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Urban Land: Price Indices, Performance, and Leading Indicators

Author

Listed:
  • Mark Fitzgerald

    (USAA Real Estate)

  • David J. Hansen

    (Property Reserve, Inc.)

  • Will McIntosh

    (USAA Real Estate)

  • Barrett A. Slade

    (BYU Marriott School of Business)

Abstract

This study had two objectives: first, to evaluate the historical performance of urban land prices across 20 prominent U.S. metro markets; and second, to determine if urban land prices are a leading indicator for prices in the built environment. Using a time-varying econometric model with spatial controls, we constructed constant-quality metropolitan-level land price indices. We found that 1) from 2000 to 2017 (18 years) national residential and commercial-industrial urban land prices appreciated by 2.08% and 1.87% annually, respectively; 2) urban land prices exhibited greater volatility compared with improved property prices; 3) in many metro markets land prices began to decline before improved property prices leading up to the Great Recession; and 4) land prices were slower to recover after the Great Recession compared with prices in the built environment. Using Granger Causality tests on the national urban land market, we found evidence that from the peak of the market in 2007 through 2017, land prices were a leading indicator of prices in the built environment.

Suggested Citation

  • Mark Fitzgerald & David J. Hansen & Will McIntosh & Barrett A. Slade, 2020. "Urban Land: Price Indices, Performance, and Leading Indicators," The Journal of Real Estate Finance and Economics, Springer, vol. 60(3), pages 396-419, April.
    • Handle: RePEc:kap:jrefec:v:60:y:2020:i:3:d:10.1007_s11146-019-09696-x
    DOI: 10.1007/s11146-019-09696-x
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    More about this item

    Keywords

    Land prices; Hedonic price analysis; Time-varying constant-quality indices; Residential and commercial properties; Leading indicator;
    All these keywords.

    JEL classification:

    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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