Is Utah Land a Good Investment?

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Is Utah Land a Good Investment?
By

Bart Waldon

Utah is a western state known for its iconic red rock landscapes, an expanding tech sector, and booming population centers like Salt Lake City. With economic tailwinds and scarce private developable land supply amid abundant natural beauty, Utah real estate has attracted growing investor interest and money inflows.

But navigating the intricacies of the Utah land market takes savvy and rigorous planning. From proximity to protected public lands to mineral rights conflicts and drought concerns, risks exist if failing to research thoroughly. So, what exactly should potential buyers and investors know to make informed decisions?

Weighing the Utah Land Market Growth Thesis

Predicting land valuation trajectories follows a combination of art and science. And in Utah, recreational attributes intersect with urbanization patterns and commodity shifts to make analysis complex. But several macro drivers suggest investor enthusiasm that lifted land values over 20% across 2021 may have merit, if following prudent due diligence:

  • Utah’s 3% annual GDP growth and nation-leading job creation is driving residential and commercial developments outward from Salt Lake City, Provo, St. George and other metros experiencing major demographic surges. This rising demand lifts values for vacant perimeter lands and sites adjoining new master-planned communities.
  • With in-migration from coastal states surging, Utah home prices rose over 25% in 2021 - third highest nationally. New construction struggles to keep pace amid statewide labor and materials shortages. An estimated 15,000 housing units fall short of demand each year. More speculation is flowing into land plots for residential builds.
  • Departures of California firms like Oracle, HewlettPackard and Charles Schwab reflect businesses embracing Utah’s low taxes, cost advantages and talent pool growth. Major office expansions from Amazon, Micron, Goldman Sachs and others will drive commercial land development tailwinds.
  • Southern Utah recreational hubs near Zion National Park are booming, with Washington County alone growing over 30% since 2010. New resort properties and retirement communities lift values especially for lands abutting protected public lands. Ski markets around Park City also field intense demand from second homeowners.

In combination, these trends paint a compelling picture of upward growth trajectories ahead. But realizing profitable investments requires honing in on specific sub-regions and sites poised to capture disproportionate gains amid a generally rising tide.

Key Due Diligence Steps Before Buying

Because no two land parcels are identical, extensive property-specific due diligence is mandatory before making any purchases in Utah’s complex terrain. Items investors and buyers should scrutinize closely include:

Title and Ownership Verification

Unlike other assets with clear centralized registries, land title transfers historically faced limited visibility - especially across Utah's rural expanses. Confirming clean ownership chains requires exhaustive title searches along with strong surveillance. Watch for red flags like heirs’ property disputes or challenges from purported mineral/water rights holders against deeds.

Surveys, Easements and Access

While plats provide general boundary mappings, on-site professional surveys are essential for vacant lands lacking recent site plans to validate acreage, incorporate any encroachments and map legal easements crossed by roads, pipelines or wiring. If landlocked parcels, access rights must be notarized via ingress/egress agreements with neighboring owners.

Site Conditions Assessment

Photographs easily distort or omit land characteristics informing valuation and development costs. Personally, walking the property helps gauge topography, vegetation, environmental attributes, preliminary grading budgets, fencing needs and more while also scouting any concerning issues like dumping, erosion, unauthorized usage or trespassers that may complicate closing transactions.

Zoning Codes and Density Allowances

Carefully probe local county authorities on any zoning restrictions applicable to lands - especially parcels proximate to protected public lands or important wildlife corridors that commonly face stringent density limits even if otherwise suitable for building. Lands zoned for agricultural grazing may lack pathways for rezoning to residential use.

Infrastructure Feasibility and Expense

Vast price differences emerge between raw vacant lands and “shovel ready” sites with established road access, electricity, water/sewer connectivity permitting prompt construction starts. Buildout expenses must be overlaid on comp value analysis, so engage civil engineers to estimate infrastructure capex budgets for coveted parcels.

While time and resource intensive, such due diligence allows buyers to mitigate risks like unseen title clouds or zoning barriers that massively erode land values and development plans if undetected before closing deals. Partnerships with experienced local firms help navigate these intricacies.

Growth Projections Vary Widely Across Utah

Drilling down to county and metro forecasts, some regions should dramatically outpace Utah’s already elevated statewide projections. The most explosive population and construction expansion is expected within areas like:

Washington County

Anchored by St. George, this Southwest county gained over 30% in residents since 2010. Retirees flock seeking warm weather, golf and proximity to Zion National Park spurring construction of new master-planned communities. 1,100 building permits issued in 2021 struggled to match demand. And ample vacant land coupled with business relocations make this the state’s premier growth epicenter.

Utah County

Thanks to tech expansion, the Provo-Orem metro population swelled by 23% in the past decade driving intense housing development. Major firms like Adobe, Ancestry.com and vitamin/supplements maker Nature’s Sunshine relocated here with young skilled talent migrating inward. New communities sprout across vacant acreages in cities like Vineyard along Utah Lake.

Cache & Iron Counties

Logan and Cedar City are emerging Northern Utah magnets for outdoors enthusiasts with college presence and affordability pulling residents. New single family permits jumped over 30% in 2021, still leaving inventory shortfalls. Outdoor rec and smart ag/logistics land plays should pay off.

Conversely some rural counties lacking business diversity or anchored by struggling commodities face population declines even amid statewide upswings. Carefully weigh the region-specific advantages powering metro area growth when evaluating sites.

Navigating Risk Factors in Utah

Alongside the tangible value creation catalysts lifting real estate, less obvious risk factors also permeate Utah’s land market. Savvy investors mitigate downside threats around:

Water Rights & Supply - Utah’s arid climate and complex prior appropriation laws make confirming secure water access essential for irrigation, drilling, dust mediation and other activities central to land utility. Drought conditions strain supply amid battles between ag, residential and government usages.

Commodity Volatility - Energy, minerals and agriculture fluctuate, impacting both property tax receipts for local counties and real estate ripple effects from drilling/mining lands. Fossil fuel and nut/grain pricing surges in 2022 buoyed real estate, but prolonged downcycles damage market pricing.

Native Land Repatriation - Citing broken 19th century treaties, tribes like the Navajo recently reacquired over a million acres into sovereign lands across Southern Utah. This shrinks private property inventory while advancing other land claims likely reduces market certainty.

BLM & Conservation Policy Shifts - Given massive federal land ownership, conservation priority changes influence development viability on significant swathes of Utah acreage. Market access may tighten under renewable energy, species protection or monuments expansions.

While no investor can fully control macroeconomic policy, keeping abreast of shifts and targeting subsectors less exposed to volatility smoothens returns.

Approaching Land Partnerships

For newcomers and smaller buyers diving into Utah's intricate property terrain, partnering with specialized resident firms brings advantages when locating and evaluating parcels. Veterans often enjoy access to:

  • Off-market inventory bypasses hot MLS competition
  • Proprietary data insights on pricing, demand drivers, site issues
  • Expedited legal/physical due diligence support
  • Flexible purchase terms and coordinated land flips
  • Value optimization expertise around developments or land swaps

However, conflicts of interest occasionally arise from mismatched return objectives. And outsider speculation based on surface-level research risks overpaying if failing to drill down on locational nuances. Clarifying priorities, leveraging local network insights, and co-investing alongside experienced operators can balance risks.

Conclusion: Plotting a Prudent Course

Utah real estate broadly - and vacant land specifically - remains characterized by major upside potential but also risks requiring extensive planning to mitigate. By concentrating on Utah's best positioned metro growth clusters, validating property specifics through careful analysis, and enlisting specialized partnerships, investors stand to realize outsized risk-adjusted returns over a long-term hold horizon. However, those either buying sight-unseen based purely on big picture enthusiasm or failing to cement development rights risk disappointment. Balancing optimism with rigorous due diligence and local market mastery illuminates the most promising path forward.

Frequently Asked Questions (FAQs)

Is the demand for housing and development high in Utah? 

Yes, Utah has experienced strong population growth over the past decade, with estimates ranging from 18% to 30% growth across various counties. This rapid in-migration combined with job growth and low housing inventory has created substantial demand for more housing and development across the state.

Which Utah metro areas are seeing the fastest land value growth? 

The St. George metro area in Washington County has seen land values increase by over 30% recently, followed by Summit County and Utah County which both benefit from strong tech sector expansion and recreation tourism catalysts. These markets centered around southwestern Utah and the Wasatch Front have demonstrated the hottest land valuation growth.

How risky are mineral rights when buying Utah land plots? 

Utah has substantial mining and drilling activity that expose land investors to commodity volatility. It's essential to thoroughly assess any severed mineral rights included with surface land purchases to gauge development limitations as well as royalty payment potentials if not acquiring unified mineral rights. Complex mineral right valuations make their risk level case-by-case.

How difficult is confirming water rights for land parcels in Utah?

Between prior appropriation doctrines favoring historical users and recent drought conditions, Utah's complex web of water rights laws presents major due diligence challenges. Investors must partner with hydrology specialists and attorneys to trace back individual site entitlements to aquifers, rivers or conveyance pipelines before acquisition to mitigate risks.

Which types of land zones face the strictest development regulations? 

Lands bordering protected areas like National Parks and Monuments or Tribal Lands as well as wildlife conservation/watershed regions generally face the tightest zoning density limits on any private construction. Investors must confirm precise allowable usages for sensitive sites with county planning authorities before determining valuation.

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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