This paper tests various hypotheses related to expectations and the value of undeveloped land. Evidence is found to support the hypothesis by Capozza and Helsley (1989) that the price of land in rapidly growing cities reflects a significant premium based upon expectations about future growth. There is also evidence that this premium varies from less than 40% of land value during down times to over 70% during boom times. Additional hypotheses tested related to development expectations for smaller geographic areas within the market. Land values reflect forecasts of employment up to five or six years into the future for nine square mile planning areas. The level of residential development activity from two to three miles around individual parcels is also capitalized into value. Much of the value of urban land may be explained by the growth rate of the metropolitan area and micro-geographic factors related to individual parcels.
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