The real estate industry is a reasonably safe environment. One of the reasons is that the land value can withstand significant economic tribulations, including recession. That’s because land valuation is edged on many factors.
Nevertheless, individual land property values can drop due to many factors. Landowners may or may not have control over these factors.
What are they, and how do they affect your land? Here we’ll dive into several factors that might cause land depreciation.
1. The Impact of Interstate on Local Property Value
Interstate highways can have a significant impact on your property values. In some cases, such as in towns and cities, their presence can increase property values. But that is not the case in rural farmland.
With the rights-of-way bill, interstate highways are on the rise and will take up about a million acres. Over 75,000 farms will give up part of the operational space for this development. While the number isn’t enough to threaten food security, it will change the real estate sector.
For example, if the roads cut through your farmland, it will forever change how you operate the remaining piece. The government will strictly control highway access, meaning you won’t use them just because your property is next to them. Such policies create land-locked situations where you get forced to look for alternative routes in and out of your property.
Zoning can have a significant impact on land value. Governments and local leadership can designate certain areas for specific usage, like single-home areas, high-rise buildings, or even religious and entertainment spaces.
While zoning can create artificial scarcity, which drives up land prices, it can also negatively impact your property. For example, if yours happens to be within a designated space for a church, it would be difficult or impossible to develop it for the desired use.
In some cases, zoning can make land virtually worthless.
3. High Crime Rate
High crime rates are one of the things that can reduce land value. If an area is known for having high criminality, people will likely be less interested in living there. In fact, only a few developers will want to establish a property there.
Such undesirable areas can lead to lower property prices and a decrease in the overall value of the land. Finding a buyer or an investor becomes a tall order.
While there are several ways to combat high crime rates, such as increasing police presence and investing in security features, you have little control over the issue.
4. Home Not Being Kept Up
Another thing that can negatively impact your home’s value is if it is not being kept up. That means that if your property needs repair or maintenance, it can be worth less than homes in good condition. Simple things like paint, windows, or walkways attract or discourage potential buyers.
Not maintaining your home can make selling more challenging, as the property condition may turn potential buyers off. While it may seem like a non-issue, if the surrounding properties are in excellent condition than yours and are also on sale, you may be forced to sell for less.
If you want to keep your property value on a rising trajectory, it is essential to keep up with maintenance.
Next time you’re out looking for land to buy, don’t just go for anything up for sale, even if it’s legitimate and cheap. You might end up with a depreciating property or soon to be worthless. Work with professionals who have done the background check and ensured it’s the right investment opportunity.
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