How to Value Vacant Land and Undeveloped Land — The Value of Vacant Land

How to Value Vacant Land and Undeveloped Land — The Value of Vacant Land

Learning how to value vacant land is more than a market calculation.  Property is a limited resource; how we manage this resource has implications and consequences beyond its current market price.

The traditional Western philosophy behind the use of real estate is in its use in a commercial enterprise.  The underlying tenets come from Western European property owner rights.  This philosophy was utterly foreign to the indigenous people of the North American continent; they saw the value of vacant land much differently.  (1)

To know how to value vacant land, you must look beyond today’s market research or mathematics.  You must be able to step away from the historical view of real estate as nothing more than an asset to be developed.  Unfortunately, governments still promote this philosophy because they directly benefit from the tax revenue.

Reasons to Own Undeveloped Land

The traditional reasons for owning real property fall into three categories based on our priorities.  But it’s not as simple as it seems because these priorities can change.

1) Develop it
2) As an Investment
3) Conservation

Most people understand these three reasons, but how they prioritize them makes all the difference.   The fundamental value of vacant land does not reside in its monetary value.

More and more people think if you want to know how to value vacant land, you need to make conservation and proper stewardship the highest priorities because of climate change.  After all, if the environment collapses, no amount of money can cure the problem.

Our priorities about the value of undeveloped land can change quickly.  (2)  Several factors can flip our priorities regarding real estate.  We often cannot control the zoning, market value, and use of adjacent property are things we often cannot control.  People in local governments typically work to boost development to increase tax levies.

To understand a better way and more holistic philosophy, we must start with the three reasons to own undeveloped land.

1) Develop it

Individuals buy a piece of property primarily because they want to build a home or business on the property.  The location of local resources, schools, or families is the top concern for most buyers.  They sometimes overlook the cost of access to utilities.    They are concerned not only with their property but the surrounding area.  However, they are generally unconcerned with the indigenous life on the property because it will be removed to make room for their house.

Contractors and builders select a property for many of the reasons above, but the overriding element is the market cost and cost of financing.  One of the main reasons to own undeveloped land is that it is easier for the builder to plan and build.  It allows them to build according to the buyer’s needs.

Custom homes have been a growing trend, but picking a home style is not as easy.  Zoning and planning commissions play a large part in the type of approved structures.

You would think that the municipality where the property is located would prioritize the preservation of undeveloped land, but this is rare.  Although many urban and semi-urban counties talk about green space and conservation, it always gives way to development.

“The worst thing that will probably happen in fact is already well underway-is not energy depletion, economic collapse, conventional war, or the expansion of totalitarian governments. As terrible as these catastrophes would be for us, they can be repaired in a few generations. The one process now going on that will take millions of years to correct is loss of genetic and species diversity by the destruction of natural habitats. This is the folly our descendants are least likely to forgive us.” — E. O. Wilson

Municipalities use the value of vacant land as something to give to corporations to develop, raising all property values.  Higher property values equal greater funds from taxation.  The environmental concerns of endangered plants or animals are overlooked and suppressed.  Once the bulldozers remove any traces of the endangered species, it’s too late to turn back the clock.

Refurbishing, renovating, and rebuilding make more sense ecologically, but it’s harder to do because you must consider what’s already in place.  Building a new house is much easier, but with building materials costs escalating, more builders are rethinking the strategy of renovations when materials are in short supply.

2) As an Investment — The Value of Vacant Land

In most cases, investors are not concerned with the indigenous life on the property.  Many owners never set foot on the property; it is an asset and nothing more.  So, it is sold for development; they do not care.  Restate experts recommend investing and buying undeveloped real estate for future development.

Undeveloped real estate gives you financial security against the uncertainty of investing in market products like stocks or bonds.  Some people use raw or vacant land to hedge against inflation and an asset that takes little or no maintenance.  Here, the land is sold when a financial need arises.

When our natural resources are treated as assets or investments, they often become misused.  Once a habitat is destroyed, it affects many species of plants, insects, animals, and birds.  Many birds and insects migrate annually to the same areas to sustain their species.  When this environment is compromised, we risk the extinction of a species.

3) Conservation — The Real Value of Undeveloped Land

Some people either buy or inherit real estate to retain its natural beauty.  Many of these people are environmentally conscious of the true wealth that the land provides to maintain the balance of the ecosystem.  (3)

“Right now there should be a moratorium on the cutting down of old growth in this country. That is a small thing to ask at this point. There is only four percent of old growth left. Ninety-six percent of it has been cut down.” — Woody Harrelson

Keeping some parts of the wilderness close to urban areas increases urban development.  People would rather have trees and open space as neighbors than another house or strip mall.

This group is a growing minority.  They see the unspoiled landscape as something more than a commodity to buy and sell.  They understand the actual value of undeveloped land is much greater than its momentary price.

They are concerned about what happens to land when they are not in control of the property, and that’s where we come in.

Learning How To Value Vacant Land

The monetary value of vacant land is determined by the zoning, its distance in relation to any industrial operations, and the impact of long-term planning, if available.  But, this is less than half of the true value of undeveloped real estate.

When you look only at the financial worth of any property, you are missing the big picture.  Sure, you can look up what other land has sold for in the area, and that will give you the momentary worth, but that is only a small portion of the land’s worth.

“Though this new forest grew mightily, elsewhere the mighty jungles fell. Elsewhere, the coastal rain forests that furred the body of the world were torn and riven. Elsewhere, the last of the old growth, the last of the world’s own garment, were ripped away. It was in this time, now, that the mother of us all was stripped naked and left to die in shame of her children, she who had been robed in glory like this, adorned like this. I bent my head upon the roots and wept, sorrowing for the trees.” — Sheri S. Tepper

Every piece of land provides places for indigenous life, from animals to plants.  They all work together to control pests and the climate.  I’m reminded of the situation that happened to me in 2015.  We remodeled a home we had lived in for several years, not knowing that a contractor had purchased the surrounding property of about 2 acres.  We had a garden and also raised butterflies.

After the bulldozers left, we discovered the land was the home of skunks and bats.  Until then, we never had problems with mice or mosquitoes, but now we do.  The skunks kept down the mice population, and the bats took care of any mosquitoes.  The people who bought the house on the property get visits each spring from the skunks who still think it’s their home.

Now the neighbors spray for mosquitoes, but it also kills the pollinators in our garden, which has an adverse effect on the garden, and we have very few caterpillars or butterflies.  The unintended consequences of just a few acres have irreversible effects on our quality of life.

Strategy for Conservation

Americans in Alliance provides a perpetual solution to conserve land.  We understand how to value vacant land and protect it as a resource for future generations.  We also work with local governments, counties, parks, and recreation departments.  If possible, these lands become part of a municipal green space if they agree to a binding agreement that forbids the land’s transfer, sale, or development for any other purpose than a natural habitat.   A perpetuity land-use agreement ensures future leaders keep the promises made.

We welcome your feedback and questions.  You can reach us using the contact form.


(1) Historical Land Use:

(2) Changes In Global Land Use Four Times Greater than Previously Estimated:

(3) The Public Value of Urban Vacant Land

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