Andrew Haughwout on Urban Land Values

Thanks to Andrew Haughwout from the Federal Reserve Bank of New York for leading this week’s brown bag discussion on measuring and interpreting urban land values.

Haughwout’s research uses the COMPS dataset from the CoStar Group to identify two types of transactions: purchases of vacant land and purchases of parcels with structures that the buyer intends to tear down. By examining these transactions, Haughwout effectively hones in on the price of the land itself.

Among other results, Haughwout finds a quadratic relationship between distance of a parcel from the city center and the log price per square foot. The relationship, with the most expensive land nearest the city center, is consistent across cities though the gradient is less steep in some cities than others.

By developing a better understanding of land values, Haughwout’s work opens up the possibility of, among other things, helping to detect real estate bubbles, judging the impact of policy interventions, and providing information for more efficient property taxation.