Tea only The truth in the expression “the land will always be valued because it is no longer being used” is in the last 7 words! The finite supply of land does not even come close to guaranteeing that its value will increase over time. Supply is only one factor to consider when estimating how much any piece of real estate is worth, and it is not as important as other aspects when it comes to determining the value of the land for development.
The urban appraisal process begins with several questions. These questions focus on the most profitable use of the parcel, taking into account current zoning and other legal restrictions and any physical limitations of the site. Value is tied to the “highest and best use” of a parcel of land, which is the most profitable use that is legally, physically possible, and economically feasible. Tea utility (utility) of a plot of land is the key.
Suppose there is only one vacant parcel of land, consisting of 20 acres, that is available in one area. It has an excellent location and the utility lines are on the street. The seller asks for $ 2 million for it. How much is it really worth? You can’t answer that question until you know some additional data, such as what uses and development densities are allowed based on zoning, how much of the land area can be developed, and whether utility permits are available. In other words, you need to know how the pack can be used and the intensity of use that is possible.
Lower future $$$
Time can work for or against land development values. It can bring changes that limit the way a parcel can be used or affect its economic or physical viability for development. State, county, and local governments may enact laws that prohibit or suspend development for a specified period of time to allow a condition to be corrected or a change to take effect. These “moratoriums” can last for weeks, months, or even years.
Suppose the 20 acre parcel is in an area that has been exploited with development. Builders have purchased virtually every available sewer permit. The local government imposes a moratorium and stops issuing further sewerage and construction permits until the existing wastewater treatment plant is expanded or a new plant is designed, built, and commissioned. Development could be suspended for years because only properties that have sewer permits can be built. The seller would have a difficult time finding buyers once the moratorium took effect because the builders would not be interested in locking up resources in a property that they would not be able to use for the foreseeable future.
Just because this parcel is the only undeveloped property left in the entire area does not mean it is worth a lot of money now or even 10 years from now. If it is zoned agricultural, for example, the property probably won’t appreciate significantly over time without a change that allows for profitable development use. Alternatively, the parcel could contain significant areas of natural resources that could not be altered or would increase the cost to the point that any development would not be economically feasible. Time is not going to make these limitations magically disappear. The value will not increase substantially over time.
Future Superior $$$
The 20 acre property could it will be worth a lot of money if you are in an area that has been targeted for growth. A highway through the county may be in progress as a result of years of state and county planning, and the value of this property would increase if it is in the corridor of the proposed highway. The parcel could be worth a lot five years from now, when the local government updates its master plan and decides that properties in this area should be zoned to allow for more intensive development than agriculture. This change would promote plans for housing developments and major commercial and retail facilities (a regional mall, shopping malls, theme parks, and office campuses), and public services would be extended or expanded to handle the growth expected to occur in this area. area. A substantial appreciation would occur, not because of the passage of time, but because the highest and best use of the plot had changed dramatically.