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Land Prices and the Development Process

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  • Henry J. Munneke

    (University of Georgia)

  • C. F. Sirmans

    (Florida State University)

  • Barrett Slade

    (Brigham Young University)

Abstract

As lot area increases, it is commonly believed that land prices will increase at a non-constant rate. In the case where the land price-area curve increases at a decreasing rate with respect to parcel area, it is believed the cost of subdividing land is the driving factor behind the concavity. This paper uses a unique data set to explore how the area elasticity of price changes over the development cycle as land moves from raw land to finished lots. The results show the area elasticity of price increases as parcels of land move through the phases of development. The results also show concavity in the price-quantity (of lots) curve—as the number of lots bundled in a transaction increases, total price increases at a decreasing rate.

Suggested Citation

  • Henry J. Munneke & C. F. Sirmans & Barrett Slade, 2025. "Land Prices and the Development Process," The Journal of Real Estate Finance and Economics, Springer, vol. 71(1), pages 70-94, July.
    • Handle: RePEc:kap:jrefec:v:71:y:2025:i:1:d:10.1007_s11146-023-09959-8
    DOI: 10.1007/s11146-023-09959-8
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