Why Most Rural Landowners Undervalue Their Land

There’s an old saying in real estate that the price of land comes down to “location, location, location,” and that is certainly true in Ontario. In most of Southwestern Ontario, land can be classified into two categories: settlement areas and non-settlement areas. When Municipalities review their Official Plans and expand the urban boundaries, those landowners can often feel like they have won the lottery. When land is brought into the urban area, it can now be developed for a variety of uses, including residential subdivisions, commercial malls, and employment uses. If that land was previously in a protected agricultural area, the simple change of a line moving on a map can often increase the value of the land by a factor of 10.

While moving land from outside the urban area into it is a proven and effective way to increase value, there are often-ignored, seldom-used planning tools that can achieve a similar effect. Today, I would like to talk about why most rural landowners severely undervalue their land, and how you can increase the value of your land even if your land is nowhere near an urban area.

The first thing that any landowner looking to maximize value should know is the concept of highest and best use. This term is top of mind for both land use planners and economists. The highest and best use is the use of land that leverages its natural qualities (location, servicing, surrounding uses, access, etc.) and, based on those, identifies which uses would generate the greatest economic gain at the lowest marginal cost...

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