Kuminoff & Pope (2013): The Value of Residential Land and Structures during the Great Housing Boom and Bust

Overview

Nicolai V. Kuminoff and Jaren C. Pope's "The Value of Residential Land and Structures during the Great Housing Boom and Bust," published in Land Economics (February 2013), uses a hedonic estimator to separate the market value of land from the value of structures at the Census-tract level, drawing on sales data for more than one million residential properties across 10 US metropolitan areas between 1998 and 2009.[1] The paper's headline, described by the authors as "surprising," is that lower-value land at the urban fringes of metro areas was the most volatile component of home prices during the boom and bust, not the most expensive, centrally located land as a naive story might predict.[1]

The finding is one data point in the broader case, developed at length in Lars Doucet's Land Is a Big Deal, that the 2000s US housing boom and bust was substantially a land-price phenomenon rather than a structures or construction-cost phenomenon, and that disaggregating land from structures is essential to understanding both bubble dynamics and how large a land value tax base actually is.[2] By isolating a land-value series distinct from total home price, the paper supplies exactly the kind of decomposition Georgist analysts rely on to argue that housing-price volatility is predominantly a land phenomenon.

See Also

• Land Bubble — the concept this paper's fringe-land volatility finding bears on directly
• 2008 Financial Crisis — the crisis whose lead-up (1998-2009) this study's data window covers
• Boom-Bust Cycle — the general macroeconomic pattern within which this land/structure decomposition sits
• Land Is a Big Deal (book) — the book that frames this kind of land/structure decomposition as central evidence for land's economic weight

Sources

1. Nicolai V. Kuminoff & Jaren C. Pope (2013), "The Value of Residential Land and Structures during the Great Housing Boom and Bust," Land Economics 89(1), 1-29. DOI: 10.3368/le.89.1.1 — used for the study's data (1M+ sales, 10 metros, 1998-2009), method (hedonic decomposition of land vs. structure value at the Census-tract level), and headline finding that lower-value fringe land was the most volatile component during the boom-bust. Abstract, UW Press
2. Lars Doucet, Land Is a Big Deal (2022), Ch. 14 — used for the discovery context and the framing of land/structure decomposition studies as evidence for the scale and volatility of land value (via the wiki's book page).