By Jeff D. Opdyke
From The Wall Street Journal
Online

The real-estate market has a new cry: Land ho!

As the nation's housing market cools, there's a rush to snap up undeveloped property as buyers stake their claim on everything from New England creek-front parcels, to mountainous woodlands in Tennessee, to big-sky vistas in Montana.
Some people are buying dream lots now, while the land is available and prices affordable, with plans to one day build a vacation or retirement home.
Others are investing in recreational property they want to use today: In rural west Texas, for example, scrubland that wouldn't even sell a few years ago has become so popular with deer hunters and the off road-vehicle set that it now fetches premium prices from buyers flying in from Florida, Illinois and California.

In the face of demand like this, prices for undeveloped land in many parts of the country are shooting up. Around the country last year, farmland values rose at their highest year-over-year rate -- 11% -- since 1981, according to the Agriculture Department. Rural land in Texas hit a historic high of nearly $1,500 an acre on average last year, up about 75% since 2000, according to Texas A&M University Real Estate Center.
In some ways, buying land and buying a second home are similar. Both are capable of generating income -- a house through rental income; land through leases for farming, hunting, fishing, ranching or mineral rights. And in both cases, the first three rules of a successful purchase are location, location and location.

In some circumstances, it can make a lot of sense to buy land well in advance of your intention to build on it, especially if you find a scenic plot you're particularly fond of. Over the course of years or decades, the price of the land is likely to escalate faster than the cost of one day building a house on it. On undeveloped land, real-estate taxes are typically lower, and you have no expenses for electricity, water and insurance.