The paper examines land use in an urban zone. We propose a partial equilibrium model of housing markets with both vacant and built up land. The existing literature, precluding physical decay of housing stocks, assumes building decisions to be irreversible and treats any given stock of vacant land as an exhaustible resource. In contrast, we argue that vacant land is built upon in finite time rather than asymptotically, and reduces to a temporary phenomenon only. When housing stocks depreciate, the continued replacement of existing structures allows to adjust the average structural intensity, even if all land is built upon.
