The price of residential land in large US cities

Morris A. Davis, Michael G. Palumbo

Research output: Contribution to journalArticlepeer-review

157 Scopus citations

Abstract

Combining data from several sources, we build a database of home values, the cost of housing structures, and residential land values for 46 large US metropolitan areas from 1984 to 2004. Our analysis of these new data reveal that since the mid-1980s residential land values have appreciated over a much wider range of cities than is commonly believed. And, since 1998, almost all large US cities have seen significant increases in real residential land prices. Averaging across the cities in our sample, by year-end 2004, the value of residential land accounted for about 50 percent of the total market value of housing, up from 32 percent in 1984. An implication of our results is that housing is much more land intensive than it used to be, meaning that the future course of home prices-the average rate of appreciation and volatility-is likely to be determined even more by demand factors than was the case even ten or twenty years ago.

Original languageEnglish (US)
Pages (from-to)352-384
Number of pages33
JournalJournal of Urban Economics
Volume63
Issue number1
DOIs
StatePublished - Jan 2008
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Urban Studies

Keywords

  • Construction costs
  • Housing prices
  • Housing values
  • Land prices
  • Land values
  • Replacement costs

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