Buying land is a large investment and likely a years-long commitment—so you want to know that you’re picking the right plot.
Changing markets, shifting economies, and unpredictable trends sometimes make buying land feel like a risky game. Luckily, Land.com is here to help you quit guessing and start investing in a clear, fruitful future.
Stay ahead of the land market with our expert land-spotting and evaluation guide. Then, get a few extra steps ahead on your land search with Land.com. Whether you’re buying to settle down or to develop and resell, we can help you find the high-potential land you need.
Understanding Key Indicators of High-Potential Land
Early in your land search, you may ask, “Does this property have potential?” Before you can answer that, you need to learn what factors contribute to a plot’s potential—and how to decipher them.
The main indicators of high-potential land include:
- Location – The first thing you’ll likely consider when buying land is the plot’s location. Location can impact the population’s demographics, infrastructure, economic growth, environmental factors, zoning laws, and more. It will also affect the property’s monetary value.
- Demographics – How old is the area’s average resident? Are there generally more retired adults or young couples ready to start their families? What is the projected population growth rate? Whether you’re developing land for your family or a future buyer, considering the area’s community can help determine its potential for your specific plans.
- Infrastructure plans – New infrastructure increases an area’s attractiveness, improving accessibility, public amenities, and aesthetics. When more people want to live in, work in, and visit an area, the surrounding home sales rise and businesses gain traction. All these factors boost nearby land’s potential for development.
- Economic growth – Similarly, when the economy grows, land value does, too. Indicators of economic growth include population growth, job market growth, and improved business performance.
To better understand the potential of the land you’re eying, let’s zoom in on each factor and its implications.
Researching Zoning Laws and Land Use Regulations
Zoning laws dictate how developers can use land and real estate in certain areas (or zones). Local governments set zoning laws to preserve a community’s aesthetic and history, boost the economy, or protect the environment, among other reasons.
Even if you own a piece of land, you must still abide by its zoning laws, meaning you can only develop the land for its intended purpose. Some common zones include:
- Residential
- Commercial
- Agricultural
- Industrial
- Hospitality
Zoning laws and land use regulations that align with your ambitions for the plot reliably indicate high potential. With a concrete plan, you can more easily find properties intended for your specific land development goals.
Mixed-use zoning offers particularly high potential in terms of desirability and property value. These types of laws allow developers to use land for multiple purposes, often combining both residential and commercial zones in a single area or building. (On a large scale, think about Times Square in New York City or the Mission Bay Neighborhood in San Francisco.)
This creates the potential for walkable neighborhoods and accelerated economic growth—desirable for residents and businesses alike.
Before buying a property, you’ll need to research its zoning laws and land use regulations to determine its unique value to you and your needs. How do you find out what they are?
Local governments typically make zoning laws readily available to the public. A quick search of the zoning department’s website should yield zoning maps that detail the regulations for your property’s address. If the zoning laws don’t align with your development plans, you can try to obtain a conditional use permit (CUP) or approach the zoning department to appeal.
Proximity to Growing Infrastructure
Quality infrastructure supports a community’s economic growth, property value, and overall well-being. Buying land in an area with proposed infrastructure development and improvement will put you in a prime place to benefit from new growth.
Planned infrastructure projects that boost a property’s value over time can be split into these main categories:
- Transportation – When people can travel to, from, and within an area with more ease, both residential and commercial real estate value jumps. Improved accessibility leads to lower commute times, increased walkability, and, therefore, higher property value. Some examples of these “hard” infrastructure projects include highway construction, public transit expansion, and sidewalk improvements.
- Energy – Infrastructure plans such as municipal energy improvements and renewable energy projects attract both cost-conscious and sustainably-minded residents and businesses. Alternative energy sources such as solar panels, wind farms, and hydropower lower overall energy costs and protect the environment from carbon emissions. New energy infrastructure also signals that an area can adapt to future changes, adding longevity and desirability to nearby property.
- Community – “Soft” or community-centered infrastructure improves the lives of residents and creates a more desirable place to live. Positive community infrastructure growth includes school construction or expansion, parks and public space development, and healthcare facilities development.
Municipalities build new infrastructure intended to last: You can expect your property to increase in value steadily over time as infrastructure grows and its benefits take hold. However you decide to develop your land, you can be sure the infrastructure will be there to support your goals.
Evaluating Market Trends and Regional Growth
The performance of the local real estate markets can indicate the value potential of a plot you’re seeking to buy. While market trends can be difficult to read and predict, many organizations—including the government—seek to measure them to gauge the health of real estate and the economy overall.
Important indicators of land and property value in the U.S. include:
- Construction spending reports – Each month, the U.S. Census Bureau releases a report detailing U.S. spending on residential and nonresidential construction activity. As you now know, growing infrastructure signals a property’s potential. These reports date back over 50 years, so you can easily compare a previous year’s monthly performance to create future projections.
- Housing starts numbers – These numbers tally new homebuilding permits issued nationwide, again signaling growing infrastructure and area desirability.
- New and pending home sales reports – You can find out not only how many homes have sold or are about to sell but how much they previously sold for. This offers a more explicit view of property value and desirability in a specific region.
- Regional home price indices – Rather self-explanatory, these indices provide another reliable meter for market health in certain areas, generally providing more relevant and accurate information for your circumstances than national averages.
While most of these factors indicate the health of the real estate market nationwide, you can apply them to the local market you’re eying by looking at the state and regional measurements.
Local real estate markets are deeply intertwined with other types of growth. Growth trends that often signal high land potential include:
- Population growth
- Job market growth
- New project proposals and development
- Local business performance
Local news offers one of the best sources for market and growth trend research. Keep a watchful eye on news of proposed development plans, shifting market trends, business performance, and more. If you can catch wind of exciting growth before it reaches its peak, you’ll maximize the value of your new land and your return on investment (ROI).
Considering Environmental and Geographic Factors
Of course, you can’t forget to consider the physical land your potential property sits on.
Environmental and geographic factors pose potential benefits and risks for land development. For example, waterfront property is highly desirable for its scarcity and serene views but may also fall inside flood zones.
Here are some additional factors that may impact your land’s potential:
- Topography – Square footage only tells you part of a plot’s story; the geographic layout and elevation of a piece of land can significantly impact how you develop it. Does it sit at the top of a steep drop-off or just below one? Is the land perfectly flat and fertile or hard and uneven? Answering these questions can help you determine if a property will meet your needs.
- Natural resources – Your land may have more to offer than space to build. Natural resources that may benefit you and your development goals include bodies of water, waterways, beaches, fertile soil, trees, crops, stone or other natural building materials, and much more.
- Climate and natural events – Is your plot located in the desert, the mountains, or on the coastline? Average temperatures can affect how you use the land, as well as heating and cooling bills, weatherproofing, and insurance coverage. Certain areas may be more prone to natural disasters like flooding, earthquakes, fires, or snowstorms. No matter how you’re intending to develop the land, these factors will likely come into play.
No piece of land is fully free of adverse environmental or geographic factors. The key to spotting high-potential land is to always keep your development goals in mind and search for properties that will best help you achieve them.
Finding Your Next Great Investment with Land.com
Worried about keeping all the components of high-potential land straight while looking for properties? Land.com can help you there.
Not only do we grant you access to the largest platform for rural land, but we also offer tools to optimize your search and tailor it to your unique needs.
Browse the current listings for sale and learn why more than 12 million monthly buyers and sellers trust Land.com to maximize their true investment potential.
Sources:
Investopedia. Zoning: What It Is, How It Works, Classification Examples. https://www.investopedia.com/terms/z/zoning.asp#toc-mixed-use-zoning
Primior. The Impact of Infrastructure Projects on Real Estate Values. https://primior.com/the-impact-of-infrastructure-projects-on-real-estate-values/
Investopedia. Top U.S. Housing Market Indicators. https://www.investopedia.com/articles/personal-finance/033015/top-us-housing-market-indicators.asp