With the housing market, stock market, and inflation remaining unpredictable, it’s more critical than ever for aspiring landowners to know what goes into the valuation of properties. And with rumors of a pending recession, it just might be a great time to expand your ventures with new land.
Let’s dive into five of the most common and highest impact factors to land valuation!
1. Location
It’s always about “location, location, location”– and for good reason. Location will tell builders, developers, or entrepreneurs what will be the best use of the land.
● Proximity to other relevant facilities, factories, or residencies: Farms or wineries typically go for a higher price when they are close to restaurants.
● Zoning laws: The surrounding existing market will largely determine what the land can be used for, changing the value accordingly.
● Topography and soil type: Land use depends on topography and soil quality. Hilly swamp lands are great for hunting grounds but not typically used for farming or development.
Your vision for the land will change the perfect location for you.
2. Stock Market Performance
Simply put, a high-performing stock market encourages further investments, while a low-performing stock market usually has people cinching up their purses.
The current downturn in the stock market (and possible recession) opens up possibilities for land prices to decrease for the first time in several years– but remain wary of inflation, supply chain backlogs, and other factors that could impact the profitability of your land.
3. Land Use
The valuation of a plot will significantly depend on the intended use of the land. So land that would be great for farming or a vineyard may not fare as well if sold for hunting land or for development.
It’s also important to note that the existing land management will change the valuation. Forested land will value higher with existing and operational foresting management than the same land without it.
4. Amenities and Improvements
Next on the list is what is coming with the land. A wildlife conservation plot with a lodge or conservation camp will likely value more. Land suitable for farming or a vineyard with barns or wineries will sell for more.
5. Presence of Natural Threats
Finally, the likelihood of natural disasters will impact the land valuation. The top threat is flooding for most properties, so it’s critical to know the natural water pattern through the land. If the land naturally drains well, or the threat of enough water to flood is low, it will fare better.
Keep in mind the likelihood of other natural threats, like fires and violent storms.
Looking to Buy Land?
At AltaTerra Realty, we help Texans expand their business through quality land purchases. It’s critical to work with a team that understands your vision and values– and that’s what we’re here to bring to life. Contact us today to begin your search!
References:
https://rethinkrural.raydientplaces.com/blog/15-ways-an-appraiser-determines-land-value
https://www.landthink.com/top-five-factors-that-impact-land-value/
https://farmtogether.com/learn/blog/farmland-investing-during-a-recession