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Land Values: Size Matters

  • Terrence M. Clauretie
  • Herman LiEmail author
Article
  • 159 Downloads

Abstract

Using Clark County, Nevada land auction data from the Bureau of Land Management, we find evidence that the price paid per acre of land initially increases, and then decreases with parcel size and find the price paid per acre to be maximized at approximately 14 acres. We also find that convexity exists on the value-size curve up to approximately 8 acres. We attribute this phenomenon partially to the fact that larger parcels are better suited towards commercial and mixed-use developments. A similar pattern is found for residential land, and can be attributed to the economies of scale developers would need when building tract housing. We also find some evidence that for large lot sizes (over 25 acres), price-per-acre seems relatively constant. Finally, we use this data to approximate difference in price between purchasing smaller contiguous lots and larger lots. In this setting, we find that the value of plottage (assembly) is about $60,000/acre which is the difference between assembling contiguous parcels versus purchasing the equivalent size parcel outright.

Keywords

Plottage Plattage Land values Real estate 

Notes

Acknowledgements

The authors would like to thank Edward Coulson, Daniel McMillen, Brent Ambrose and Stephen Popick for helpful comments as well as participants in the ARES 2014 Annual Meeting as well as participants in the 61st Annual North American Meetings of the RSAI as well as anonymous reveiwers.

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of Nevada, Las VegasLas VegasUSA
  2. 2.Department of EconomicsCalifornia State University, SacramentoSacramentoUSA

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