IDEAS home Printed from https://ideas.repec.org/a/jre/issued/v14n11997p1-18.html
   My bibliography  Save this article

Residential Land Prices Prior to Development

Author

Abstract

This paper tests various hypotheses related to expectations and the value of undeveloped land. Evidence is found to support the hypothesis by Capozza and Helsley (1989) that the price of land in rapidly growing cities reflects a significant premium based upon expectations about future growth. There is also evidence that this premium varies from less than 40% of land value during down times to over 70% during boom times. Additional hypotheses tested related to development expectations for smaller geographic areas within the market. Land values reflect forecasts of employment up to five or six years into the future for nine square mile planning areas. The level of residential development activity from two to three miles around individual parcels is also capitalized into value. Much of the value of urban land may be explained by the growth rate of the metropolitan area and micro-geographic factors related to individual parcels.

Suggested Citation

  • Karl Guntermann, 1997. "Residential Land Prices Prior to Development," Journal of Real Estate Research, American Real Estate Society, vol. 14(1), pages 1-18.
    • Handle: RePEc:jre:issued:v:14:n:1:1997:p:1-18
    as

    Download full text from publisher

    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol14n01/v14p001.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Capozza, Dennis R. & Helsley, Robert W., 1989. "The fundamentals of land prices and urban growth," Journal of Urban Economics, Elsevier, vol. 26(3), pages 295-306, November.
    2. Arnott, Richard J & Lewis, Frank D, 1979. "The Transition of Land to Urban Use," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 161-169, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elias Oikarinen, 2009. "Dynamic linkages between housing and lot prices: Empirical evidence from Helsinki," Discussion Papers 53, Aboa Centre for Economics.
    2. Jing Li & Ying Xu, 2016. "Evaluating restrictive measures containing housing prices in China: A data envelopment analysis approach," Urban Studies, Urban Studies Journal Limited, vol. 53(12), pages 2654-2669, September.
    3. Hans R. Isakson & Mark D. Ecker, 2001. "An Analysis of the Influence of Location in the Market for Undeveloped Urban Fringe Land," Land Economics, University of Wisconsin Press, vol. 77(1), pages 30-41.
    4. Jeanty, Pierre Wilner & Kraybill, David S. & Libby, Lawrence W. & Sohngen, Brent, 2002. "Effects Of Local Development Pressure On Land Prices: A Spatial Economic Approach," 2002 Annual meeting, July 28-31, Long Beach, CA 19767, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Luis H.R. Alvarez & Jukka Lempa & Elias Oikarinen, 2009. "Do Standard Real Option Models Overestimate the Required Rate of Return of Real Estate Investment Opportunities?," Discussion Papers 52, Aboa Centre for Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rutger-Jan Lange & Coen N. Teulings, 2021. "The option value of vacant land: Don't build when demand for housing is booming," Tinbergen Institute Discussion Papers 21-022/IV, Tinbergen Institute.
    2. Carrión-Flores, Carmen E. & Flores-Lagunes, Alfonso & Guci, Ledia, 2018. "An estimator for discrete-choice models with spatial lag dependence using large samples, with an application to land-use conversions," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 77-93.
    3. Li, Man, 2014. "An evaluation of the effectiveness of farmland protection policy in China:," IFPRI discussion papers 1348, International Food Policy Research Institute (IFPRI).
    4. Jean Cavailhès & Mohamed Hilal & Pierre Wavresky, 2011. "L’influence urbaine sur le prix des terres agricoles et ses conséquences pour l’agriculture," Économie et Statistique, Programme National Persée, vol. 444(1), pages 99-125.
    5. Kane, Kevin & York, Abigail M., 2017. "Prices, policies, and place: What drives greenfield development?," Land Use Policy, Elsevier, vol. 68(C), pages 415-428.
    6. Templeton, Scott R., 2004. "Demographic, Economic, And Political Determinants Of Land Development In The U.S," 2004 Annual meeting, August 1-4, Denver, CO 20052, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Carmen Carrión-Flores & Elena G. Irwin, 2017. "A fixed effects logit model of rural land conversion and zoning," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 181-208, January.
    8. Batabyal, Amitrajeet A., 2004. "Endogenizing The Reservation Value In Models Of Land Development Over Time And Under Uncertainty," Economics Research Institute, ERI Series 28340, Utah State University, Economics Department.
    9. Elena G. Irwin, 2010. "New Directions For Urban Economic Models Of Land Use Change: Incorporating Spatial Dynamics And Heterogeneity," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 65-91, February.
    10. Byron F. Lutz, 2009. "Fiscal amenities, school finance reform and the supply side of the Tiebout market," Finance and Economics Discussion Series 2009-18, Board of Governors of the Federal Reserve System (U.S.).
    11. Batabyal, Amitrajeet A., 1998. "Land development and preservation over time and under uncertainty: a review and a research agenda," Ecological Economics, Elsevier, vol. 25(3), pages 233-238, June.
    12. Livanis, Grigorios T. & Moss, Charles B. & Breneman, Vincent E. & Nehring, Richard F., 2005. "Urban Sprawl and Farmland Prices," Working Papers 15657, University of Florida, International Agricultural Trade and Policy Center.
    13. Pia Nilsson & Sara Johansson, 2013. "Location determinants of agricultural land prices," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 1-21, February.
    14. Jean Cavailhès & Mohamed Hilal & Pierre Wavresky, 2011. "Urban influence of farmland prices and its impact on agriculture [L'influence urbaine sur le prix des terres agricoles et ses conséquences pour l'agriculture]," Post-Print hal-02645617, HAL.
    15. Batabyal, Amitrajeet A. & Yoo, Seung Jick, 2004. "Indivisibility And Divisibility In Land Development Decisions Over Time And Under Uncertainty," 2004 Annual meeting, August 1-4, Denver, CO 20278, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Christopher J. Mayer & C. Tsuriel Somerville, 1996. "Unifying empirical and theoretical models of housing supply," Working Papers 96-12, Federal Reserve Bank of Boston.
    17. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Residential Construction: Using the Urban Growth Model to Estimate Housing Supply," Journal of Urban Economics, Elsevier, vol. 48(1), pages 85-109, July.
    18. Irwin, Elena G. & Bockstael, Nancy E., 2004. "Land use externalities, open space preservation, and urban sprawl," Regional Science and Urban Economics, Elsevier, vol. 34(6), pages 705-725, November.
    19. Sohngen, Brent & Hite, Diane & Templeton, Josh, 2001. "Land Use Change And Property Taxes: An Empirical Study Of The Effect Of Property Taxes On The Timing Of Land Conversion From Agricultural To Residential Development," 2001 Annual meeting, August 5-8, Chicago, IL 20773, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Jean Cavailhés & Mohamed Hilal & Pierre Wavresky, 2011. "Option values on periurban land markets," ERSA conference papers ersa10p1629, European Regional Science Association.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:14:n:1:1997:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: JRER Graduate Assistant/Webmaster (email available below). General contact details of provider: http://www.aresnet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.