www.lesswrong.com/posts/xCWiFGezwMPswZ6Ea/is-gdp-a-kind-of-factory
1 correction found
Davis and Palumbo (2006) estimated that land accounts for about 50% of US residential real estate value, up from 32% in 1984, and the trend has continued since.
Davis & Palumbo (2006) did not estimate land’s share for all U.S. residential real estate; they estimated it for 46 large U.S. metropolitan areas (an average across their city sample).
Full reasoning
The post attributes a nationwide estimate (“US residential real estate value”) to Davis & Palumbo (2006).
However, the Federal Reserve’s abstract for the paper (and the paper’s own title) makes clear the study is about “Large U.S. Cities” and that the 50%/32% figures are computed by “averaging across the cities in our sample”—i.e., across 46 large U.S. metropolitan areas, not the entire U.S. housing stock.
So the quoted sentence is incorrect as written: it overstates the geographic scope of the Davis & Palumbo estimate (metro-sample average vs. nationwide).
1 source
- FRB: FEDS paper 2006-25 — The Price of Residential Land in Large U.S. Cities (Davis & Palumbo, 2006)
"...we build a database ... for 46 large U.S. metropolitan areas from 1984 to 2004... Averaging across the cities in our sample, by year-end 2004, the value of residential land accounted for about 50 percent of the total market value of housing, up from 32 percent in 1984."