Growth Controls, Real Options, and Land Development
Many urban growth controls attempt to check sprawl by restricting allowable new housing densities. However, land may be undeveloped to preserve its real-option value. Real options in land markets arise from uncertainty as to the optimum use of a site. By limiting allowable development choices, growth controls can narrow real options and potentially accelerate investment. This paper examines the effect of price volatility, a generator of option value, on the timing of development after the imposition of an Urban Growth Boundary (UGB) around Seattle. While the net effect of the UGB is to lower the likelihood of new housing outside the boundary by between 28% and 39%, price volatility is no longer a deterrent to development. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 89 (2007)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:89:y:2007:i:2:p:343-358. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites)
If references are entirely missing, you can add them using this form.