house prices and land prices under the microscope: a property-level analysis

8/11/2019 House prices and land prices under the microscope: A property-level analysis

1/38

House Prices and Land Prices under the Microscope:

A Property-Level Analysis

Morris A. Davis, Rutgers University

Stephen D. Oliner, AEI and UCLA

Edward J. Pinto, AEI

Presented at the Third International Conference on Housing Risk

American Enterprise Institute, Washington, DCSeptember 17, 2014

Note: The views expressed are ours alone and do not represent those of the institutions with which we are

affiliated. We thank FNC, Inc., and Marshall & Swift, a CoreLogic company, for providing the data for the paper.

1


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Key Takeaways

Land prices were more volatile than house prices, especially in areaswith inexpensive land and a low land share in 2000.

In those areas, the land share jumped the most through 2006. This

increase was a useful predictor of the later crash in house prices.

Movements in land prices and land shares had predictive informationthat was not evident from looking at house prices themselves.

These results highlight the value of focusing on land for assessinghouse-price risk.

3


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Scope of the Paper

Focuses on detached single-family homes

Main results are for Washington, DC metro area City of Washington, DC

Virginia: Arlington, Fairfax, Loudoun, and Prince William Counties, plus City ofAlexandria

Maryland: Montgomery and Prince Georges Counties

Compare DC area results to preliminary results for Boston and Miami Boston: Norfolk, Suffolk, and Middlesex Counties

Miami: Dade County

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Snapshot of the Washington, DC Area

Compared to US average, Washington area as a whole is affluent, with a well educatedand ethnically diverse population. But there are differences across the area.

Arlington, Fairfax, and Loudoun: high income and education; low Black and Hispanic share

Prince Georges: lower income and education, high Black and Hispanic share

Others have a blend of these characteristics. In Montgomery, diversity within the county.

County/city PopulationMedian

Household

Income

% of Adults w/Bachelors

Degree

% Black or

Hispanic

Arlington Co., VA 220K $101K 71% 24%

Fairfax Co., VA 1.1 mil $108K 58% 25%

Loudoun Co., VA 340K $122K 57% 20%

Prince William Co., VA 430K $95K 37% 40%

City of Alexandria, VA 150K $82K 61% 38%

Montgomery Co., MD 1.0 mil $95K 57% 35%

Prince Georges Co., MD 880K $72K 30% 78%

Washington, DC 630K $65K 52% 59%

Memo, U.S. total 314 mil $52K 29% 29%

Note: Population and percent Black or Hispanic are as of 2012. Median household income and percent with bachelors degree are averages over2010-2012; median household income is in 2012 dollars. Source: U.S. Census Bureau.

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Key Data Sources

Property-level data House characteristics, location, year built, sales history, and AVM value:

FNC, Inc.

Reconstruction cost as new: Marshall & Swift (M&S), a CoreLogic company

Zip-level data House price indexes: FNC

Construction cost indexes: M&S

DC area dataset contains about 680,000 detached single-familyhomes across 142 zip groups. About 90% coverage of universe.

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Estimating Land Value

Create a market-based stake in the ground for every home

Consists of an estimate of total property value broken into land value and

structure value.

Estimate land value for the stake in the ground from sale price of

new homes in the zip group minus reconstruction cost at sale date

Land is a shorthand for amenities of a given location

Stake in the ground is in 2000 for a majority of zip groups Is in a later year when there are too few sales of new homes in 2000 alone.

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Creating Time Series

Given stake in the ground, move AVM from that period through time

with house price index for homes zip.

Move structure value through time with construction cost index forhomes zip.

Back out land value for each home in each period as AVM minus

structure value.

Take average of house-level results within each zip group.

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Average AVM, 2013:Q3

Loudoun County, VA

Prince WilliamCounty, VA

Fairfax County, VA

Montgomery County, MD

Prince George'sCounty, MD

*Range of average AVM values by quintile (rounded to the nearest $1000) is $128,000 to $304,000, $304,000 to $436,000, $436,000 to $554,000, $554,000 to $670,000,and $670,000 to $1,657,000. Source: Authors' calculations using data from FNC, Inc.

By quintile*

Lowest

Second

Third

Fourth

Highest

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

House prices are relatively low in Prince George's County and most outlying areas,and relatively high in Fairfax,Arlington, and Alexandria, as well as the affluent parts of Montgomery County and DC.

9


10/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

20001200092001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Loudoun County, VA


Fairfax County, VA



By quintile*

Lowest

Second

Third

Fourth

Highest

Average Lot Value, 2013:Q3

*Range of average lot value by quintile (rounded to the nearest $1000) is $0 to $134,000, $134,000 to $201,000, $201,000 to $289,000, $289,000 to $456,000, and $456,000 to $1,012,000.Source: Authors' calculations using data from FNC, Inc. and Marshall & Swift, a CoreLogic company.

Lot values largely mirror the pattern for house prices.

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11/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

20197

20129

20158

20740

20770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 20833

20860, 20861

20862

22306

20782

20886

20002, 20003

20019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

22311

22312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

20895

20896

22203

20784

22209, 22201

2230122305

20710

20712

20722

Loudoun County, VA


Fairfax County, VA



Average Lot Size, 2013:Q3

By quintile*

Smallest

Second

Third

Fourth

Largest

*Range of average lot size by quintile (rounded to the nearest 1000 square feet) is 4,000 to 9,000, 9,000 to 13,000, 13,000 to 16,000, 16,000 to 28,000, and 28,000 to 183,000.Source: Authors' calculations using data from FNC, Inc.

As expected, lots tend to be small in close-in areas and larger further out.

11


12/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

20001200092001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Loudoun County, VA


Fairfax County, VA



Average Standardized Land Price per Square Foot, 2013:Q3

*Range of average land price per square foot for a quarter-acre lot by quintile (rounded to the nearest dollar) is $0 to $11, $11 to $17, $17 to $25, $25 to $39, and $39 to $106.Source: Authors' calculations using data from FNC, Inc. and Marshall & Swift, a CoreLogic company.

By quintile*

Lowest

Second

Third

Fourth

Highest

After controlling for differences in lot size, the price of land is highly correlated with house prices.That is, house prices reflect the amenity value of a given location.

12


13/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Loudoun County, VA


Fairfax County, VA



By quintile*

Lowest

Second

Third

Fourth

Highest

Average Land Share of Property Value, 2013:Q3

*Range of average land share of property value by quintile (rounded to the nearest 1%) is 0% to 37%, 37% to 46%, 46% to 58%, 58% to 71%, and 71% to 80%.Source: Authors' calculations using data from FNC, Inc. and Marshall & Swift, a CoreLogic company.

The land share tends to be high in areas with high land prices and vice versa.But there are outliers, some of which could arise from limitations of the data.

13


14/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

22301

22305

2071020712

20722

Loudoun County, VA


Fairfax County, VA



By quintile*

Smallest

Second

Third

Fourth

Largest

House Price Increase, 2000-2006

*Range of house price increase by quintile (rounded to the nearest 1%) is 89% to 127%, 127% to 131%, 131% to 147%, 147% to 165%, and 165% to 204%.Source: Authors' calculations using data from FNC, Inc.

Substantial variation across zip groups. Some tendency for increases to have been largest in outlyingareas and smallest in "band of affluence" along the Potomac River i n DC, Maryland, and Virginia.

14


15/38

20707

20866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

2019720129

20158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

22301

22305

2071020712

20722

House Price Decline, 2006-2012

Loudoun County, VA


Fairfax County, VA



*Range of house price decline by quintile (rounded to the nearest 1%) 2% to 13%, 13% to 21%, 21% to 31%, 31% to 41%, and 41% to 51%. Bottom quintile includes zips20007, 20008, 20016, 20815, 22201, 22203, 22204, 22205, 22206, 22209, and 22207 where prices increased.Source: Authors' calculations using data from FNC, Inc.

By quintile*

Lowest

Second

Third

Fourth

Highest

Sharper geographic differentiation than in the boom period. House prices fell the most in Prince George's Countyand in outlying areas. Prices fell much less in the affluent, close-in areas.

15


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Land Prices over Time

For DC-area zips grouped into quintiles by quarter-acre land price in 2000:Q1.Very large swing for low-price zips, much less for high-price zips.

10

20

30

40

50

60

70

80

90

100

110

10

20

30

40

50

60

70

80

90

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Index, 2006=100

Note: Observations for 2013 represent average of Q1, Q2, and Q3.Source: Authors' calculations using data from FNC, Inc. and Marshall & Swift, a CoreLogic company.

Highest quintile

Lowest quintile

Second

Third

Fourth

16


17/38

Prices and Construction Costs: 2000-2006

In DC area, land prices rose more than house prices, especially in zips with lowland prices. Construction costs accounted for little of the rise in house prices.

0

100

200

300

400

500

600

700

Lowest quintile Second Third Fourth Highest quintile

Zips grouped int o quint iles by quarter-acre land price in 2000:Q1

Land Price House price Construction cost

Percent change

Source: Author's calculations based on data from FNC, Inc. and Marshall & Swift, a CoreLogic company.

17


18/38

Prices and Construction Costs: 2006-2012

In DC area, land prices fell more than house prices, especially in zips with low landprices, where the declines were staggering. Construction costs continued to rise.

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20Lowest quintile Second Third Fourth Highest quintile

Zips grouped in to quint iles by quarter-acre land price in 2000:Q1


Percent change

Source: Author's calculations based on data from FNC, Inc. and Marshall &Swift, a CoreLogic company.

18


19/38

Land Shares over Time

For DC-area zips grouped into quintiles by quarter-acre land price in 2000:Q1. Largeswing in land share for low-price zips, while share is much more stable for high-price zips.

10%

20%

30%

40%

50%

60%

70%

80%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Highest quintile

Lowest quintile

Second

Third

Fourth

19


20/38

Predictive Power of Changes in Land Share

Source: Authors' calculations using data from FNC, Inc. and Marshall & Swift, a CoreLogic Company.

In DC area, house prices fell more from 2006 to 2012 in zipswhere the land share rose a lot during 2000-06.

-60

-50

-40

-30

-20

-10

0

10

20

10 15 20 25 30 35 40 45 50 55

Housep

rice

change,

2006

to

2012,pe

rcent

Maximum rise in l and share from 2000 to any year through 2006, percentage points

R2= .31

20


21/38

Boston Prices and Construction Costs: 2000-2006

Same general pattern as in DC, though the increases in land pricesand house prices were not as large.

0

50

100

150

200

250




Percent change


21


22/38

Miami Prices and Construction Costs: 2000-2006

Same general pattern as in DC, though the increases in land pricesand house prices were larger.

0

100

200

300

400

500

600

700

800

900

1000




Percent change


22


23/38

Boston Prices and Construction Costs: 2006-2012

Same general pattern as in DC, though the price declines were not as large(except for land prices in the lowest quintile).

-80

-70

-60

-50

-40

-30

-20

-10

0

10




Percent change


23


24/38

Miami Prices and Construction Costs: 2006-2012

Same general pattern as in DC, though the price declines were larger.

-120

-100

-80

-60

-40

-20

0


Zips grouped in to quint iles by quarter-acre land price in 2000:Q1


Percent change


24


25/38

Boston Land Shares over Time

Same general pattern as in DC, with huge gap in shares between lowest and highestquintiles and much larger swing in lowest quintile.

10%

20%

30%

40%

50%

60%

70%

80%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Highest quintile

Lowest quintile

Second

Third

Fourth

25


26/38

Miami Land Shares over Time

Same general pattern as in DC, except that share for lowest quintile turns negative.

We will be exploring the source of this negative share in future work.

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Highest quintile

Lowest quintile

Second

Third

Fourth

26


27/38

Boston Predictive Power of Changes in Land Share


Same general pattern as in DC area.

-50

-40

-30

-20

-10

0

10

5 10 15 20 25 30 35 40 45

House

price

change,

2006

to

2012,p

ercent

Maximum rise in l and share from 2000 to any year throug h 2006, percentage points

R2= .46

27


28/38

Miami Predictive Power of Changes in Land Share


Same general pattern, though less predictive power than in DC.

-70

-60

-50

-40

-30

-20

-1010 15 20 25 30 35 40 45 50

House

price

change,

2006

to

2012,p

ercent

Maximum rise in l and share from 2000 to any year throug h 2006, percentage points

R2= .23

28


29/38

Robustness Checks for Price Results

Under way:

Use a market-based stake in the ground in the middle of sampleperiod instead of near the beginning

Little effect on results for DC

Currently being done for Boston and Miami

Still to be done:

Estimate hedonic land-price indices for comparison

Method 1: Use estimated land prices for zips with large volume of newly-builthomes since 2000

Method 2: Use MLS data on residential land sales

Comparison to hedonic indices important after 2006-07 for areaswith little or no construction

29


30/38

What Lies Behind the Boom/Bust Cycle?

We have described what happened to house and land prices over

the recent boom/bust cycle.

What accounts for the observed price patterns?

We have begun to assess the role of fundamentals and credit supply

Fundamentals include household income, availability of jobs, crime, quality of

schools

Today will present initial results for the DC area on the correlation

of household income and availability of jobs with land prices

30


31/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

201972012920158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Employment per Working-age Person within a Driving Radius of 10 Miles, 2000

Loudoun County, VA


Fairfax County, VA



*Range of values by quintile (rounded to the nearest integer) is 0 to 4, 5 to 8, 9 to 13, 14 to 24, and 25 to 59.Note: Working age defined to be 18-64 years old.Source: Authors' calculations using data from the Census Bureau.

By quintile*

Lowest

Second

Third

Fourth

Highest

"Job-rich" zips are concentrated in bands running north and west from downtown DC.

31


32/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

201972012920158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Adjusted Gross Income per Household, 2001

Loudoun County, VA


Fairfax County, VA



*Range of values by quintile (rounded to the nearest $1000) is $25,000 to $47,000, $48,000 to $58,000, $59,000 to $72,000, $73,000 to $88,000, and $89,000 to $216,000.Note: Number of households is proxied by number of tax returns. Data are unavailable for zip group 22025.Source: Authors' calculations using data from IRS Statistics of Income.

By quintile*

Lowest

Second

Third

Fourth

Highest

High-income zips are also mainly north and west from downtown but extend further into the suburbs than the "job-rich" zips.

32


33/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

201972012920158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Change in Employment within a Driving Radius of 10 Miles per Working-age Person, 2000 to 2012

Loudoun County, VA


Fairfax County, VA



*Range of values by quintile (rounded to the nearest 0.1) is -1.1 to 0 .2, 0.3 to 0.6, 0.7 to 1.4, 1.5 to 3.0, and 3.1 to 21.9.Note: Working age defined to be 18-64 years old.Source: Authors' calculations using data from the Census Bureau.

By quintile*

Lowest

Second

Third

Fourth

Highest

Job gains concentrated in DC and Virginia. Maryland counties have lagged behind.

33


34/38

2070720866

20132

20772

20175

20176

20180

20837

20608, 20613

20105

20854

20112 22079

20774

20744

22066

22039

20119, 20181

22134, 22172

20124

20874

20878

20109

22192

22191

20147

20871

22030

20117, 20184, 20130, 20135, 20141

20169, 20137

20120

22193

20838, 2083920841, 20842

20882, 21797

20111

20705

20721

20148

20152

20164, 20166

20708

20143, 20155

20136

20904

20110

20151

20715

20855

20850

22101

20623, 20735

22003

20720

20906

22102

22182

20171

20601, 20607

20716

20872, 21771

22025

2212420743

20876

20785

20165

22060, 22309

22026

20832

20706

20121

20852

20853

20170

20748

2070720866

20032

22015

22153

22033

22150

22315

20745

20902

22032

20747

20746

22031

2086820905

2081720818

22042

22152

20879

2215122304

20910

20020

22308

20016

201972012920158

2074020770

20769

20190, 20191

22181

20901

20815

20814

22043

20777, 2083320860, 20861

20862

22306

20782

20886

20002, 2000320019

22202

22303, 22310

22314

22307

20007

20737

2078320903

20912

20008

22213, 22207

20194

20015

2231122312

2202722180

2087720880

20018

20879

2220622204

20781

22046 22205

20784

2204122044

20012

20851

2000120009

2001020011

2081220816

22302

20017

2089520896

22203

20784

22209, 22201

2230122305

2071020712

20722

Percent Change in Adjusted Gross Income per Household, 2001-2011

Loudoun County, VA


Fairfax County, VA



*Range of values by quintile (rounded to the nearest 1%) is -1% to 20%, 21% to 26%, 27% to 31%, 32% to 41%, and 42% to 73%.Note: Number of households is proxied by number of tax returns. Data are unavailable for zip group 22025.Source: Authors' calculations using data from IRS Statistics of Income.

By quintile*

Lowest

Second

Third

Fourth

Highest

Gains in income did not follow a crisp geographic pattern. Every jurisdiction had zip groups with small increases and others with large increases.

34


35/38

Level of Land Prices Across Zip Groups

Run regression of quarter-acre land price per square foot onemployment per working-age person within 10-mile driving radius andavg. household AGI.

Land price and employment data are for 2000; AGI data are for 2001

Employment and AGI both have very significant positive effects

Strong explanatory power regression explains about one-half of the

variation in the level of land prices across zip groups

Results using data for 2012 are quite similar

35


36/38

Change in Land Prices Across Zip Groups

Run parallel regression to explain the change in quarter-acre landprice per square foot from 2000 to 2012.

Explanatory variables are change in employment per working-age

person within 10-mile driving distance and change in averagehousehold AGI

Changes in AGI are highly significant, changes in employment less so

Regression explains up to one-half of the variation in land-pricechanges across zip groups

36


37/38

Summary of Results

Housing submarkets are important in Washington, DC area.House-price swing was:

Mildest in affluent, close-in areas

Considerably more severe in places where land was relatively cheap

Land prices were more volatile than house prices everywhere, butespecially in areas with initially inexpensive land

Large rise in land share was a useful predictor of sharp house pricecorrection later on

Results highlight the value of focusing on land for assessinghouse-price risk

Regarding fundamentals, initial results point to importantconnection between income, job availability, and land prices

37


38/38

Next Steps

Additional work on fundamental factors (income, employment,crime, school quality, rents)

Assess contribution of high-risk mortgage lending to explosion inland prices in certain areas

Extend analysis to other metro areas across the U.S.

Data collection and analysis under way for seven other metros (LA, Phoenix,Seattle, Chicago, Detroit, Memphis, Oklahoma City)

Eventually, intend to expand coverage to include all of the largest metro

areas and a broad sampling of mid-size cities

house prices and land prices under the microscope: a property-level analysis

Documents