We’ve heard time and again how prices would always go up in Las Vegas because of the short supply of land. Even though supply is glutted and demand has disappeared, apparently the BLM wants to sell land badly enough to sell below appraised value: [Hat tip Judge!]
The Bureau of Land Management is considering whether to abandon its policy of refusing to sell land for less than its appraised value.
Only one of 31 BLM parcels sold at the lackluster auction Nov. 1, which was the worst this decade by BLM standards.
The auction placed 167.5 acres up for grabs in Henderson, the southwest and other areas.
Only the sale of one 15-acre site at Pollack Drive and Welpman Avenue kept the auction from being a shutout.
Will a lack of interest cause the BLM to reconsider sales? Apparently not:
It is possible that at the BLM’s next auction, tentatively scheduled for April, it may for the first time, allow bidding to start below the appraised value.
Bidders would be required to meet the reserve price, which is the appraised value, Palma said, but the more open bidding process would give insights as to the level of interest in the federally owned land and its current market value.
That could ultimately lead to changes that would allow property to be sold for less than appraised value, he said.
It seems odd that the BLM was so anxious to sell land, when they claim they don’t need to and demand is so low:
Craig Cherney, director of Western operations of the Philadelphia-based American Land Fund, a private equity and land acquisition group, said it is not surprising that parcels didn’t sell at the auction in a market where prices continue to decline.
"There is no demand, and basically it is a supply and demand problem," Cherney said. "There is overhang in the private real estate market and until that is burned through, there is going to be little demand from public and private homebuilders."
Given the glut of land for sale at the moment, the BLM could consider another alternative- don’t dump any more on the market. If there is no demand, why sell it?
I’m not sure where the money from the BLM land sales go, but regardless of who gets it to spend, here are a few possible theories:
1. They’ve become addicted to the income.
2. Low prices are the Pine Sol & Clorox to keep the party going. (ie: college party out of beer)
3. Several people’s jobs at the auction company, the BLM, and several other organizations are completely dependent upon the transaction of that land (at any price.)
4. The land doesn’t actually belong to those people, and they are going to beat it like a rented mule to keep their jobs for a while longer. (think of the college kids driving a ‘rented’ car down to buy more beer late in the night)
5. The BLM might be aware that if they don’t sell now, at lower prices, that they will continue for many years to compete for “customers” with the very builders that they sold the adjacent land to in the last couple years, at the pompous “above appraised price.”
If the builders want to / need to dump it, the BLM could have created it’s own desperate competition for land buying dollars for some time to come, and thereby violated theories # 1,2,3 & 4 above.
Of course, it could just be an example of the Number 1 priority of any bureaucracy.
To protect the bureaucracy.
Number 2 rule: Grow the bureaucracy by any means available.
I don’t like the BLM much, though, so I’m probably very biased.
Asset Hunter, I think item #1 sums it up best.
I wonder how the government is going to react when their tax receipts come in a good deal lower than in the go go days. I know in the Sacramento city and/or county government, they now have a hiring freeze.