We own some lakefront property in a resort area. It has increased in value over the years as a hedge against inflation. But, with gasoline scarcer and more costly, will this type of property eventually lose value? What do you predict? -- R. C.
Houses in outlying areas where long commutes by car are required have lost relative value. There appears to be a trend toward moving back into cities. These considerations involve daily use of an automobile. Resort or recreational properties, however, appear to be less affected, because the trip from home to lakefront occurs less often -- possibly only one round trip each year.
In the short run, say the next three to four years, the value of your property may plateau of decline slightly. Long term, the land value will likely continue to increase. You should ask yourself two questions:
1. What is your eventual objective? Do you plan to build your own hideaway and use it yourself? Or are you primarily holding the property as an investment?
2. If it is mainly an investment, are there other properties or investments that would increase in value more over the long pull than the lakefront property? The only way land or lots yield a return is when their sale price is higher than the purchase price. A rough rule of thumb: Unless the market value of the property doubles every five years, you're probably losing.