C. Rogers.

by Associated Press, by Michael Cooper, by Graham Ruddick, The Economist, and by Claire Rogers

U.S. home prices fell for a third straight month. Prices dropped in November from October in 19 of the 20 cities tracked, according to the Standard & Poor’s/Case-Shiller home-price index. The steepest declines were in Atlanta, Chicago, and Detroit. Phoenix was the only city to show an increase.

The declines partly reflect the typical fall slowdown after the peak buying season. Still, prices fell in 18 of the 20 cities in November compared to the same month in 2010. Only Washington and Detroit posted year-over-year increases.

Prices in Atlanta, Las Vegas, Seattle and Tampa dropped to their lowest points since the housing crisis began. And prices have fallen 33% nationwide since the housing bust, to 2003 levels.

The Case-Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The November data are the latest available.

Home prices tend to follow sales. And a large number of vacant homes are sitting idle on the market. Some people in position to buy are holding off, waiting for prices to fall even further.

To see the whole article, click here .

JJS: "Able to buy" ... That’s the big driver -- money to spend.

Imagine looking for a house in San Francisco or one of the nicer parts of Silicon Valley, which are already among the most expensive parts of the country.

Even after some of the air went out of the housing bubble in the Bay Area in recent years, prices in the most desirable parts of San Francisco and Silicon Valley stayed buoyant enough to remain out of reach for most people.

Silicon Valley has been good to Mr. DeLeon, a former lawyer, who said he sold $275 million worth of homes last year, and who is finishing up a memoir about overcoming illness, injury and loss that he calls “Why Do Bad Things Happen to Sexy People?”

To see the whole article, click here .

JJS: That’s the big driver -- money to spend, whether for land in suburbs or cities.

Canary Wharf Group (CWG) has paid £90m to Irish company Ballymore and British Waterways to buy out their 75pc stake in the semi-derelict Wood Wharf development.

CWG will pay £52.5m for British Waterways' 50pc stake in Wood Wharf and will also make an annual ground rent payment. The company has agreed to pay Ballymore £38m for its 25pc.

CWG intends to initially press ahead with the residential buildings and complete them for the opening of the Crossrail station at Canary Wharf in 2018.

To see the whole article, click here .

JJS: Note the role of the metro station, paid for by the public yet its value lining private pockets.

The money people spend for land is immense. It could be a security blanket for all society. And if government did recover it, then that would flatten the business cycle and subsequent recessions; just ask The Economist.

In China house prices are now falling in many big cities. This is having a big impact on China’s local governments. They carry out over four-fifths of the country’s public spending, but pocket only half of the taxes.

To help make up the difference, they rely on expropriating land from farmers and flogging it to bullish property developers. But as land sales are dwindling, local-government revenue is drying up. (Popular resentment is not.)

The government had tried imposing a variety of levies on the sale, size, and historical cost of. Then a year ago, Chongqing and Shanghai, two giant cities, introduced a pilot tax on some upmarket homes. The tax was largely symbolic, levied at low rates on a few thousand homes in each city. But it set a precedent.

A property tax would provide a stable source of revenue. Unlike workers or businesspeople, homes cannot up sticks and leave. A property tax raises revenue year after year, in contrast to a land sale. Such taxes are fair: local amenities raise property values.

A property tax could also temper the wild swings in China’s housing market. A recurring levy makes it costlier to buy and hold a second or third home as a speculative bet on rising prices. That would force some absentee homeowners to sell their vacant flats or rent them to the many citizens priced out of the market.

But many urban Chinese now think of taxation as theft. This antipathy is not lost on China’s local governments. They are wary of angering the urban middle class, who own their own homes, and the city elites (including party officials and their families), who usually own several.

Still, China should now broaden that tax to as many properties as possible, in cities across the country.

To see the whole article, click here .

JJS: Everything nice they wrote about the property tax is actually true of not taxing the building but taxing the location (or requiring land dues). As for owners' resistance, many people are used to paying for land to their community, and many communitie are used to recovering this socially-generated value.

New Zealand’s Hell Pizza, with franchises in Canada, Britain, and India, is firing up in Korea. The company has not had to revise any of its pizzas to suit Korean tastebuds, but its menu has shrunk. "They don't like a huge amount of choice," Director Stu McMullin says. "We have 21 pizzas here; they only have about 11."

A large proportion of Korea is Christian, and Koreans are well exposed to American culture, so concepts such as hell and Halloween are not lost on them. But Hell's relaxed Kiwi approach is not a perfect fit with Korean culture. "We pick up the phone and say, `How the hell are ya?' but they are very proper and very organized," McMullin says.

There have been a few local quirks to learn, McMullin says. For example, a bylaw that says a business' signage can't be bigger than that of the business on their left. "They had to shrink down our logo for the first store but then for the second store there was no one on the left, so we were fine."

Hell’s pizza bar opened in New Delhi about a year ago, with a heavily vegetarian menu. "The thing there is the ground rent is humungous, because you've got so many people on so little land. They're paying about $15,000 a month in rent; for some of our shops here that's what we pay in a year.”

"The other problem there is bribes: our guy there pays thousands of dollar a month to the cops, council, local officials ... you name it."

To see the whole article, click here .

JJS: The corruption is a good reason to use the recovered rents for paying a dividend to residents. So is the resistance of property owners. When people get a share of the value of all the land in their region, then resistance to paying in their fair share should melt away.

---------------------

Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Lower land prices so at last the cycle can turn
http://www.progress.org/2011/vacancy.htm

During this bottom, who catches a break?
http://www.progress.org/2011/zillow.htm

China overtakes Japan as world's #2 economy
http://www.progress.org/2011/taiwan.htm

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