Publication Date:
Tue, 2009-08-04 10:31
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CAMBRIDGE, Mass., Aug. 3 — Filling a major gap in the availability of residential property data, the Lincoln Institute of Land Policy and the Graaskamp Center for Real Estate at the Wisconsin School of Business announced a new online database detailing land and property values in the United States.
Located in the Resources and Tools section of www.lincolninst.edu [1], Land and Property Values in the U.S. [2] provides separate price indices for land and structures, in addition to the more common price indices for property – land and structures combined. Information on the values and rents of residential properties in the U.S. cover three dimensions:
- Rent-Price Ratio: The ratio of rents to prices for the stock of all owner-occupied housing
- Aggregate U.S. Land Prices: Values and price indexes for all land, structures, and housing in residential use
- Metro Area Land Prices: Values and price indexes for land, structures, and housing for single-family owner-occupied housing units in 46 major U.S. metropolitan areas.
"Price indexes and values of land inform the analysis of trends and cycles in house prices," said Morris A. Davis, an assistant professor of Real Estate and Urban Land Economics at the Wisconsin School of Business and fellow at the Lincoln Institute of Land Policy, who created the data sets. "If housing were simply a manufactured good, and location or land had no value, then the price of housing would be determined by construction costs, and housing prices would increase at roughly the same rate as the price of other goods in the US economy."
But, Davis noted, housing is on land with a specific location, and good locations are often scarce and valuable. If construction costs rise slowly over time and desirable locations are in limited supply, increases in the demand for housing can translate directly to increases in the price of good locations – the land – and in house prices. Accordingly, information on changes in the price and value of land over time often relate to trends and cycles in housing demand.
Although the rent-to-price ratio and the price and value of land are obvious metrics for understanding dynamics of housing and house prices, few of these data can be directly observed. In the case of the rent-to-price ratio, the implicit rents accruing to homeowners must be estimated based on market rents of similar rental units. In the case of land, direct land sales are rarely observed in built-up areas and occur mainly where new suburban development occurs. To estimate the value of land in built-up areas requires separating the directly observed sale price of housing into the underlying values of the housing structure and the land, neither of which is separately observed. The online database provides disaggregate estimates of property value for real estate analysis.
The Lincoln Institute of Land Policy is a leading resource for key issues concerning the use, regulation, and taxation of land. For more information on the Lincoln Institute, visit www.lincolninst.edu [1]. The Wisconsin Real Estate Program is one of the oldest academic real estate programs in the world. Established in 1920, the James A. Graaskamp Center for Real Estate builds upon a Wisconsin tradition of the highest standards in real estate education, academic research, and community outreach, all with a strong global focus. For more information on the Graaskamp Center, visit www.bus.wisc.edu [3].
Morris A. Davis is assistant professor of real estate and urban land economics at the Wisconsin School of Business, and a fellow at the Lincoln Institute of Land Policy. He serves on the Academic Advisory Council of the Federal Reserve Bank of Chicago and was a research associate at the Federal Reserve Bank of Cleveland, an economist at the Federal Reserve Board working in the Flow of Funds Section and Macroeconomics and Quantitative Studies Section, and director of Yield Optimization at Return Buy, Inc. For more information on Davis, visit www.bus.wisc.edu [3].
The Land and Property Values in the U.S. database may be accessed directly by visiting: http://www.lincolninst.edu/subcenters/land-values/ [2].
