Speculative value varies with the vividness of the holder's imagination and with the state of local ex citement created by recent transactions. Another cause of uncertain valuation is the wide range in the kinds of real estate that are involved; these include various types, from the central-district property—in plotted areas, with paved streets, trackage facilities, and fire, water and police services—to distant swamp land which must be filled before buildings can be erected upon it. This variety makes the definition of types and the calculation of standards of value a difficult task.
Manufacturing sites in cities of from 20,000 to 100,000 population are worth approximately from $500 to $2,000 an acre, without trackage, while with trackage they are worth from $1,000 to $25,000.
4. Residential regard to land values it is interesting to note the following statistics compiled by Mr. Hurd: In the outskirts of the smaller cities plotted land runs as low as V to $4 per front foot, and there are built up mechanics' sections, with street-car accommodations, less than a mile from the center of cities of 30,000 population, where land sells at but $5 per front foot. From this figure, land for detached residences grades upward more in proportion to the class of people utilizing it than in pro portion to the size of the city, to land worth $20 to $30 per front foot for the residences of small shopkeepers and clerks, and $40 to $75 for the more fashionable residences in cities of 75,000 population and under. The best residence land in cities of 100,000 to 200,000 population runs from $75 to $150 per front foot ; in cities of 9,00,000 population to 400,000, from $300 to $500 per front foot.
The value of a residential site depends partly upon whether the streets are laid out so as to form a park like area, or whether the ordinary American checker board plan has been adopted, irrespective of the nat ural characteristics of the site. It depends also upon the topography and whether or not there are trees ; upon the availability of the city services and the public utilities, and the class of people who have settled nearby. The presence in a residence section of schools, stores, factories or vacant lots, disfigured by billboards always lowers the value of the immediately adjacent property. Values near the outskirts of a city are proverbially insecure, since they are partly speculative. They are liable to be disturbed by the advent of nuisances or of inappropriate developments. High-class residence districts located at a moderate distance from the center of the city now suffer a two fold handicap. They are not far enough out for automobile owners ; they are too far out for apartment dwellers. Such localities are more seriously affected by hard times than less pretentious sections.
5. Chances incident to growth.—In a growing city one district will often crowd upon and displace an other. The mercantile section sometimes encroaches upon the surrounding residential areas. The rear rangements that take place alter the nature of all intermediate or boundary areas. Topography and
established improvements, such as railways and fac tories, seldom permit a city to expand evenly in all directions, and unequal growth in certain directions will mean that the mercantile district will no longer be in the center of the city. It will travel slowly to keep as nearly as possible at the center. On the front, toward the chief residence section, the advance will be marked by new and attractive specialty shops. On the rear side the evacuated district will be marked by vacant shops, buildings in a state of disrepair, and a miscellaneous collection of small manufacturing es tablishments, second-hand stores and cheap restau rants.
In all districts in which change of function takes place, the value of improvements falls rapidly by reason of inappropriateness. If the change of func tion is retrograde in the economic scale the ground values may also decline, even in a growing city. The value of any location in such a city is always subject to fluctuation. This is one reason why real estate loans should, as a rule, be of short duration. If the term be set at five years, a resurvey at expiration will show whether or not any change which might be dan gerous has taken place in the security. If the condi tions are found to be still excellent, the loan may be safely renewed.
6. Lot valuation.—The market for real estate is not standardized; it is one in which each transaction is a unique adjustment of the needs of the individual buyer to those of the individual seller. As to the valuation of land, no two pieces of ground are ex actly alike, and consequently it is a difficult matter to standardize values. Even the activities of profes sional real estate agents, organized into a real estate board, do not give to the valuation of land that pre cision attained in the valuation of goods that are all of the same kind. For the perfection of any local real estate market two steps are essential. First, the problem of the valuation of a location should be re duced to the simplest possible form by the establish ment of a theoretical unit consisting of an inside lot of given dimensions; this unit should at first be valued solely with reference to one characteristic—for ex ample, the accessibility which its street frontage pro vides. The second step is to concentrate neighbor hood opinion upon the problem of the relative value of the accessibility of differently located standard lots, and to do this in some organized and systematic manner, as by a series of public meetings, or thru the agency of a representative committee of citizens. These two principles of ground valuation, namely, to construct a definite unit in terms of which values may be expressed, and to consider one value-giving ele ment of real estate at a time, appear in the Somers System as administered by the Manufacturers' Apr praisal Company of Cleveland, Ohio. The plan of a city, showing the relative value of accessibility for standard lots, as determined by the Somers System, is given in Figure 1, page 47.