Dwelling Attribute Forecasts Based on Land Residual Maximization

This paper uses an implicit market approach to model the highest and best use concept when applied to single-family residential development. Formulated from the landowner's perspective, this persistence forecasting model relies on the theory that the marginal product of a site, as determined by its locational traits, varies with each alternative dwelling type. The dwelling attribute bundle that maximizes its site's marginal product, as measured by the resultant land residual value, becomes that site's "best" use. The empirical results indicate a site's locational attributes can provide reasonable dwelling type forecasts.