One Hundred Years of Land Values in Chicago

Homer Hoyt, The University of Chicao Press, 1933

This diagram has been traced from Figure 99 of Hoyt's history of the Chicago cycle. The vertical axis shows % variation from a "normal" value.

Land Values: Land was valued at 80% below normal in 1830, but it reached normal values by 1835. Then the values shot off the chart. If you look closely at Hoyt's diagram, you can read that land was 456% above normal in 1836. Within a few years, land value was back to 80% below normal. This was the first five booms in land values over the 100 year period.  New Construction Hoyt's data on new construction begins in 1854 when construction was 60% below normal. Within 2 years it was at normal values; 2 years later it was 120% above normal. The chart shows 4 major booms in construction. The final boom in the 1920s is the most sustained, with above normal construction from 1922 until 1928. Indeed, construction was still booming in 1926-1928 even though land values were declining.  General Business Hoyt used the business activity index (shaded in black) of the Cleveland Trust Company. He shows the index to make it clear that the cycles in land values and in construction do not coincide with cycles in business activity.

This diagram illustrates the role of population growth and the real estate cycle. In this example, the population of a community grew by 12 fold in 3 decades. Land values increased by 18 fold by the middle of the 1920s. Then land values were cut in half in the late 1920s and early 1930s. Hoyt gives several such examples. They all tell the same story: population surges can trigger a surge in land values. But the real estate industry itself is responsible for the boom and bust in land values.

Population and Residential Land Values in Yates/Stoney Island 1on Axis = 7,500 population 1 on Axis = $7.5 million land value

A Closer Look at 1880 to 1920 and the Four Phases of the Real Estate Cycle