Circular 64—Evolution of values in New Mexico

By W. E. Bertholf II, 1962, 14 pp., 1 fig., presented before the New Mexico Real Estate Commission on April 13, 1962.

The problem herein is to appraise the evolution of value ideas of a region; namely, New Mexico. Such appraisals are of the "special purpose" type in the sense that a region develops in response to particular needs of the first settlers and users, who tend to be few or transitory. Further, regulations promulgated in response to momentary and local needs tend to clog the socioeconomic machinery used to cure obsolescence and develop the highest and best utility of a region. Hence, it is not uncommon to observe that early formed regional values evolve in a "boom and bust" atmosphere rather than through comprehensive and orderly progression. The "property" to be appraised is more than a site. It is a socioeconomic environment that comprehends the need- and want-satisfying activities of the human inhabitants in their efforts to attain high-consumption standards of living. Functional and livability data should include the (1) mineral resource potential, (2) climate trends, (3) psychosocial trends, and (4) population potential. To simplify discussion, the mineral resource data are assumed to range from hot and dry to cold and wet. The nature of the interest to be appraised is not a fee simple absolute. Rather, it is the movement of thought concerning the bundle of expectations that tend to form property values. Such thoughts range from objective to subjective.
The extent of the purpose of the appraisal is not limited to fair market price of property as of a given date. Rather, it encompasses evolution of the "need-satisfying activities" of that "reasonable man" called the "willing buyer."

The appraisal of a region has analogues in the appraisal of a site and its improvements. An appraisal is undertaken to answer a question concerning value, cost, damage, taxation, or other purposes. Further, all analytical appraisals involve the use of one or more of the three methods that are called approaches to the value estimate; to wit, (1) cost or summation, (2) capitalization or income, and (3) comparative or sales or market. These three "ever-loving" approaches primarily are used to estimate the relation of economic price and socioeconomic value for a parcel of land and its improvements in a present and local situation. The three approaches contain the movement of valuation standards from the 19th century bricks-and-mortar ideas to the more subjective ideas of the 20th century market place.
The cost or summation approach has been used in limited regional situations, such as preliminary studies of valuation practice in the taxation field, and so-called "national balance sheets." The capitalization or income approach has been applied to particular regional mineral industries. In the past, there have been sales of regions at prices set by treaty. Application of all such special purpose valuation data requires substantial correction and adjustment to bring the historical environments into comparability with present and future environments.