Tuesday, August 12, 2008

Who Owns the West?

One of the most astounding things that I’ve learned in my travels around the USA is the vast amounts of acreage that the U. S. Government owns in most of the western states. The map on the right clearly shows the incredible swaths of land under direct governmental control. In fact it totals 650 million acres, which is almost 30% of the entire land area of the USA! If all of this acreage were in one piece it would be just over 1 million square miles, or a land area that was 1,000 miles wide by 1,000 miles long.
At the same time, the western USA is the fastest growing part of the country. Much of the blame for the current housing crisis, which is most pronounced in 3 western states (CA, NV & AZ), can be laid at the feet of the double digit price increases in houses, largely driven by increases in the underlying value of the land under those houses. There is not a markedly different cost to build in different parts of the country…virtually all of the difference in value is due to the land cost of the property upon which a house is built.

And, like any commodity, when you have a shortage, the market will cause the value to increase. When you have an acute shortage, those prices will spike higher.

The situation is most intense in NV which has 84.5% of its land area under governmental ownership. Four other states have over 50% of their land government owned (AL, UT, OR and ID) and four have over 40% government owned (AZ, CA, WY and NM). The least owned, all under 1%, are CN, RI, IA and NY.

At the risk of opening up a flood of emails (I’m not proposing this!), the U. S. Government could pay off ALL of its $9.5 trillion debt if it sold off all of its current land holdings for an average of $15,000/acre. Now some of most remote areas of the west are not worth anywhere near that value but there are also some ocean front areas that are worth millions of dollars/acre.

We are a truly rich country. We’ve got some wonderful assets and attributes that are irreplaceable.

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