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Estimating land values using residential sales data

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  • Longhofer, Stanley D.
  • Redfearn, Christian L.

Abstract

Land prices are at the heart of urban economics but are generally not observed directly. Though they are central to household and firm location choices, land-only sales in urban areas are rare and often outliers. Indeed, urban areas are in part defined by a largely contiguous area of high land-use intensity – those places in which developable land is scarce. In this paper, we make use of more-common market data to infer land prices: house sales. Using locally weighted regressions, we estimate the value of a standardized structure across two urban counties: Maricopa, Arizona and Sedgwick, Kansas. Because the value of the standardized structure should be invariant across different locations in a metropolitan area, any remaining variation in the value surface should reflect differences in land values. By pinning down this surface using vacant lot sales at the periphery, we are able to extract land values throughout the metropolitan area, even in locations where vacant land sales are rare.

Suggested Citation

  • Longhofer, Stanley D. & Redfearn, Christian L., 2022. "Estimating land values using residential sales data," Journal of Housing Economics, Elsevier, vol. 58(PA).
  • Handle: RePEc:eee:jhouse:v:58:y:2022:i:pa:s1051137722000419
    DOI: 10.1016/j.jhe.2022.101869
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    References listed on IDEAS

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    1. Jeffrey P. Cohen & Cletus C. Coughlin & Jeffrey Zabel, 2020. "Time-Geographically Weighted Regressions and Residential Property Value Assessment," The Journal of Real Estate Finance and Economics, Springer, vol. 60(1), pages 134-154, February.
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    Cited by:

    1. Scott Wentland & Gary Cornwall & Jeremy G. Moulton, 2023. "For What It's Worth: Measuring Land Value in the Era of Big Data and Machine Learning," BEA Papers 0115, Bureau of Economic Analysis.
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    3. McMillen, Daniel & Zabel, Jeffrey, 2022. "Special issue on land valuation: Introduction," Journal of Housing Economics, Elsevier, vol. 58(PB).

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    Keywords

    Land values; Locally weighted regressions;

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