Valuing urban land: Comparing the use of teardown and vacant land sales

Michael Gedal, Ingrid Gould Ellen

Research output: Contribution to journalArticle

Abstract

This study explores the use of “teardown” sales to estimate the value of urban land. When a buyer purchases a property intending to tear down the existing structure and rebuild, the value of land can potentially be estimated as the purchase price plus demolition costs. There has been little exploration of teardown sales in cities around the country, or any explicit comparisons between the estimates of land values derived from teardown sales and those derived through vacant land sales. This paper undertakes just such an explicit comparison, analyzing approximately 3800 teardown sales and 4900 vacant land sales occurring in New York City between 2003 and 2009. The two approaches yield surprisingly similar estimates of the value of both parcel attributes and locational amenities. However, vacant parcels are disproportionately located in very distressed neighborhoods and tend to be valued less highly than teardown parcels, even in the same neighborhood. Teardown parcels appear to be more representative of the city as a whole and may be a more useful approach to developing estimates of land prices, at least in the central cities of large urban areas where sample sizes are large enough.

Original languageEnglish (US)
Pages (from-to)190-203
Number of pages14
JournalRegional Science and Urban Economics
Volume70
DOIs
StatePublished - May 2018

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Keywords

  • Housing supply
  • Land values
  • Teardowns
  • Vacant land

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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