Value of Land Per Acre
It is quite interesting to see how the value of land per acre today, in the summer of 2011, stacks up with other prices. We are referring to the lowest priced land in the nation, land that can be purchased for around $400 per acre. A quick review of this topic reveals some interesting comparisons and helps focus on the issue of relativity.
First, how have we arrived at the value of land per acre being $400? Let’s take just one small example. Forty-acres in Wyoming might be priced at $16,000—which calculates to $400 per acre. But a person would have to purchase the entire 40 acres in order to realize the $400 per acre price. In other words, a person couldn’t just elect to have one acre carved out of the 40 acres. So the following analogies would apply if 40 people formed a syndicate and purchased the 40 acres (where, in effect, each person would then own an undivided interest in one acre of land).
Let’s start with the price of gold, which currently is a little over $1,600 per ounce. As opposed to an ounce of gold, wouldn’t you rather own four acres of land (that measures over 400 feet by 400 feet)?
A fancy briefcase can easily cost $400. But wouldn’t you prefer to own an acre of land for $400 instead of the briefcase?
A pair of men’s shoes can cost $400. But wouldn’t you rather own an acre of land for $400 instead of the shoes?
A fine dinner and a couple bottles of wine for four people can easily cost $400. Wouldn’t you rather own an acre of land for $400 instead of the meal?
I don’t know what the price of gold will be in 10 years (but prices could be subject to some form of government controls), but I do know that in 10 years the briefcase and the men’s shoes will probably be worn out and thrown away. I also know that in 10 years the fine dinner will have long since been forgotten. Finally, I know that the value of land per acre, which is $400 today, will be substantially higher 10 years in the future!