Department of Energy
- Land is essential for all types of economic activity - every business has a footprint.
- At the height of the 2006 real estate boom, land in the US is estimated to have been worth more than $17 trillion.
- Research presented by @AEI’s Stephen Oliner suggests that land is indeed a high-risk investment.
Land is essential for all types of economic activity. Every business — whether it’s General Motors or the corner grocery store — has a footprint. The same is true for the homes and apartments in which people live.
Land also constitutes a major part of wealth. At the height of the real estate boom in 2006, land in the United States (excluding farmland and land held by the government) is estimated to have been worth more than $17 trillion. This figure represents about 40 percent of the value of commercial real estate and housing in the United States.1 Of course, much of that wealth dissolved over the next few years as real estate markets crashed. The new research presented in this Letter documents the huge swing in land value over the recent cycle, showing that land is indeed a high-risk investment.
Read the full text of the letter here.