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Is Land in The United States Going to Increase Its Value?

Published on Tuesday, January 26, 2016 by Land Century

Predicting the future is no easy task. While certain resources may be valuable today, such as oil, we know that this can change rather quickly. But land has always been known as a rather safe investment. Land will always be needed, whether it be for residential purposes, commercial purposes or for agriculture.

It’s safe to say that land will only increase in price in the future, but how much value it will gain can be better gauged by looking at the past values of land. We have a lot of resources at our disposal, and we're going to look at a few to see if land prices will increase in the future. This is all based off of statistical information, and we will be linking up all of the resources, so you can conduct your own research as well to determine the price of land in the future.

Lincoln Institute of Land Policy

The Lincoln Institute takes a look at all 50 states, and provides land prices dating back to 1975. The interesting factor here is that this data-set takes into account home value, structure cost and land value. Land share is also provided, showing the amount of a total property’s value and the value of the land itself.

For example, this data looks at overall home prices. A home in 1975 may have cost $100,000, and the land value may have been $6,000.

Let’s take a look at the prices of a few of the most popular states in the country:

New York: In Q1 1975, the average home value was $36,875, with land values of $3,472, or 9.4% of the total home's value. In Q1 2000, the average home value was $189,999, with land values being $64,773, or 34.1% of the total property’s value. In Q1 2015, the average home value was $332,437, with the land value being $106,753, or 32.1% of the total value.

California: In Q1 1975, the average home value was $40,998, with land valued at $11,759, or 28.7% of the total value. In Q1 2000, home prices were $290,697, with land value being $170,915, or 58.8% of the total home value. In Q1 2015, home prices skyrocketed to $625,156, with land valued at $376,052, or 60.2%.

Texas: In Q1 1975, the average home value was $22,746, with land value being just $1,137, or 5% of the home's total value. Prices in Q1 2000 were $111,238, with land valued at $14,244, or 12.8% of the total property value. By Q1 2015, the average home value was $205,965, with land being valued at $35,343, or 17.2% of the total property value.

If you're interested in land in a particular area, the data provided by the Lincoln Institute does list all of the states in the United States. What we can derive from the data is that all of the states have seen the value of land increase dramatically. In New York, for example, the price of land has increased by almost 300%. In California, the value has increased by nearly 200%, and in Texas, the value has increased by over 300%.

What we can derive from this data is that the trend will continue as more people are alive today than in 1975. As the population continues to grow, land will become more scarce, and the prices will continue to increase.

USDA Agricultural and Farm Prices

The USDA provides pertinent information on land values for farms by state. This information is provided just for the years of 2011 to 2015, so it is not a dramatic look into the past. You’ll also find that the real estate market has improved at this time, so the numbers may be slightly skewed. What the numbers do point to is that land prices are still increasing.

Let’s take a look at what prices were in 2011:

- Northeast: $4,690 per acre
- Lake: $3,450 per acre
- Corn Belt: $4,460 per acre
- Northern Plains: $1,290 per acre
- Appalachian: $3,520 per acre
- Southeast: $3,610 per acre
- Delta: $2,300 per acre
- Southern Plains: $1,580 per acre
- Mountain: $899 per acre
- Pacific: $4,100 per acre

These numbers are drastically different for 2015, with the prices being:

- Northeast: $5,020 per acre
- Lake: $4,740 per acre
- Corn Belt: $6,350 per acre
- Northern Plains: $2,340 per acre
- Appalachian: $3,730 per acre
- Southeast: $3,670 per acre
- Delta: $2,780 per acre
- Southern Plains: $1,900 per acre
- Mountain: $1,100 per acre
- Pacific: $4,780 per acre

By far, the area that has experienced the most growth is the corn belt, with an acre of land increasing by $1,890. This is a prime place for agriculture, and obviously corn growing, in the United States. This data shows that the prices of land have increased over the past five years, and that the increase is rather impressive even when considering mountain areas. It may not seem like a lot to have the price increase by $200 per acre, as seen in the mountain region, but this is an increase of over 22% in price.

Karl E. Case Study

Karl E. Case also provided an in-depth study of land prices from 1975 to 2005. The study was conducted at a university, and it shows the total value of land in the United States in terms of total value. These numbers are all in the trillions, and are very impressive.

* Owner occupied housing in 1990 had total land values $2.2 trillion. These figures reached $7.6 trillion by 2005.

* All residential real estate had a total land value of $2.8 trillion in 1990, and this number swelled to $9.5 trillion by 2005.

* Nonresidential real estate had a stagnant land value of $1.3 trillion between 1990 and 2005.

* All real estate had a total value of $4.1 trillion in 1990 and $10.8 trillion in 2005.

Over just a 15-year time span, these values have all tripled, according to the study provided by Karl E. Case. All of the studies and information provided point to land values continuing to increase in the future. As land continues to become more developed and more scarce, it is safe to say that the price of land will continue to grow for the foreseeable future.