Land leverage and house prices

S.C Bourassa, Martin Edward Ralph Hoesli, D. Scognamiglio, S. Zhang

Research output: Contribution to journalArticle

24 Citations (Scopus)

Abstract

A house is a bundle of land and improvements, with the weights of the two components varying both over time and across locations. We capture the land intensity or “leverage” of a property by measuring the ratio of land to total value. This is accomplished using transactions data for single-family homes in Switzerland over the period 1978 to 2008. We show how to use hedonic models to develop time series of land prices and land leverage. Then we estimate error correction models for both house prices and land leverage. We show the importance of interacting land leverage with fundamentals when assessing the determinants of house prices. House price changes are shown to be affected by changes in real construction costs, in real GDP per capita, and in the growth of the population aged 30 to 49, while land leverage changes are a function of changes in real construction costs and in real GDP per capita.

Original languageEnglish
Pages (from-to)134-144
Number of pages11
JournalRegional Science and Urban Economics
Volume41
Issue number2
Early online date25 Nov 2010
DOIs
Publication statusPublished - Mar 2011

Fingerprint

Gross Domestic Product
error correction
land
price
cost
time series
family
measuring

Keywords

  • Land leverage
  • House price dynamics
  • Land prices
  • Error correction models

Cite this

Land leverage and house prices. / Bourassa, S.C; Hoesli, Martin Edward Ralph; Scognamiglio, D.; Zhang, S.

In: Regional Science and Urban Economics, Vol. 41, No. 2, 03.2011, p. 134-144.

Research output: Contribution to journalArticle

Bourassa, S.C ; Hoesli, Martin Edward Ralph ; Scognamiglio, D. ; Zhang, S. / Land leverage and house prices. In: Regional Science and Urban Economics. 2011 ; Vol. 41, No. 2. pp. 134-144.
@article{ed48fb5518264960a04e5dfb02adfccd,
title = "Land leverage and house prices",
abstract = "A house is a bundle of land and improvements, with the weights of the two components varying both over time and across locations. We capture the land intensity or “leverage” of a property by measuring the ratio of land to total value. This is accomplished using transactions data for single-family homes in Switzerland over the period 1978 to 2008. We show how to use hedonic models to develop time series of land prices and land leverage. Then we estimate error correction models for both house prices and land leverage. We show the importance of interacting land leverage with fundamentals when assessing the determinants of house prices. House price changes are shown to be affected by changes in real construction costs, in real GDP per capita, and in the growth of the population aged 30 to 49, while land leverage changes are a function of changes in real construction costs and in real GDP per capita.",
keywords = "Land leverage, House price dynamics, Land prices, Error correction models",
author = "S.C Bourassa and Hoesli, {Martin Edward Ralph} and D. Scognamiglio and S. Zhang",
year = "2011",
month = "3",
doi = "10.1016/j.regsciurbeco.2010.11.002",
language = "English",
volume = "41",
pages = "134--144",
journal = "Regional Science and Urban Economics",
issn = "0166-0462",
publisher = "Elsevier",
number = "2",

}

TY - JOUR

T1 - Land leverage and house prices

AU - Bourassa, S.C

AU - Hoesli, Martin Edward Ralph

AU - Scognamiglio, D.

AU - Zhang, S.

PY - 2011/3

Y1 - 2011/3

N2 - A house is a bundle of land and improvements, with the weights of the two components varying both over time and across locations. We capture the land intensity or “leverage” of a property by measuring the ratio of land to total value. This is accomplished using transactions data for single-family homes in Switzerland over the period 1978 to 2008. We show how to use hedonic models to develop time series of land prices and land leverage. Then we estimate error correction models for both house prices and land leverage. We show the importance of interacting land leverage with fundamentals when assessing the determinants of house prices. House price changes are shown to be affected by changes in real construction costs, in real GDP per capita, and in the growth of the population aged 30 to 49, while land leverage changes are a function of changes in real construction costs and in real GDP per capita.

AB - A house is a bundle of land and improvements, with the weights of the two components varying both over time and across locations. We capture the land intensity or “leverage” of a property by measuring the ratio of land to total value. This is accomplished using transactions data for single-family homes in Switzerland over the period 1978 to 2008. We show how to use hedonic models to develop time series of land prices and land leverage. Then we estimate error correction models for both house prices and land leverage. We show the importance of interacting land leverage with fundamentals when assessing the determinants of house prices. House price changes are shown to be affected by changes in real construction costs, in real GDP per capita, and in the growth of the population aged 30 to 49, while land leverage changes are a function of changes in real construction costs and in real GDP per capita.

KW - Land leverage

KW - House price dynamics

KW - Land prices

KW - Error correction models

U2 - 10.1016/j.regsciurbeco.2010.11.002

DO - 10.1016/j.regsciurbeco.2010.11.002

M3 - Article

VL - 41

SP - 134

EP - 144

JO - Regional Science and Urban Economics

JF - Regional Science and Urban Economics

SN - 0166-0462

IS - 2

ER -