Real Estate: The Most Valuable Residential Lands in the USA

Real Estate: The Most Valuable Residential Lands in the USA

Real Estate: The Most Valuable Residential Lands in the USA

At the Pacific Ocean on the West and the Los Angeles Country Club at the East, the 90402 Zip Code is prime Real Estate.

In fact, according to a new study, it is the most exclusive address in the USA

It is not about the homeowners there, though with average home prices exceeding $4-M, there are plenty of those.

It is about zoning restrictions, which the study found are preventing builders from supplying the market with more homes that buyers want.

The chart reflects an analysis by Issi Romem, Chief Economist of BuildZoom, a San Francisco-based company that connects homeowners with building contractors.

Mr. Romem set out to identify areas where home values outstrip the construction cost of new homes, giving builders a natural incentive to put up more of them.

He took the average home value in a given area and subtracted the estimated average value of the sticks and bricks.

The data came from the census; the full methodology is here.

While construction costs vary from 1 market to another, those differences play a small part in explaining why homes are so much more expensive in some places than others, Mr. Romem said.

Scarcity plays a much bigger role, he said, and high land values are partly due to zoning restrictions that limit the density of residential construction. If builders were given free rein to build all the homes they thought they could sell, the argument goes, the difference between home values and construction costs would shrink.

To that end, it is instructive to compare land values in California cities, where restrictive land use policies have helped drive up housing prices, with those in Texas.

In the metropolitan area of San Jose, the average land value per home was $931,000, according to Romem’s data, in Los Angeles, $782,000, and in Houston, known for freer zoning regulations, it was $133,000.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

2 Responses to "Real Estate: The Most Valuable Residential Lands in the USA"

  1. Erik Kengaard   October 19, 2017 at 1:02 pm

    Excessive population, not zoning, is the cause of high prices.
    Houston does not compare with LA.
    Houston is flat as a pancake for hundreds of miles in all directions.
    Los Angeles is surrounded by mountains.

    • Paul Ebeling   October 19, 2017 at 9:18 pm

      Have is your way Erik, Paul Ebelingg

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