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Simultaneous modeling of developer behavior and land prices in UrbanSim

Author

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  • Daniel Felsenstein

    (Institute of Urban and Regional Studies, Hebrew University of Jerusalem; Israel)

  • Eyal Ashbel

    (Hebrew University of Jerusalem)

Abstract

A strong inter-dependence exists between the decision to develop land and the expected returns to be gained from that development. Current practice in UrbanSim modeling treats developer behavior and the emergence of land prices as independent processes. This assumes that land prices are exogenous to the interaction between buyers and sellers—an assumption that is difficult to sustain in urban economics and real estate research. This paper presents an attempt to model the two processes as occurring simultaneously. Using the UrbanSim model for metropolitan Tel Aviv, we compare the results of forecasts for densities (residential and non-residential) and land values for the period 2001–2020. Our results show that simultaneous estimation tends to produce more accentuated outcomes and volatile trends. The validity of these results and the implications of this approach in the wider context of land use modeling are discussed.

Suggested Citation

  • Daniel Felsenstein & Eyal Ashbel, 2010. "Simultaneous modeling of developer behavior and land prices in UrbanSim," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 3(2), pages 107-127.
    • Handle: RePEc:ris:jtralu:0033
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    References listed on IDEAS

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    1. de Palma, Andre & Picard, Nathalie & Waddell, Paul, 2007. "Discrete choice models with capacity constraints: An empirical analysis of the housing market of the greater Paris region," Journal of Urban Economics, Elsevier, vol. 62(2), pages 204-230, September.
    2. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Land use regulation and new construction," Regional Science and Urban Economics, Elsevier, vol. 30(6), pages 639-662, December.
    3. Ellickson, Bryan, 1981. "An alternative test of the hedonic theory of housing markets," Journal of Urban Economics, Elsevier, vol. 9(1), pages 56-79, January.
    4. Omar M. G. Keshk, 2003. "CDSIMEQ: A program to implement two-stage probit least squares," Stata Journal, StataCorp LLC, vol. 3(2), pages 157-167, June.
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    Cited by:

    1. Man Jiao & Hengzhou Xu, 2022. "Does Rural Construction Land Marketization Inhibit State-Owned Industrial Land Transactions? Evidence from Huzhou City, China," Land, MDPI, vol. 11(9), pages 1-17, September.
    2. Daniel Felsenstein & Kay Axhausen & Paul Waddell, 2010. "Land use-transportation modeling with UrbanSim: Experiences and progress," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 3(2), pages 1-3.
    3. Shahab Valaei Sharif & Dawn Cassandra Parker & Paul Waddell & Ted Tsiakopoulos, 2023. "Understanding the Effects of Market Volatility on Profitability Perceptions of Housing Market Developers," JRFM, MDPI, vol. 16(10), pages 1-34, October.

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    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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