What is ‘Land Value’
Land value is the value of a piece of property, including both the value of the land itself as well as any improvements that have been made to it. Land values increase when demand for land exceeds the supply of available land, or if a particular piece of land has intrinsic value greater than neighboring areas (e.g. oil can be found on the land).
Explaining ‘Land Value’
Owners of land use land value to determine how much to charge other parties for its use. For example, an individual who is renting out several acres of farmland, for use by ranchers for grazing cattle, will determine an amount to charge for its use by looking at the market value of the land compared to land taxes and the capitalization rate.