I want my 40 acres to bring in some cash to the older me

January 12, 2009 1:13 PM

Are there techniques or methods to determine how a city will grow and in what direction it will grow?

I want to buy some unimproved land with an eye to selling it in the future. I'd like my investment to be something that appreciates, rather than declining or simply remaining stable.

I'm looking for tools, books, websites, or other resources that help one gain the knowledge to try and figure out what patterns a city's growth is taking, and where growth will occur over the next 10-20 years.

Thanks!

posted by reenum to grab bag (11 comments total)

That's something Urban Planning studies and ponders.
posted by Rykey at 1:21 PM on January 12

Check out the city's long range plan/comprehensive plan. You should be able to ask at the city's planning office for that type of planning info.
posted by otherwordlyglow at 1:26 PM on January 12

If I were you, I'd buy blighted inner city land that could be redeveloped in the future. Over the next 10 to 20 years, if we're lucky, fuel prices, poverty and other economic factors will halt sprawl-style growth and usher in a period of infill.
posted by M.C. Lo-Carb! at 1:43 PM on January 12 [1 favorite has favorites]

Cities tend to grow north west first. I have no idea why. I also don't know if it is opposite in the southern hemisphere. I also cannot find a reference, but I remember learning it.
posted by maxpower at 2:43 PM on January 12

This type of question is in the realm of land use economics and forecasting. Think through where transportation improvements will be/are already, the location of proximal amenities (e.g., parks) and the following sequence: jobs begat rooftops begat retail. Your ideal chunk of vacant land can support an interim income-generating use, whether it's surface parking or a golf course... and that's the answer to why there aren't drive-in theaters anymore.
posted by carmicha at 3:36 PM on January 12

The population of the US is aging, and aging people tend to want good roads, access to health care, access to shopping, and entertainment old-people style. Land in town that you can reclaim by cleaning it up, and making it appealing. Land near golf courses, nice views, shopping centers. Land near roads.
posted by theora55 at 4:56 PM on January 12

But ultimately, none of the theory you could read is all that practical.

None of the current schools of thought predict city development except in hindsight. Cities are ridiculously chaotic systems. They grow in unpredictable ways, sudden booms in interest on one side of town will send it growing one way, fashion changes will develop it in another direction. City planners will attempt to give it some order, but ultimately all their plans will be reactionary, and all their actions, at best, preventative. Honestly, you'll have just as much luck finding out what City Hall is saying they are going to do, and then just going with your gut.

The best advice in such a uncertain situation is to bet against yourself. Don't put all your eggs in one basket, then maybe one property will pay for the rest of the investments and then some.
posted by TwelveTwo at 7:30 PM on January 12

Sometimes this kind of forecasting works, sometimes it doesn't. For instance, Disneyland was built out in the middle of what was then basically farmland because Disney had learned from some manner of forecasters (at Stanford...that's all I know) that Los Angeles was going to sprawl in the direction of Orange County. Sure enough...

On the other hand, it was common knowledge in CA that land in Merced was worth buying due to the new UC that was going to be there. That land hasn't appreciated anywhere near as quickly as people thought.
posted by crinklebat at 7:49 PM on January 12

I am seconding M.C. Lo-Carb's suggestion: sprawl is likely to decline, and all those "undesirable" inner city lots will be valuable again. Who will want to commute 4 hours when the cost of commuting is unmanageably high?

Cities also regularly re-invest in their core areas. It seems to be a cycle. If you have the right land during one of those cycles, you can clean up.
posted by rokusan at 9:49 PM on January 12

This is not an academic question but a political one in most U.S. locations. Development goes wherever the fat cat land developers make the most money. Every city I have ever lived in has a government which is firstly run for the benefit of the richest real estate developers.
posted by bukvich at 10:15 AM on January 13

There are two big difficulties you will face with this attempt:
1) Any widely known expectation of price increase will already be factored into the current price of the land. e.g. If everyone excepts that the land in blighted inner cities will increase in value, then its price will go up accordingly, until enough people no longer think the potential for future price increases is worth the now higher present cost. So to be successful you need to be either early or contrarian. You can't get rich by doing what everyone else thinks.

2) Its not clear that land values will always go up.

When you buy a part of a business, on average its value will increase over time. The price of its stock my flucuate a lot due to changes in the number of people who want to buy the stock, but the actual value of the company will tend to increase. In the long run stock prices tend to follow the actual value of the company and increase as well. This is why investing for the long term in a broad set of stocks can be profitable.

The land however, as you let it sit there will remain at essentially the same value, unless you get lucky (e.g. oil under it, theme park next to it, city grows in your direction). The only thing that will drive the value up is the increase in demand. It makes some sense that this will happen, since the amount of land is relatively fixed, and the population is growing, but it is not as reliable or fast of a process as one might hope for out of an investment.

1) makes it hard/impossible to choose land based on its value increasing, and 2) means that without being able to rely on 1), the only thing driving the increase in value will be increase in overall demand for land, which may be slow.


Together these suggest that often it is a better investment in the long run to buy buisnesses (e.g. stocks) than assets (e.g. land).

That said, this sort of academic economic theory based on perfect markets is actually not all that accurate in the real world, so if you want to give it a shot, I'd second M.C. LoCarb and suggest going with inner city core areas that are currently dilapidated. Consider leasing the lot as a parking lot in the meanwhile, until *fingers crossed* the area starts to become revitalized/gentrified and you can sell your land for a ton. This has happened to a number of neighborhoods in the D.C. area, you may be able to find one of your own.

I'd suggest finding the cheapest land you can get that is in the middle of a growing city, ideally close to public transportation.
posted by vegetableagony at 11:24 AM on January 23