Abstract

Analyses of the determinants of land prices in urban areas typically base inferences on
housing transactions which combine payments for land and long-lived improvements.
These inferences, in turn, are based upon assumptions about the production function for
housing and the appropriate aggregation of non-land inputs. In contrast, we investigate
directly the determinants of urban land prices. We assemble more than 7,000 land
transactions in the San Francisco Bay Area during the 1990-2009 period, and we analyze
the link between the physical access of sites, the topographical and demographic
characteristics of their local environment, and the prices of vacant land on those sites. We
investigate in detail the link between variations in the quality of public services and the
value of developable land. Most importantly, our analysis documents the powerful link
between variations in the regulatory environment within a metropolitan area and the
prices commanded by raw land as an input to residential or commercial development.
Finally, we relate these large variations in land prices to the prices paid by consumers for
housing in the region

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