The Price and Quantity of Residential Land in the United States

Jonathan Heathcote and Morris Davis

No 5333, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A house is a bundle comprising a physical structure and the plot of land upon which the house is built. Thus changes in house prices reflect changes in the cost of structures and value of land. In this paper we apply this insight to construct the first constant-quality price and quantity indexes for the aggregate stock of residential land in the United States. We document that the value of residential land exceeds annual GDP, and that the dynamics for the prices of residential land and residential structures are quite different. For example, the real price index for residential land almost tripled between 1975 and 2005, while the real price of structures increased by only 24 percent. Fluctuations in house prices at business cycle frequencies, including the recent boom, are primarily driven by changes in the price of land.

Keywords: Housing; Land prices (search for similar items in EconPapers)
JEL-codes: R14 R21 R31 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-agr and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: The price and quantity of residential land in the United States (2007)
Working Paper: The price and quantity of residential land in the United States (2004)
Working Paper: The Price and Quantity of Residential Land in the United States (2004)
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