The Hierarchy of Land Values

In the world of landownership, value is determined by more than just location—it’s shaped by the people involved. From end users to speculators, each group plays a unique role in the hierarchy of land values. Where do you fit in?

1. End Users: The Foundation of Value

• These are homeowners, businesses, or organizations who purchase land for direct use (e.g., to live, work, or operate).

• Their willingness to pay often reflects market demand and usability.

• Because they are purchasing for direct use, end users do not have to build in any profitability metrics and can typically pay the highest values for land.

2. Ground Up Developers: Transforming Potential into Reality

• Developers purchase land to construct homes, commercial properties, or mixed-use spaces.

• They focus on land ready for immediate improvement, with zoning and infrastructure in place (or where it can be put in place).

• Developers have certain financial return metrics they must achieve and therefore have a limit on the amount they can pay for land.

3. Land Developers: The Infrastructure Specialists

• Land developers bridge raw land and developable land by investing in zoning, utilities, roads, and entitlements.

• Their work unlocks higher value for the next buyers in the chain.

• Similar to Ground Up Developers, this group has metrics they need to reach. With this added profitability layer, this group typically can’t pay quite as much as the Ground Up cohort.

4. Investors: The Calculated Opportunists

• Investors often purchase land as an income-producing or appreciating asset, without plans for immediate development.

• They rely on market growth or rental potential to drive returns.

• The unknown length of hold time makes it difficult for Investors to pay the highest price for land.

5. Speculators: Betting on the Future

• Speculators take high risks, purchasing land in underdeveloped areas with hopes of future appreciation.

• Their bets can pay off handsomely—or result in significant losses.

• Speculators typically purchase land in areas where there isn’t current infrastructure to support development but can see significant gains if new economic drivers come to the area (freeways, employers, etc).

Closing Thought:

Each group in this hierarchy contributes to shaping land values, but timing and strategy determine success. Whether you're holding, developing, or selling, knowing where you fit in this ecosystem is key to maximizing value.

P.S.

Curious about where land values are headed in 2025? Want to learn how to position your land for its highest value? Let’s talk! Reply to this email or schedule a call today.

Thanks,

John & Ramey