The Race Continues: Economic Growth vs. An Economic Tantrum-Week 18

Land Market Summary By Segment:

Soils:

All of us have heard that the three most important criteria that determine the value of a tract of land is location, location, and location. We suggest that the fourth item is timing because timing can trump location.

But the fifth most important criteria is soils because of the tremendous impact soil type has on the use of land. In Virginia, there are hundreds of soil types. The quality of the soil does impact not only the productivity for agricultural or forestry purposes, it also determines its potential use for residential, commercial, or industrial purposes.

For example, for large commercial buildings it is extremely expensive to cut four feet of dirt, put fabric at the bottom of the hole, and then fill in that hole using six-inch lifts that have to be compacted and tested in order to refill that hole to create a sound base on which a large commercial or industrial building could be built. Similarly, poor soils or weak soils can lead to increased cost of construction for a home or roads.

If you are looking at a tract of land and evaluating it as to whether you should purchase it, you need to have a discussion about soils. A knowledgeable land consultant should be able to help you determine the soils of a specific tract and their relative quality.

In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.