tag:blogger.com,1999:blog-1141932539860553199.post8048360328477236641..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: The supply and demand curve for "money" (2)Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1141932539860553199.post-39992718507865534432013-12-02T20:38:02.458+00:002013-12-02T20:38:02.458+00:00Din, all payments for "land" are pure &q...Din, all payments for "land" are pure "rent" or "ransom" payments.<br /><br />You can muck about with the percentages all you like, any payment for land + buildings in excess of the rebuild cost/value of the building is for the land. The land price is just a balancing figure.<br /><br />Therefore, the much-vaunted "house price bubble" is no such thing, it is a "land price bubble". The value of the bricks and mortar didn't change at all.<br /><br />And what, in the context of this post, pushes up the price of land is…<br />- the expected future rises in house prices (i.e. land prices)<br />- the interest rate<br />- the easy availability of creditMark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-33702555740992626052013-12-02T20:10:00.305+00:002013-12-02T20:10:00.305+00:00instead of 8%
you would have the result of 6400 d...instead of 8%<br /><br />you would have the result of 6400 divided by the sum of 80 000 build and 80 000 land.<br /><br />= 4%Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-68903329391303491172013-12-02T19:20:02.346+00:002013-12-02T19:20:02.346+00:00But you didn't include the cost of buying the ...But you didn't include the cost of buying the land.<br />which limits the conclusions you can draw.Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-57403837476303543422013-12-02T18:49:33.366+00:002013-12-02T18:49:33.366+00:00Din, I wasn't being hyper-scientific.
The tot...Din, I wasn't being hyper-scientific.<br /><br />The total rental value of a site always breaks down into "bricks and mortar" and "rent".<br /><br />By and large, the capitalised value of the use of bricks and mortar = the current value of the bricks and mortar.<br /><br />That "rent" is in turn shared between "land owner" and "bank" in any old way they agreed between themselves. You can call it "rent" or "mortgage interest", it doesn't matter.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-43635603314272155342013-12-02T16:18:44.186+00:002013-12-02T16:18:44.186+00:00Dont't you need to include the location value ...<br /> Dont't you need to include the location value as well as the re-build value of the house in the capitiled rent calulation. Unless you are happy with something that looks like a circular argument on first glance.<br /> By starting with a calculation that did not ammortise the cost of buying the land and then concluding that anything over the rebuild cost of the house is an excess.<br /> You could simply say that the rent included both I suppose.Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-87772977575023152312013-12-02T07:26:51.478+00:002013-12-02T07:26:51.478+00:00JH, you'll have to read the first part.
Such ...JH, you'll have to read the first part.<br /><br />Such loans are only made at very high interest rates because the write offs are very high as well, but the two net off to a normal return to the lender.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-21307387090669689172013-12-02T07:21:28.180+00:002013-12-02T07:21:28.180+00:00He can 'save' those 20 extra units by sell...He can 'save' those 20 extra units by selling it to hungry people on credit, so when the harvest is not so good, he can call in the loan of food.<br /><br />Providing they're still able to respond to that.James Highamhttps://www.blogger.com/profile/14525082702330365464noreply@blogger.com