Evaluating the Louisiana Land Market

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Evaluating the Louisiana Land Market
By

Bart Waldon

Louisiana is a state rich in culture, food, music and natural beauty. From the jazz clubs of New Orleans to the scenic wetlands and bayous, Louisiana has much to offer residents and visitors alike. The unique geography, climate and history of the state also shape its land market in important ways for buyers and sellers to understand.

An Introduction to Louisiana

Nicknamed the Pelican State, Louisiana sits in the southeastern United States along the Gulf of Mexico. Its capital and largest city is Baton Rouge, located in the southern part of the state along the Mississippi River. Other major cities include New Orleans and Shreveport. Louisiana has a long growing season and subtropical climate that supports agriculture and aquaculture industries.

The geography of Louisiana is diverse, consisting of wooded hills, fertile deltas, sandy beaches and wetland bayous rich in wildlife. Much of the state sits near or below sea level. This makes the region prone to flooding from major storms. Hurricanes Katrina and Rita in 2005 devastated parts of southern Louisiana. Since then, the state has worked to repair levees and improve flood control infrastructure.

Understanding this unique landscape is key for evaluating land prices and investment potential in Louisiana. Flooding risks impact property values in some areas. However, the natural beauty and resources found across the state also present many land opportunities worth exploring.

Factors That Shape the Louisiana Land Market

Several key factors shape supply and demand trends in Louisiana’s land market. These include:

Demographic Changes

Louisiana’s population decreased over the past decade. However, some cities like Baton Rouge are growing. Areas losing residents may have declining property values as demand falls. Growth spots see rising prices amid competition for limited land. Tracking population patterns helps gauge the strength of local real estate markets.

Energy Production

Oil and gas industries significantly impact Louisiana’s economy and land development. Increased U.S. energy production with shale drilling created an economic boom in Louisiana this past decade. This brought more high-paying jobs and construction around regions like Shreveport. Recently though, declines in oil prices slowed this growth. The ups and downs of energy markets contribute to volatility in the value of rural acreage and commercial development sites.

Agriculture and Aquaculture

Farming and seafood remain pillars of Louisiana’s economy. The state’s farms generate over $2 billion in commodities annually from soybeans, sugarcane, rice and more. Meanwhile, its prime coastal waters provide 30% of national seafood yields. Louisiana’s strong agrarian roots and abundant natural resources give rural land rich income potential. But prices also rise and fall based on commodity markets and extreme weather impacts.

Tourism Appeal

Tourism centered around world-famous New Orleans generates over $18 billion yearly for Louisiana’s economy. Festivals, Mardi Gras celebrations, jazz music, historic architecture and renowned cuisine draw over 45 million visitors a year pre-pandemic. Sportsman’s Paradise is also a popular recreational destination. This robust tourism industry increases competition for commercial and residential development sites in high-traffic areas.

How to Determine Market Value of Land in Louisiana

Many factors from infrastructure access to flood risks influence the value of a given property. Yet core economic principles of supply and demand play a key role in determining land prices across Louisiana markets. Here are some tips on assessing a parcel’s market value:

Examine Recent Comparable Sales

A property is fundamentally worth what another similar buyer is willing to reasonably pay for it. Checking the sale prices of comparable vacant land and home sites in the past 6-12 months provides a baseline for value. The more comparable the location, size and features, the better indication this is for gauging market pricing.

Account for Development Potential

Raw land for construction or resource harvesting like timber have added value potential. Estimate possible rental income or future building costs based on zoning allowances. This development upside gets factored into adjusted price estimates. Of course, also budget permitting costs and construction timelines to make it a profitable venture.

Consider Accessibility Issues

A scenic country estate with acres of privacy seems idyllic. But if it takes 30+ minutes to reach the main highway or high-speed internet is unavailable, lower demand from buyers brings down values. On the flip side, parcels near key amenities and public services often fetch higher purchase offers.

Weigh Costs of Improvement

Depending on current use, land may need clearing, grading, drainage fixes, or utility access to ready it for construction or habitation. Old buildings requiring extensive rehab is another common scenario. Estimate these improvement costs and factor them into assessment of fair market prices.

Account for Carrying Costs

While vacant land itself may generate little income, property taxes, insurance, maintenance fees and interest costs accumulate for owners over months and years between sales. Budgeting ~10% yearly for carrying costs helps set realistic asking prices aligned with actual net returns.

Using Market Analysis to Negotiate Strong Deals

With a solid grasp of market conditions and influencing factors on value, sellers can better price land to move quickly while netting optimal returns. Similarly, informed buyers set up smart offers with the best chance of acceptance. Here are several key negotiation strategies:

Price on Lower End Initially

Overpricing right out the gate, then gradually discounting if needed is common. But this costs carrying expenses over extra months. Better to start slightly below perceived market value. If sufficient interest and bids emerge, the end sales result meets or exceeds target pricing anyway without excess fees eroding net gains.

Highlight Hidden Value Drivers

Rather than leading with highest conceivable list price, showcase key attributes that support property value during initial pitches. Emphasize recent development upgrades in the area. Sell the lifestyle appeal. Showcase visuals portraying the land’s best possible use. This motivates buyers to bid strong from the outset.

Offer Incentives to Sweeten Deals

Sometimes creative add-ons help bridge pricing gaps between sellers seeking top dollar and buyers unwilling to overpay. Partial financing, included modular buildings or appliances, extended closing times – these types of appealing terms persuade negotiators to stretch purchase amounts in return.

Know When to Walk Away

Emotional attachment to a property or sunken costs from failed deals tempt overeager buyers and sellers to accept subpar terms. But patience and knowing one’s “walkaway number” pays dividends. Being willing to forgo bad bargains positions dealmakers to hold out for agreements at truly satisfactory prices points aligned with current conditions.

Working With Land Buying Companies

For those seeking to quickly liquidate land holdings at reasonable prices, specialty real estate investment firms offer solutions without the hassles of traditional sales. Companies like [Land Boss] buy properties directly with all-cash offers. Sellers skip showings, open houses, and varied listing costs. The ability for these buyers to acquire land at below full market value supports their profit model when reselling holdings down the road. Ultimately, it serves as a mutually beneficial exchange.

Key Takeaways

The Louisiana land market provides exciting opportunities but requires local knowledge to navigate effectively. Residents benefit from cultivating an understanding of regional factors driving supply and demand in order to evaluate property values accurately when buying, selling or investing. Though pricing land appropriately poses challenges, those armed with the right market analytics and negotiating tactics can consistently close deals on favorable terms. Reach out now to start leveraging Louisiana’s abundant land prospects.

Final Thoughts

Navigating Louisiana’s complex property market presents unique rewards and risks. From bustling urban zones to remote rural acreage, land values fluctuate across the state based on development potential, infrastructure access, tourism appeal, and exposure to extreme weather. By understanding local supply and demand drivers in key market segments, buyers and sellers make informed decisions to equitably price properties. Setting realistic terms while leveraging creative negotiation strategies positions deal-makers to culminate agreements where all parties walk away satisfied. Though never easy, taking a nuanced approach to evaluate parcels based on comparative sales data, growth indicators and carrying costs allows professionals and individuals alike to thrive amid the Pelican State’s prosperity.

Frequently Asked Questions (FAQs)

What parts of Louisiana have the strongest land markets right now?

Some of the hottest land markets currently are in the Baton Rouge metro area and along the I-10 corridor from Lafayette to New Orleans. These regions are seeing population and job growth, driving demand for both residential and commercial development sites. Rural acreage in north Louisiana's hay farming region is also in demand.

Do flood zone classifications impact land values in Louisiana?

Definitely. Properties located in FEMA designated high risk flood zones, like zones A or V, often have much lower values than comparable parcels in moderate or low risk zones. Elevation levels, flood control infrastructure, and past storm damage history also influence pricing.

Should I get an appraisal before selling my Louisiana land?

Appraisals provide helpful guidance to estimate a property's fair market value based on recent comparable sales and current listing prices. However, they also cost $300-$500 for vacant land. Instead, you can research prices for similar nearby parcels that sold recently to value your land.

How long does Louisiana land take to sell on average?

In competitive markets near major highways or development hotspots, desirable parcels may sell within 1-3 months. But in rural areas with fewer buyers, it typically takes 6 months to 2 years to sell even at below market prices. Managing expectations on timeline is key.

Is it risky to sell land directly to investment companies well below retail pricing?

There is some risk of leaving money on the table when owners sell significantly under appraised values without shopping around offers. However, land companies provide guaranteed closings without showings or marketing hassles. For many sellers, the convenience and speed of all-cash sales outweighs the tradeoff of maximizing profits. Just be sure to research fair pricing based on recent sales of comparable lots.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.

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