Why mansions are artificially cheap

That is the title of an excellent blog post by Jaap Weel. In a nutshell, because zoning regulations prevent them from being converted into a a higher valued uses. He compares to this home on a one acre lot that sold for $6 million in Atherton

to 350 unit mixed use condo on a 1.6 acre lot 2 miles further up the peninsula in Redwood City that would fetch hundreds of millions.

If one could convert the mansion into condos, the value of the property could easily increase tenfold.

But the zoning code mandates single-unit buildings with a floor area ratio below 18% on lots of at least 1 acre, so $6m it is. Quite the bargain.

Zoning - keeping assets in low valued uses.