Keywords
land prices, land development, nonlinear pricing, plattage, plottage
Abstract
As lot area increases, it is commonly believed that land prices will increase at a nonconstant rate. In the case where the land price-area curve increases at a decreasing rate with respect to parcel area, it is believed the cost of subdividing land is the driving factor behind the concavity. This paper uses a unique data set to explore how the area elasticity of price changes over the development cycle as land moves from raw land to finished lots. The results show the area elasticity of price increases as parcels of land move through the phases of development. The results also show concavity in the price-quantity (of lots) curve—as the number of lots bundled in a transaction increases, total price increases at a decreasing rate.
Original Publication Citation
Munneke, H., C.F. Sirmans and B. Slade. 2023. Land Prices and the Development Process. Journal of Real Estate Finance and Economics.
BYU ScholarsArchive Citation
Munneke, Henry J.; Sirmans, C. F.; and Slade, Barrett, "Land Prices and the Development Process" (2023). Faculty Publications. 8905.
https://scholarsarchive.byu.edu/facpub/8905
Document Type
Peer-Reviewed Article
Publication Date
2023
Publisher
Journal of Real Estate Finance and Economics
Language
English
College
Marriott School of Business
Department
Finance
Copyright Status
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2023
Copyright Use Information
https://lib.byu.edu/about/copyright/