Swings in commercial and residential land prices in the United States

Stephen Oliner (), Joseph Nichols and Michael Mulhall
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Joseph Nichols: American Enterprise Institute

AEI Economics Working Papers from American Enterprise Institute

Abstract: We use a large dataset of land sales dating back to the mid-1990s to construct land price indexes for 23 MSAs in the United States and for the aggregate of those MSAs. The price indexes show a dramatic increase in both commercial and residential land prices over several years prior to their peak in 2006-07 and a steep descent since then. These fluctuations have exceeded those in well-known indexes of home prices and commercial real estate prices. Because those indexes price a bundle of land and structures, this comparison implies that land prices have been more volatile than structures prices over this period. This result is a key element of the land leverage hypothesis, which holds that home prices and commercial property prices will be more volatile, all else equal, in areas where land represents a larger share of real estate value.

Keywords: Real estate; Housing Center: Research (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2012-07
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Citations: View citations in EconPapers (3)

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Journal Article: Swings in commercial and residential land prices in the United States (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:aei:rpaper:16021

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