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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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File URL: http://www.nber.org/papers/w18110.pdf
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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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  1. Dennis Epple & Brett Gordon & Holger Sieg, 2010. "A New Approach to Estimating the Production Function for Housing," American Economic Review, American Economic Association, vol. 100(3), pages 905-24, June.
  2. Jeff Fisher & David Geltner & Henry Pollakowski, 2007. "A Quarterly Transactions-based Index of Institutional Real Estate Investment Performance and Movements in Supply and Demand," The Journal of Real Estate Finance and Economics, Springer, vol. 34(1), pages 5-33, January.
  3. Jordan Rappaport, 2006. "A productivity model of city crowdedness," Research Working Paper RWP 06-06, Federal Reserve Bank of Kansas City.
  4. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
  5. 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.
  6. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July.
  7. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  8. Christopher F Baum & Mark E Schaffer & Steven Stillman, 2002. "IVREG2: Stata module for extended instrumental variables/2SLS and GMM estimation," Statistical Software Components S425401, Boston College Department of Economics, revised 09 Feb 2015.
  9. Rose, Louis A., 1992. "Land values and housing rents in urban Japan," Journal of Urban Economics, Elsevier, vol. 31(2), pages 230-251, March.
  10. Jesse M. Shapiro, 2006. "Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 324-335, May.
  11. Quigley, John M. & Raphael, Steven, 2006. "Regulation and the High Cost of Housing in California," Berkeley Program on Housing and Urban Policy, Working Paper Series qt3hh7s35m, Berkeley Program on Housing and Urban Policy.
  12. Paul Cheshire & Stephen Sheppard, 2001. "The Welfare Economics of Land Use Planning," Department of Economics Working Papers 2001-03, Department of Economics, Williams College.
  13. Henry J. Munneke & Barrett A. Slade, 2001. "A Metropolitan Transaction-Based Commercial Price Index: A Time-Varying Parameter Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 29(1), pages 55-84.
  14. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2013. "The Costs of Agglomeration: Land Prices in French Cities," PSE Working Papers halshs-00849078, HAL.
  15. David Albouy, 2008. "Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas," NBER Working Papers 14472, National Bureau of Economic Research, Inc.
  16. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2006. "Superstar Cities," NBER Working Papers 12355, National Bureau of Economic Research, Inc.
  17. Adam Ozimek & Daniel Miles, 2011. "Stata utilities for geocoding and generating travel time and travel distance information," Stata Journal, StataCorp LP, vol. 11(1), pages 106-119, March.
  18. Colwell, Peter F & Sirmans, C F, 1993. "A Comment on Zoning, Returns to Scale, and the Value of Undeveloped Land," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 783-86, November.
  19. Thomas J. Kane & Douglas O. Staiger, 2008. "Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation," NBER Working Papers 14607, National Bureau of Economic Research, Inc.
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