Our plan is to annually put our our own analysis of the land market for our readers, where it is and where it is going. While there are lots of facts about the real estate market in general, there isn't much about land. In this annual article we give our take from the inside, with over 15 years of experience in land in both domestic and foreign. We have negotiated land deals through many different markets and we are no different when embracing the impact the overall market takes. After all, isn't that what makes real estate investing so popular, the possibility of return?
Our 2022 Land Value Analysis - Where It Currently Stands and Where it is Going
As a disclaimer, this article isn't just a copy and paste of someone else's facts or views. With our industry experience and the uniqueness of land investing we will be giving our own view in current trends we see.
Our Companies High Level View
We as a company need to bring value to customers when they buy land from us. While no investment is a guarantee, almost all land holds value despite any current issues with it. Some land can have some blemishes which some find can render the land less valuable. For example, land locked land, tough zoning, high slopes or currently unbuildable land. Some savvy investors actually look for this land, it's low cost and has the potential for change to increase values significantly. We have seen several strategies where buyers will petition for unique land use, zoning changes, road access or hold until the county makes improvements for significant return. These parcels were at one point easy to get at a discounted rate but now people are actually searching for these.
On average when it comes to dealing with competition and sellers, we have seen an average of 3x the asking price in just one year, everywhere. This has put a bit of a pause on our buying process, we sell land we would only hold ourselves and at what we consider a good value long term to us and our customers. We have begun to broaden our locations of interest, some areas exploded in value and we will return when these slow down. There are still deals but we have to spend much more time finding new areas and even more time failing on negotiations vs landing the deal.
The Interest in People Wanting Our Land
Unless you hold a significant amount of land, you may not know that land sharks will send you offers on your land all the time. They usually try to find eager sellers and offer about 20% of the total value so they can flip it. On average the last few years we would receive 2 to 3 of these a month, and their offer price was laughable most of the time.
Currently we are receiving at least 2 to 3 of these offers a week and the offer price is much more in range than before. Oftentimes significantly higher offers than any previous year we have ever seen.
Our inventory is currently low due to this sudden increase in buyers, we are analyzing the market and timing for the future of the company so our purchasing needs to be carefully done. In 2021 our inventory completely sold out in one month out of nowhere, we were in a frenzy to find multiple land deals as our land inventory is the only reason customers would have interest in us.
Currently we have had to significantly decrease or even cut any advertising to our website in an effort to have land available to our repeat customers and frequent visitors. While we expect to have a lot more land soon, it's taken more time to find deals. It should also be noted, if there is a downturn in this market we will have significant purchasing power in order to capitalize on assets for future swings.
Land Value Increases
Unless you have been living under a rock, you know about the inflation situation. The cost of goods, gas and real estate have hit values not seen in many years. While the inflation situation could be a topic on its own there are several other factors attributing to land value increases. We put together this brief infographic on the subject matter.
Analysis of the Land Markets future
Our analysis of the land market within the next 10 years or so is that it's still a great investment. It's possible the amount of buyers will slow down as it's quite a frenzy in 2022, however land values in the United States were very low compared to other countries and are here to stay. They were due for an increase in values, especially more remote land. The future looks bright for remote land with more and more tech options to live well off-grid are coming out.
Inflation is probably not going to go down for quite some time. Land is inflation resistant so a lot of domestic and foreign people are comfortable parking their money in hard assets for the longer term.