Keywords

land prices, hedonic price analysis, time-varying constant-quality indices, residential and commercial properties, leading indicator

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 metropolitanlevel 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.

Original Publication Citation

Fitzgerald, M, D. Hansen, W. McIntosh, and B. Slade. 2019. Urban Land: Price Indices, Performance, and Leading Indicators. Journal of Real Estate Finance and Economics. (Online 21 February 2019).

Document Type

Peer-Reviewed Article

Publication Date

2019

Publisher

Journal of Real Estate Finance and Economics

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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