On the Price of Land and the Value of Amenities

A house represents not only a bundle of structural characteristics but also a set of location specific characteristics. Adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as the hedonic prices attached to local patterns of land use and other neighborhood characteristics. One can then estimate how the value of such location-specific characteristics are capitalized into land prices. This analysis, illustrated with estimates based on data from two British towns, has a number of wider implications. It generates a more parsimonious method of estimating amenity values. It also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location. Finally, it clarifies the conceptual definition of land and suggests that monocentric models can person,n well despite recent criticism. Copyright 1995 by The London School of Economics and Political Science.

[1]  D. Cox,et al.  An Analysis of Transformations , 1964 .

[2]  R. Muth,et al.  Cities and Housing. , 1970 .

[3]  S. A. Cobb.  The impact of site characteristics on housing cost estimates , 1984 .

[4]  Joseph S. Tracy,et al.  The Structure of Local Public Finance and the Quality of Life , 1991, Journal of Political Economy.

[5]  Jan K. Brueckner,et al.  THE STRUCTURE OF URBAN EQUILIBRIA: A UNIFIED TREATMENT OF THE MUTH-MILLS MODEL* , 1987 .

[6]  R. Halvorsen,et al.  Choice of functional form for hedonic price equations , 1981 .

[7]  Peter Linneman,et al.  The demand for residence site characteristics , 1981 .

[8]  C. Whitehead,et al.  Household Attributes and the Demand for Private Rental Housing , 1982 .

[9]  J. Roback.  Wages, Rents, and the Quality of Life , 1982, Journal of Political Economy.

[10]  Guy Garrod,et al.  The environmental economic impact of woodland: a two-stage hedonic price model of the amenity value of forestry in britain , 1992 .

[11]  G. Blomquist,et al.  Hedonic prices, demands for urban housing amenities, and benefit estimates , 1981 .

[12]  J. Yinger,et al.  Urban models with more than one employment center , 1992 .

[13]  R Ward,et al.  AIRCRAFT NOISE AND RESIDENTIAL PROPERTY VALUES ADJACENT TO MANCHESTER INTERNATIONAL AIRPORT , 1990 .

[14]  The measurement of land prices and the elasticity of substitution in housing production , 1984 .

[15]  Paul Cheshire,et al.  British Planning Policy and Access to Housing: Some Empirical Estimates , 1989 .

[16]  Guy Garrod,et al.  Valuing goods' characteristics : an application of the hedonic price method to environmental attributes , 1992 .

[17]  Hedonic prices and public goods: An argument for weighting locational attributes in hedonic regressions by lot size , 1990 .

[18]  R. Wilkinson.  House Prices and the Measurement of Externalities , 1973 .

[19]  Timothy J. Bartik,et al.  Measuring the Benefits of Amenity Improvements in Hedonic Price Models , 1988 .

[20]  S. Rosenthal,et al.  Redevelopment and the Urban Land Price Gradient , 1994 .

[21]  Income and price elasticities of demand for owner–occupied housing in the UK: evidence from pooled cross–sectional and time–series data , 1989 .

[22]  John F. Kain,et al.  Measuring the Value of Housing Quality , 1970 .

[23]  W. Alonso.  Location and Land Use: Toward a General Theory of Land Rent , 1966 .