The Value of Land: Analysis uses Park Slope, Brooklyn Heights as examples
When analyzing a new study by the Federal Housing Finance Agency that examines the ramifications of land value, the Washington Post used two upscale Brooklyn neighborhoods as examples.
The reason an acre of residential land in Brooklyn Heights or Park Slope costs about 7,500 times as much as an acre in Western Arkansas or Northern South Carolina is demand – the two Brooklyn neighborhoods are close to the subway, food-co-ops and high-paying jobs. Areas like the Slope or the Heights also “tend to have higher taxes and zoning restrictions,” the Washington Post reported.
Nationwide, according to the federal study, the value of the land tends to appreciate faster than the structures on them. “When housing demand changes, you can build more structures but you can’t build more land,” the Post quotes William Larson, one of the authors of the study, as saying.
The areas with the most valuable land also saw their land values grow fastest, the study says. “And those differences are responsible for many of the trends in inequality which have defined their era,” the Post reported.
The Post also quoted Joseph Stiglitz, a Columbia University economist, as saying that income generated by land accrues primarily to the person lucky enough to own it, whether they build a house there or use it as a rental property. Therefore, “there can be an increase in the value of land, without any increase in the productive potential of the economy.”
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