Evaluating the Michigan Land Market

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Evaluating the Michigan Land Market
By

Bart Waldon

Michigan is a state located in the Great Lakes region of the United States, known for its diverse landscapes ranging from the woodlands of the Upper Peninsula to the sandy beaches along Lake Michigan. With a land area totaling over 56,800 square miles, there is plenty of available land for sale across the state. For those looking to purchase vacant land in Michigan, it is important to understand the factors that influence the local land markets in order to find a good deal.

Overview of the Michigan Land Market

The land market in Michigan has remained relatively stable over the past decade, though prices and activity vary significantly by region. According to the Michigan Realtors association, the average price per acre of vacant residential land in Michigan as of 2022 was around $16,500. However, land prices can range from as low as $2,000 per acre in rural, undeveloped areas to over $100,000 per acre in desirable recreational and waterfront locations.

Demand for land is driven by a mix of buyers looking for recreational properties, future retirement homesites, land for farming and forestry, and sites for residential and commercial development. The Upper Peninsula and northern Lower Peninsula tend to attract buyers looking for hunting camps, seasonal cottages, and other recreational parcels. Along the shores of the Great Lakes and inland lakes, there is strong demand from those seeking waterfront lots for vacation homes. In suburban and exurban areas around cities like Detroit, Grand Rapids, and Traverse City, there is demand for land for residential development as well as small hobby farms.

Key Factors Influencing Michigan Land Values

There are several key factors that impact the value of vacant land parcels in Michigan:

  • Location - As with most real estate, location is king when determining land values in Michigan. Parcels located near major cities and towns or sited on desirable natural features like lakes and rivers command premium prices compared to remote rural land. Proximity to transportation networks and infrastructure also positively impacts value.
  • Zoning and Land Use Regulations - The designated zoning and permitted uses for a parcel will affect its market value. Land zoned for residential, commercial, or industrial uses typically commands higher prices than those zoned for agricultural or recreational use. Parcels that allow for higher density development are more valuable.
  • Access and Utilities - Land with good road access, availability of public utilities like water and sewer, and access to power and internet will be worth more than land without these amenities. Installation costs for infrastructure can be high, so serviced lots command premiums.
  • Natural Features - Characteristics like lake frontage, river access, scenic views, stands of mature timber, and varied topography enhance a parcel's desirability and value. Even wetlands and floodplains can be viewed as amenities by conservation buyers.
  • Improvements - Any improvements made to the land, like well installation, driveway construction, fencing, or outbuildings will add value over raw vacant land. Even partial clearing may enhance value for some buyers.
  • Development Potential - Land suitable for subdivision into multiple lots, residential housing, commercial buildings, or industry will be more valuable than rural land with little development potential. Speculators may pay premiums if a property holds future development promise.

Regional Differences in Michigan Land Prices

Land values can vary significantly between regions within Michigan based on economic conditions, demand drivers, and land use patterns:

  • Upper Peninsula - The U.P. has the most affordable land prices in Michigan, averaging $3,500-$5,000 per acre. However, recreational and waterfront parcels may sell for up to $10,000 per acre. Rural, remote land can still be found for $1,000 per acre.
  • Northern Lower Peninsula - Moving south, land prices rise to $5,000-$10,000 on average. Recreational properties range from $10,000-$30,000 per acre. Demand is high for hunting lands and waterfront.
  • West Michigan - Cities like Grand Rapids and Muskegon anchor this region. Farmland sells from $5,000-$10,000 per acre, with rural recreational land from $10,000-$20,000. Near urban areas, land can cost $50,000 per acre or more.
  • East Michigan - Home to Detroit, Flint, and Ann Arbor, east Michigan sees more variation in land prices. Urban fringe areas can top $100,000 per acre. Rural mid-range prices are $5,000-$15,000 per acre.
  • Southwest Michigan - Fronting Lake Michigan, this region has some of the highest land prices including choice waterfront at over $200,000 per acre. Away from the lakes, farmland is $8,000-$12,000 per acre.

Tips for Researching and Valuing Land in Michigan

For those looking to purchase vacant land in Michigan, here are some tips on researching parcels and determining fair market value:

  • Check county GIS property data for details on parcel boundaries, ownership, zoning classification, property taxes, and land use regulations. This data can help narrow your search.
  • Work with a knowledgable local real estate agent active in the specific area and land market you are interested in. They will know what drives values at the local level.
  • Look for comparable land sales in the county over the past 1-2 years to gauge typical per acre prices in the area and for similar type parcels. Sale prices will help you establish benchmarks.
  • Consider having an appraisal done for any higher value properties you are seriously considering. Appraisals provide impartial professional valuations based on recent sales data.
  • Factor in development costs like access road building, utility extensions, clearing/grading when evaluating the offer price for raw vacant land. Improvements add significant costs.
  • Location influences value, so tour potential parcels and the surrounding area. Evaluate proximity to local amenities and services, as well as accessibility.
  • Account for seasonal and market trends in your region when valuing land. Prices may rise in spring/summer peak buying season compared to fall/winter.

Key Takeaways on Michigan Land Valuation

The diverse landscape and regional economies across Michigan make for a varied and complex land market. Prices per acre can range from just a few thousand for remote rural parcels to over $100,000 for prime waterfront lots. Understanding local zoning rules, land use regulations, infrastructure availability, development potential, and recent sales are all key to accurately evaluating land parcels and making sound investment decisions. While low priced land can be found, prime parcels in high demand areas along the coasts and near urban centers will continue to command a premium. Working with a knowledgeable agent and appraiser can help buyers new to the Michigan land market navigate the process and avoid overpaying.

Best Practices for Evaluating Michigan Land

Dig into County/Local Records

  • Search county GIS property maps for parcel boundaries, ownership, zoning classification, property taxes.
  • Check county assessor's site for recent surrounding vacant land sales to gauge prices per acre. Look for parcels with similar geography, zoning.
  • Review local planning documents for approved and proposed developments that may impact future land values in the area.

Consult Local Experts

  • Hire an agent very experienced in your focus area - waterfront, farmland, woodlands, etc. They will understand micro-level demand drivers and value factors.
  • Consider having an appraisal done by a professional appraiser familiar with the region for higher value properties. Appraisals provide impartial valuation.

Visit Parcels and Neighborhoods

  • Personally view each property and surrounding lands. Check accessibility, proximity to amenities and infrastructure.
  • Drive varying times of day and week to observe activity levels and neighborhood vibe.

Account for Improvement Costs

  • Factor in development expenses - clearing land, installing utilities, extending road access. Improvements add substantial costs that influence land pricing.

Time it Right

  • Be flexible on timing and purchase timeline to take advantage of seasonal fluctuations or changing market conditions.
  • Understand value may peak in late spring and summer when demand is highest.

Final Thoughts

Successfully navigating the Michigan land market requires a nuanced understanding of the diverse regional markets and hyper-local factors that drive values. While remote rural parcels can still be found for under $5,000 per acre, prime waterfront lots sell for over $100,000 per acre in high demand lakeside communities. Utilizing county records, tapping local real estate expertise, directly viewing properties, and accounting for improvement costs will enable prospective buyers to accurately assess land parcels. Being flexible on timing and watchful of seasonal trends can also help secure a property at a fair price. With thorough research and patience, sound investments can be made even in a complex market like Michigan. The rewards of owning a slice of Michigan's varied landscape may be worth the diligent effort.

Frequently Asked Questions (FAQs)

What are the main factors that influence land values in Michigan?

Location, location, location! Like most real estate, proximity to amenities like lakes and cities drives Michigan land prices. Zoning and permitted use is also key - land allowed for dense housing or commercial use is worth more. Parcel improvements like a well or driveway add value over raw land. And of course waterfront commands big premiums.

How can I research land sales to inform my offer price?

Comb through county assessor records for recent vacant land transactions near your target parcel. Compare price per acre for properties with similar geography, zoning, and improvements. This comps research gives you solid benchmarks to formulate an offer price.

Should I get an appraisal on a high value property?

Absolutely! Appraisals cost money but provide experienced objective valuation by a local professional very familiar with the area’s land values. For any property over $100k, an appraisal prevents grossly overpaying.

Does seasonality impact land prices?

It can definitely. Prices are often higher in late spring through summer when out-of-state buyers flood Michigan for vacation. Less competition in fall and winter allows for negotiation. But sellers may prefer waiting until peak season to list.

How can an agent help me navigate the Michigan land market?

A good local real estate agent familiar with your target properties knows the hyper-local demand drivers and niche value factors at play in that micro-market. An agent’s expertise helps you avoid overpaying and steers you to bargains other buyers may overlook. Invaluable for newcomers to the area!

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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