Over the decade 1995 - 2004, the market value of residential real estate increased, on average, about 10% a year. (See: Federal Reserve Flow of Funds Table B100.)

The same table shows that the replacement cost of America’s homes, rose, on average, only about 7.6% a year.

If these estimates are reasonably correct, we can deduce that the value of the land on which American homes are built increased, on average, about 15.6% a year, over the decade.

The graph, drawn from this data, shows how overall residential real estate values changed over the period 1995 - 2004.

	American Homes: Land vs. Buildings

Over the decade, the imputed value of land as a percentage of total residential property values, rose from 25% to 38%. (Note: The imputed value of land is the market value of residential real estate less the cost of replacement of structures.)

Taking into consideration home equity values (market value less mortgages), land values increased from a 43% share to a 64% share, on average, of home equity values.

Since these figures represent averages for the entire nation, we may conclude that in some sections, land values are still around 20% of residential property values, whereas in other areas, land values may be higher than 60% of property values.

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