I've just spent the last week driving past houses like this alongside the old Route 66. Now the road is a two or three lane each way Interstate Motorway called I 40. It struck me during the endless hours of driving that there is an enormous amount of land in the United States. I seemed to drive past thousands of miles of empty land, punctuated by the occasional town and city, mostly full of either new houses or very old dilapidated houses and mobile homes. This may be one of the reasons why house prices in America have fallen so fast. The price of land is infinitely flexible and there is so much of it that theoretically, it should be worth nothing. That certainly seemed the case. I saw lots of signs advertising 40 acre blocks for a few thousand dollars. Around the outskirts of Las Vegas and Los Angeles I saw so much unoccupied and yet easily occupied land (flat, dry and accessible from a big honking motorway) that I can see why prices have plunged so far.
Some people say this abundance of land, the relative ease of developing new suburbs (in some places at least) is one reason why house prices will fall further in the United States than in New Zealand, where the land is often not flat, dry or easily developed (thanks to the RMA). After days of driving across vast acreages of empty land I am more sympathetic to that view than I was. But that doesn't mean our land couldn't easily become cheaper. Look around Hamilton and you'll see what happens when eager developers are allowed to build plenty of supply to meet demand. There is plenty of land in the Waikato that doesn't have houses on it. Look around South Auckland and North of Auckland and there are also plenty of open spaces. Canterbury has the potential to be one vast suburb. The only limit to how low prices could fall in New Zealand would be the naturally productive value of the land for dairying (because not much else produces much profit these days) plus the development costs (roads, sewerage, etc). The one limit for both countries is the willingness of home owners to commute huge distances to work, schools and families. America has surmounted the problem by building big motorways and big broadband highways. New Zealand has done neither yet. Perhaps it should.