If We’re to Pay Land Dues, How can we Estimate Land Values?
|January 9, 2014||Posted by Staff under Editorials|
To Assess Land Values, Use Asking Rents
This 2013 excerpt of Keystone Politics, Dec 21, is by Jon Geeting.
Some people pop up to say land value is difficult for city governments to assess fairly and accurately, but I don’t buy that.
For starters, local governments in PA already do assess land values. We do it here in Philadelphia, and they do it in your town.
If people think these official land values aren’t sufficiently accurate, then what we need to do is try harder to get accurate values. The reassessment system most places have now, where we send a bunch of dudes to walk around and eyeball the value of everybody’s houses from outside, is far less accurate than using market prices.
The best valuation system that exists for figuring out what people are willing to pay for stuff is the housing market.
Why can’t we just use asking rents as a proxy for land, for tax purposes? Rents are basically equal to land values. Asking rents for crappy oldster row homes that haven’t been improved in decades have been going up. That’s all land. The asking price increases are driven by the desirability of the neighborhood, the school catchment district, and other amenities. You didn’t build that!
Shouldn’t it be possible to come up with an index where we keep track of the asking rents for different types of houses in each catchment zone or ward, average the rate of price increases or decreases together, and then use that number as a stand-in for land value changes in determining people’s tax bills?
That’s a bit crude, but I feel like the GIS wizards can definitely figure out a more sophisticated algorithm in areas where there aren’t that many vacant parcels left to assess directly.
Ed. Notes: People wonder how government will be able to figure out the value of locations but don’t wonder how business already figures out the value of sites, buying and selling, leasing and letting parcels of land every day. If business people can figure out the rental value of land, then so can government people. It’s really another non-issue.