We’ve all heard the expression "Buy land, because they aren’t making any more of it." While this can certainly be sound investment advice in many cases, how much exactly does it cost to buy land?
The short answer is that it depends on several factors, and an acre of land can vary in market value from a few hundred dollars to a price tag that stretches into the millions. Like most other assets, land values are derived from supply and demand. So, the more desirable a particular location is and the less available land that exists in that location, the more expensive you can expect an acre of land to be.
How much land is an acre?
Just so we’re all on the same page, let’s go ahead and define what we’re talking about. An acre of land is equal to 43,560 square feet. There are 640 acres in a square mile, and acreage is the most common way to describe parcels of land for sale in the United States.
Location, location, location
There is no simple answer to the question "How much is an acre of land worth?" There are several factors that determine the value of land -- for example, if it's flat or sloped, if it's close to paved roads, and if it has utility services (or if they could easily be added). Only about 6% of land in the United States is developed, meaning that it's covered with roads or buildings, and this land is (on average) significantly more valuable than undeveloped land that’s far from civilization.
Perhaps the largest factor that determines land value is location. There are 1.9 billion acres of land in the contiguous 48 states, and the average value is about $12,000 per acre. However, this ranges from a low of $1,558 per acre in Wyoming to $196,410 for the average acre of land in New Jersey.
Within each state, the variation can be enormous as well. Land in the middle of nowhere isn’t worth anywhere near as much as land in ultra-desirable locations. For example, the average land value in California is $39,092 per acre. However, a 1.43-acre empty lot in Atherton, California (in Silicon Valley) was listed for a staggering $6.9 million in 2017.
On the other side of the spectrum, there are some places where land is extremely cheap, and in some cases land has even been given away for free. For example, farmland in New Mexico is worth an average of $530 per acre, and Marquette, Kansas, has given buildable lots away as long as the new owner agrees to build a house on the land and live in it for at least a year.
The Millionacres bottom line
The bottom line is that there’s no one answer to how much land is worth. It depends on the use (or potential use) of the land, as well as its location within the United States.