The ongoing battle to discover land values

There's a great post over at HousingCrisis.com about the current stand-off in residential land values. After all, if homes don't sell, how can you hope to value undeveloped land?

From the post:

What we’re certain of is that most of the scant deal flow in the residential land game over the past 15 months or so has been tax motivated. Occasional and minor exceptions to that rule have occurred, and will continue to occur. Big Builder senior editor Sarah Yaussi has set herself the task of getting to the bottom of the impasses and inertial forces at work that have croyogenically frozen the great land reset in time.

As it looks, a Democrat-weighted Congress has favorably disposed itself to extending the provision that allows money-losing companies to recover taxes paid on prior-year profits. This would allow home builders to tap into their IRS payments as far back as the latter half of 2003.

So, we’ll see several companies bone up and leverage their expertise in tax accounting to get access to those cash dollars, which might serve to help a builder from tripping a convenant that could make its debt more expensive or could actually keep some builders from flirting with negative cash flow during a new-order-lean 2009...

The other question around land has to do with a broader question of when capital will flow into any asset class, be it land or paper. The answer may be that for as long as there’s no floor beneath any asset’s value, capital remains in holding. Most institutions that would release it don’t have a clue as to what either their asset portfolios are worth or what their exposure to toxic assets totals to. So, no capital flow.

Hence few big land deals.