The price and quantity of residential land in the United States

By Morris A. Davis, Jonathan Heathcote. 2004

658 citations recorded by the source corpus.

Abstract One can conceptualize a house as a bundle comprising a reproducible tangible structure and a non-reproducible plot of land. When the value of a home is decomposed this way, land capitalizes the market value of a home's location. We develop a formal relationship between the dynamics of house prices, structures costs and land prices, and thereby construct the first constant-quality price and quantity indexes for the aggregate stock of residential land in the United States. In a range of applications we show that these series can shed light on trends, fluctuations and regional variation in the price of housing.

View Paper: https://www.semanticscholar.org/paper/3ccb402238899fc0c631d5d1626c0645470955d6

Citations in the corpus

• Why Has House Price Dispersion Gone Up (2010, unknown): “See also Davis and Heathcote (2005). We set the yearly endowment Mt of construction material so that, year-by-year, the aggregate housing supply per household in the model, Ht, matches the de-trended house size per household we observe in the data. For the years 1975-2007, we feed in the observed de”
• Forecasting real estate prices (2012, unknown): “While we do not analyze land data in our article, aggregate, state-level, and MSA-level price indices for land re provided by the Lincoln Institute following the work of Davis and Heathcote (2007).”
• Relationship between urban land price and housing price: Evidence from 21 provincial capitals in China (2013, unknown): “Davis and Heathcote (2007) conceptualized a house as a bundle which comprises a reproducible tangible structure and a nonreproducible plot of land and found that economic fundamentals affect housing price by association with land price.”
• The equilibrium effect of fundamentals on house prices and rents (2013, unknown): “Davis and Heathcote (2007) find that on average, land accounts for 36 percent of the value of a house in the U.S. between 1975 and 2006. Based on their findings, we set the depreciation rate of rental property for tax purposes to τ = (1 − .36) × .0363 = .023. Lastly, we follow Díaz and Luengo-Prado ”
• What moves housing markets: A variance decomposition of the rent-price ratio (2009, unknown): “To put this growth in context, over the decade spanning 1987–1996, the same data sources suggest that real house prices in the United States did not increase at all; and, the available evidence suggests that real house prices in the United States increased by less than 2% per year in real terms over”
• No Price Like Home: Global House Prices, 1870-2012 (2014, unknown): “Similar to Hornstein (2009a,b) and Davis and Heathcote (2005), Diewert (2013) applies a supply side analysis of house prices.”
• Implications of US Tax Policy for House Prices, Rents, and Homeownership (2018, unknown): “Davis and Heathcote (2007) find that on average, land accounts for 36 percent of the value of a house in the U.”
• HOUSING DYNAMICS OVER THE BUSINESS CYCLE (2016, unknown): “The concavity of PPF is a stand-in for the costs of changing the composition of the economy’s production (Huffman and Wynne, 1999), as well as for the constraints on housing construction due to available residential land (Davis and Heathcote, 2007).”
• The price of residential land in large US cities (2006, unknown): “The views expressed are our own and do not necessarily reflect the views of the Board of Governors or the staff of the Federal Reserve System.”
• Housing, Finance and the Macroeconomy (2014, unknown): “…of land is roughly 45 percent of GDP, but the land share is volatile: At the height of the housing boom, the value of land was equal to 100% of GDP. 7The data from Davis and Heathcote (2007) enforce that the capital gains to housing line up with changes in the Case-Shiller-Weiss price indexes.”