The great land price swing
Lenders and investors beware: Land is a very risky asset

Department of Energy

Article Highlights

  • Land is essential for all types of economic activity - every business has a footprint.

    Tweet This

  • At the height of the 2006 real estate boom, land in the US is estimated to have been worth more than $17 trillion.

    Tweet This

  • Research presented by @AEI’s Stephen Oliner suggests that land is indeed a high-risk investment.

    Tweet This

 

Land is essential for all types of economic activity. Every business — whether it’s General Motors or the corner grocery store — has a footprint. The same is true for the homes and apartments in which people live.

Land also constitutes a major part of wealth. At the height of the real estate boom in 2006, land in the United States (excluding farmland and land held by the government) is estimated to have been worth more than $17 trillion. This figure represents about 40 percent of the value of commercial real estate and housing in the United States.1 Of course, much of that wealth dissolved over the next few years as real estate markets crashed. The new research presented in this Letter documents the huge swing in land value over the recent cycle, showing that land is indeed a high-risk investment.

Read the full text of the letter here.

 

 

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Stephen D.
Oliner

What's new on AEI

Defeating ISIS: AEI experts weigh-in before the president’s address on Wednesday
image Degrading, defeating, and destroying the Islamic State
image Wealth Building Home Loan: Building wealth through homeownership and retirement savings
image The $3 iPhone
AEI on Facebook
Events Calendar
  • 15
    MON
  • 16
    TUE
  • 17
    WED
  • 18
    THU
  • 19
    FRI
Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

Wednesday, September 17, 2014 | 8:10 a.m. – Thursday, September 18, 2014 | 1:30 p.m.
Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

Please join us as a panel of distinguished experts explore the implications of the report and the consumer role in shaping the future of Medicare.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.