Looking for the next hot spot to invest in land in the U.S.? The housing market can provide helpful clues that will help you pinpoint up-and-coming spots where prices are expected to explode.
Major cities are a surefire bet if you’re looking to invest in land. About 62% of the U.S. population lives in urban areas, according to the U.S. Census Bureau, so you can expect a nice return if you can score some land in a metro area at a great price.
Metro areas are an obvious choice when it comes to land investment, but finding land for sale a at a decent price is a challenge. And the competition is fierce.
Taking a closer look at the housing market in the U.S., you can get an idea of areas where home values are rising.
Home prices along the West Coast have been skyrocketing for years, and that trend is spreading east.
In the Visalia and Hanford areas, just south of Fresno, homes are valued in the $190K-$221K range. Just outside this area, values are around $90K-$130K. Land prices may rise next year in these outer areas, as more people flock to the region.
Of course, areas right on the coast are major hot spots, but land prices are in the million-dollar-plus range. Just outside these coastal areas (a little further inland), home prices are significantly lower. In the Livermore area, homes are selling for $780K, but in the Patterson area, home values are around $220K. The Patterson area is still a hot spot on Trulia’s value heat map, so this may be an area where land prices will rise next year.
Outside of California, there are hot areas in both Oregon and Washington, including Seattle, Olympia, Everett, Yakima, Spokane, Eugene, Salem, Ashland and Portland, among many others.
The East Coast is another hot spot for home values, which isn’t exactly news. But there are some areas where home values are significantly higher than others.
The areas just outside these hot spots, where prices are already at a peak, are prime for investing, as values are likely to increases in the next few years.
Steer clear of the usual suspects: New York City, Philly, Baltimore and D.C. – unless you can score a good deal.
In PA, areas like Allentown, Harrisburg, York, and Monroeville are seeing higher home valuations. These are areas just outside the city limits, where populations will likely grow and land values will likely rise.
Trends like this can be found all along the East Coast, but Florida (not surprisingly) is a hot spot right now – particularly the Orlando area.
Inland areas along the Southeast, like North Carolina’s Asheville and South Carolina’s Greenville, are also seeing home values rise. Land prices in these areas will continue to rise, particularly in the Southern Appalachian region.
The Denver area of Colorado took off years ago. In Boulder, median home values are sky high at around $700k. But just outside Denver, over in Park County, the median home value is around $165K. In Pueblo County, just outside Colorado Springs, the median home value is around $130K.
These are areas just outside the hot spots where prices are double (or more, in some cases). Land prices, like the home values, will likely increase over the next year.
While Denver is a red-hot area, experts warn that the city’s housing market may be in a bubble that’s ready to burst. Prices in the area continue to rise, and it doesn’t appear to show any signs of stopping.
Since 2007, home prices in the city have increased by a staggering 60%. In some neighborhoods, prices are up over 200% in the last decade.
In April, the average home price was around $430K – that’s a new high.
While some fear the bubble may burst, other experts say that the Denver market is healthy.
Either way, Denver may be one place you want to steer clear of, or invest just outside the city limits where people will eventually be forced to go due to higher prices.
Regions of Oklahoma and Arkansas are also seeing land and home values increase. Little Rock and Oklahoma City are two obvious choices, but values are also rising in areas like Hot Springs, AK and Malvern, AK. But values are still very reasonable at around $100K.
In Oklahoma, areas just outside cities like Sapulpa and Broken Arrow, where home values are in the 180K to 240K range, land values and prices are likely going to increase over the next year.
Right now is really a great time to invest in land just about anywhere. Inventory is particularly low in high-demand areas, which means buyers – especially young buyers – are finding it difficult to find a home that meets their needs.
If you find a great piece of land, build a brand new home and put it on the market at a reasonable price, you’ll probably sell it faster than you had ever imagined.
Renting is, of course, another option, but rent prices are projected to rise faster than incomes. That could pose a problem if your home is out of the everyday Joe’s price range.
Of course, there are areas where the risk is too high to even bother. At the moment, the areas you want to avoid are mainly in states where energy-extraction is the primary sector.
High-risk states include Louisiana, Wyoming, Alaska, North Dakota, Texas, Oklahoma, West Virginia and New Mexico.
As home prices continue to rise, land prices will also rise. It can be hard to predict with certainty which areas will see the biggest price increases, but buying land just outside fast-growing cities is always a good choice. These are areas where demand will be higher – if not now, eventually – and prices are still reasonable.
Don’t be afraid to jump on a deal in a market that you know is taking off. You may just miss your opportunity for a serious return on your investment if you don’t.