>separating the value of land and improvements is practically impossible.

is routinely done in countries in which variants of land value tax are implemented.

It's routinely done in appraisals where I live too. Doesn't mean it's in any way accurate, as required to make the mechanism in the grandparent comment work.

Valuing a building+land is already done and used for property tax purposes. Why do you think it would be worse or less accurate to just remove building part?

> gives a value for the lot far lower than the actual market price of an empty lot in this location

Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.

There's no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town. Spec home development ceased here in 2019.

> no teardown required here. Developing an empty lot and selling the result will lose you a $1M+ in my town.

Lots of people want to design their own homes. For them, paying up for an empty lot is worth it. Put another way: those buying empty lots are developers or rich. With rates rising, the latter set marginal pricing in desirable places.

So no, there is no teardown required. But a teardown is desirable to some people. They bid up empty lots. Hence the deviance you notice, which is well documented in other places rich people like building designer homes. (Hamptons, Jackson Hole, et cetera.)

Not sure how you're using the term "teardown" here. Earlier, you mentioned the cost of the tearing down being a factor. And as I said, I already factored it out entirely.

I mentioned the custom home premium upthread. It's not the cause of the deviance either.

What area is this? Are homes being built anywhere in the area?