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Land Valuation using Public Records and Kriging: Implications for Land versus Property Taxation in Cities

Author

Listed:
  • William D. Larson

    (Federal Housing Finance Agency)

  • Jessica Shui

    (Federal Housing Finance Agency)

Abstract

We construct land values for each parcel in Maricopa County (Phoenix), Arizona, from 2000 through 2018 using a novel administrative dataset containing the universe of land sales and parcel records in the county. We then compare residential land values constructed using two classes of source data, vacant land sales and land under existing structures. Estimated land values for developed parcels are nearly double when estimated using vacant land due to lot size plattage effects and other unobserved factors, calling into question use of vacant land sales to estimate the value of land under structures within our study area. Growth rates are similar, however, facilitating the possible use of vacant land price indices to trace valuations over time from an accurate base year valuation. Dynamics between prices of Maricopa County land and housing suggest hypothetical land value tax revenues are more pro-cyclical than property tax revenues, with betas with respect to national house prices of 3.7 and 2.3, respectively. By 2018, houses had recovered 96% of pre-crisis (2007) values, but land had only recovered 63%. These findings demonstrate a source of risk of dependence on public revenues from land value taxes versus a base-period revenue-neutral property tax.

Suggested Citation

  • William D. Larson & Jessica Shui, 2020. "Land Valuation using Public Records and Kriging: Implications for Land versus Property Taxation in Cities," FHFA Staff Working Papers 20-01, Federal Housing Finance Agency.
  • Handle: RePEc:hfa:wpaper:20-01
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    More about this item

    Keywords

    land prices; price gradient; land value taxation; price dynamics;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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