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Metropolitan Land Values and Housing Productivity

  • David Albouy
  • Gabriel Ehrlich

We present the first nationwide index of directly-measured land values by metropolitan area and investigate their relationship with housing prices. Construction prices and geographic and regulatory constraints are shown to increase the cost of housing relative to land. On average, approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half. Conditional on land and construction prices, housing productivity is relatively low in larger cities. The increase in housing costs associated with greater regulation appears to outweigh any benefits from improved quality-of-life.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18110.

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Date of creation: May 2012
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Handle: RePEc:nbr:nberwo:18110
Note: LS PE
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  15. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc.
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