You may have heard that land is a good investment. After all, they’re not making any more of it. While it’s true, does it really appreciate the same way a house does?
We’ll take a deeper look into this topic and explore the factors contributing to land value appreciation. You will know if land is a good investment for you and how you can make the most of it.
Does Land Increase in Value Like a House?
The truth is houses do not always appreciate. In fact, in many cases, the opposite is true. The structure ages with time, and even if you keep up with repairs and maintenance, it will never be worth as much as a new build home.
On the other hand, land typically does appreciate over time. The reason for this is that land is a limited resource. There’s only so much land available, and the demand for land increases as the population grows.
While the house may seem to increase in value, the land beneath it is what’s actually gaining. The house depreciates while the land appreciates. Of course, there are a few exceptions to this rule. If the location is not desirable or there are environmental issues, the land may not appreciate.
Proven Factors That Influence Land Appreciation
Now that we know land typically appreciates, let’s look at factors influencing long-time value.
Location
The number one factor that determines how much your land will appreciate is location. If you own land in a desirable area, it will be worth more than others in a less desirable area. For example, land near the beach will always be in high demand and worth more than land inland.
If the land is productive, such as farmland, it will also be worth more. The closer the land is to towns and cities, the higher the demand and the value. That’s because people are always willing to pay premium prices for land close to conveniences.
At Land Soar, our land listing includes some of the best locations in the country. We aggressively acquire land at discounted prices to pass on the savings to our clients.
Natural Resources
Land with natural resources such as timber, minerals, or water, will typically gain value yearly. That’s because these natural resources are in high demand and can be sold for a profit.
For instance, if the land has timber, it can be logged and the lumber sold. That makes the land fetch a higher price than land without it. The same is true for minerals and water. If the land has a water source, such as a river or lake, it will be worth more than land without a water source.
Infrastructure Development
Infrastructure such as roads, power, and sewerage will also impact the value of the land. The proximity to these conveniences will make the land more valuable. That’s because it’s easier to develop land that has the infrastructure in place.
The closer the land is to roads, the easier it will be to access. That means the land can get used for more purposes, such as farming, industrial, or residential. The same is true for power and sewerage. The land will always be in high demand if these amenities are close by.
Economic Factors
The state of the economy will also influence how much your land appreciates. In general, land values will go up when the economy is doing well. That’s because people have more money to invest and are willing to pay more for land.
On the other hand, land values will usually go down when the economy is struggling. That’s because very few people can invest in long-term assets like land.
While there’s no guaranteed percentage for how much your land will appreciate, it’s safe to say that it will go up in value over time. Of course, the best way to ensure you profit from your investment is to buy land at a discount. That’s where Land Soar comes in. We specialize in acquiring land at below-market prices so our clients can reap the maximum rewards.
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