The Effect of Transportation Improvements on the Separate Values of Land and Buildings
23 Pages Posted: 24 Aug 2017
Date Written: August 23, 2017
Transportation improvements tend to raise property values. But how do they affect the two components of property value, land and buildings? We develop a simple model to show that transportation improvements that raise the value of land generally lower the value of existing buildings. Our model provides intuitive explanations for several recent findings in the empirical urban economics literature.
Keywords: Transportation Improvement, Land Value, Building Value, Residual
JEL Classification: R14, R41, R52
Suggested Citation: Suggested Citation