Housing Markets and Vacant Land
AbstractThe paper examines land use in an urban zone. We propose a partial equilibrium model of housing markets with both vacant and built up land. The existing literature assumes building decisions to be irreversible and treats any given stock of vacant land as an exhaustible resource. By way of contrast, we argue that vacant land is built upon in finite time rather than asymptotically, and reduces to a temporary phenomenon only. When housing stocks depreciate, previously built up land is released and may be rebuilt at any structural intensity dictated by the going market conditions. The continued replacement of existing structures allows to adjust the average structural intensity in the city even if all land is built upon. We explain analytically the long-run equilibrium with full land use and demonstrate numerically that vacant land may still be an important transitional phenomenon. In particular, we emphasize the implication for land prices.
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Bibliographic InfoPaper provided by Institute for Advanced Studies in its series Economics Series with number 1.
Length: 23 pages
Date of creation: Dec 1994
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Other versions of this item:
- R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
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