THE VALUE OF LAND

 

During weekly chats with a friend, we discuss the usual topics including the Steelers, political developments, and the economy. My friend is sure an economic collapse is around the corner that will be worse than the Great Depression. Now that my wife and I have purchased a new home, he advises us to rent our current abode, get out of the stock market altogether, and to accumulate as much land as possible.

This position is easy for my friend to take. He lives on 130 acres of property with plentiful mineral rights. My wife and I are not going to trade in our retirement portfolios and become landlords to deal with tenants and broken appliances. However, my friend’s point is well taken. The value of land is underestimated and often misunderstood.

According to Zillow, the total value of the U.S. housing market is a record $55.1 trillion as of mid-2025, a nearly $20 trillion jump since early 2020. Nine major metro areas hold one-third of the total market value. While rural farmland is valued at $4,000-$5,500 an acre, with cropland higher than pastureland, prime urban real-estate can exceed $500,000.

Not all land is in private hands. Most people are unaware that the federal government remains a significant landowner, especially in the West. The government owns around 640 to 650 million acres, which is roughly one-quarter to one-third (28-29%) of the total U.S. land base.

The value of land has always been an important issue in the development of the United States. The Native American activist and scholar, Russell Means, once said, “Early American democracy was about land." This widely held view, known as the frontier theory, believes that westward expansion and available land were instrumental in bringing disagreements with the British to a head.

Prior to the Revolution, the British sought to limit colonial development west of the Alleghenies to keep peace with native Americans. This motivated Scots-Irish and German settlers seeking cheap, fertile soil away from the East Coast to become patriots.

Following the Revolution, this push west helped develop America’s brand of democracy by fostering citizenship and self-reliance. Unlike Europe, where the wealthy held most of the land, any settler and, later, poor immigrant could become a landowner.

Two recent books present very different viewpoints in addressing the value of land. The first, Land Power: Who Has It, Who Doesn’t, and How that determines the Fate of Societies, was written by Michael Albertus, political scientist at the University of Chicago. Albertus does not buy into the belief that the financial industry and technology will replace land as the world’s engine of social change. He makes the case that land has always been humanity’s greatest asset and will remain so.

Fundamentally, Albertus tells us, “Land confers identity and a sense of belonging. A connection to land provides people a sense of who they are in the world and the communities they belong to.”

However, Albertus has a more significant point to make on the importance of land. He wants to show how power has always been fused with land. He adopts the concept of “reshuffling” to show how political elites have seized land from some people and then granted it to others. Albertus’s sweeping study of land ownership covers centuries of case studies to illustrate his thesis of reshuffling land to gain power.

A few of his examples will illustrate the point. The French Revolution sanctioned the mass appropriation of land from the nobility to smaller farmers and to the urban middle-class. European colonization seized large swaths of foreign land, dispossessing those that already inhabited them. In the United States, Albertus documents the case of the Cahuilla Indians of California’s Coachella Valley. These native Americans were first confined to reservations and then evicted from those lands in the 1950s.

Albertus provides well-researched examples of collectivization land reforms that failed, causing famine, and less radical programs that increased equality. In the Stalinist Soviet Union and in Maoist China, the state sought to eliminate private landholding and to industrialize agricultural production, leading to economic disasters. In South America (Bolivia, Columbia, Mexico, Peru), more grassroots cooperative land reform brought substantive social change for impoverished rural citizens.

The second book, The Land Trap: A New History of the World’s Oldest Asset, by Mike Bird, Wall Street editor of the Economist, addresses the value of land from the financial angle. Tracing three centuries of history, Bird explores how land became the anchor of the global banking system, driving everything from soaring housing prices to increased international tensions. Bird explains the economics of our most basic asset.

Historically, land ownership created hereditary wealth that benefited the rich while deepening economic divisions in society. However, it is what Bird has to say about the connection between present-day global financial stability and land that is most interesting. Land drives the modern financial system, but also is responsible for its crashes. Mass home ownership made mortgages and home equity loans dominant sources of lending. Economies do well when land values rise and stall when they fall.

Following Japan’s 1980s land bubble burst, the economy tanked for decades. China’s recent real estate boom deflated into thousands of empty residential buildings and millions of unoccupied apartments. The U.S. subprime mortgage bubble caused the economic crash of 2008.

Bird concludes that modern finance remains rooted “in the dirt beneath our feet” – in land.