Real Estate Economics 156 Foldvary
Economic and ethical question: to what extent may private real estate be controlled?
What are the economic and ethical implications of restricting private property rights?
Justified because buyer knows one is subject to regulations and taxes?
How well a market economy functions depends very much on its land tenure system.
Two land-tenure systems compatible with a free market.
In both, there are complete private rights of possession.
Two possible systems for the land rent:
allodial: all land rent is retained by the title holder.
geoist: the natural land rent is owned in common shares by a community.
The rental generated by civic capital goods is collected by the provider by contract.
Market allocation of land use leads to the highest and best use of sites and buildings.l
Best use: that of the highest bidder of an auction.
It often yields the highest financial rent payment, but not always.
It could be a park that the residents prefer to a building.
Land use can be controlled privately by contract.
Covanants, easements. Deed restrictions.
CC&Rs: covernants, conditions, and restrictions.
In residential associations and condominiums.
An owner can sell land with covenants.
Government powers on land use:
Police powers: the control of private activity.
Pollution controls. Environmental regulation, including before development.
No compensation, up to some limit.
building codes, rent control.
Zoning. Variance: exception from zoning.
Early zoning: for safety and nuisance. Then expanded.
Inclusionary zoning: requires developers to include low-income housing.
Now wider controls: a master plan. Regional plans.
Some entire cities were planned from the beginning: e.g. DC (p. 323).
No-growth, slow-growth policies, as in San Jose.
California Coastal Zone.
Eminent domain: the power to confiscate real estate, with compensation, for public use.
But in practice, it is often for private uses.