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Top Five Factors that Impact Land Value

Top Five Factors that Impact Land Value

Two properties can seem identical, but have wildly different values. Land values are shaped and changed by hundreds of different factors. These factors can be essential but often forgotten (such as road access) or as massive and unpredictable as the stock market. These five factors are by no means the only ones that impact land value, but they are some of the most important.

One: The Stock Markets

When it comes to the economy, everything is connected. In a strong market (like our current one), people have more money to:

  • Invest in land
  • Buy more produce/meat
  • Spend money hunting on recreational land/agritourism

In bad markets, there are many more sellers than buyers, which drives prices down.

Keep in mind though, that the land market does not always mimic the stock market. Sometimes it does (like during the Great Depression), and sometimes it doesn’t. So, while the stock market can be a good indicator, it is just one of many factors.

Two: Access to Utilities

Many savvy buyers want their land to have utilities included, especially in these technological times. Not having utilities such as access to electric power (while solar and wind are gaining popularity, electric is still king) and gas, can cause prices to plummet.

“Location of utilities and infrastructure should be a given when it comes to looking at land, especially residential home sites, but I’ve seen several buyers purchase land over the years because of a fabulous view it offered and didn’t give any consideration to the costs of pulling utilities to the property,” said Justin Osborn, ALC, in his guest post for RLI.

Three: Land Use

Picture a remote plot of land with sandy or clay soil, all the machinery to make wine, and great irrigation and drainage. If you use this land for a vineyard, the value will likely be much higher than if you use it for hunting land.

Finding the highest and best use for your land is an important step to increasing value. Make sure to find an expert land consultant when identifying your property’s most profitable use.

Four: Soil Type

Soil type impacts everything from what you can grow to what you can build.

To find out what type of soil your land has, consult an expert in your area or get a soil test done.

“The soil test lab report provides valuable information on the makeup of the soil, its pH (acidity or alkalinity), and cation exchange capacity (CEC),” says Kirk Goble, ALC, in an article for RLI’s Terra Firma magazine. “CEC is a determination of the ability of the soil components (primarily clay and humus) to allow for the absorption and transport of soil nutrients from the soil to the plant roots. It is essentially a measure of the soil’s ability to hold nutrients and feed the plants.”

Five: Location

Okay, this one is a bit obvious, but we had to include it! Different land types require different locations to get their highest value. Here are a few examples:

  • A residential property located near great schools, work places, restaurants, and museums will have a higher price than that same property in the middle of nowhere.
  • Timberland a short drive away from a lumber mill will have a higher value than one hours away.
  • A vineyard near wineries and restaurants will likely have a higher value than one that isn’t.

There are so many ever-changing factors that impact land values that it is impossible to predict the future. Knowing these six factors can make understanding the value of your land a little easier. However, since land is such a complex asset and land transactions require specialized expertise, it is essential to find a qualified expert, like an Accredited Land Consultant (ALC), near you.

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