A: I have seen real estate increase in value in three general progressions:
- Linear Growth: Examples are farmland, residential housing. Characteristic is already-developed real estate that is in an area with no strong limitations on supply. The slope of the line is dependent upon the macroeconomic climate of an area.
- Hockey Stick Growth: Examples are undeveloped land at the edge of a growing town or infill re-development opportunities. Characteristic is land value is low but “tips” to become more valuable once a city or development catches up to the area.
- Exponential: Examples are Manhattan and San Francisco real estate. Characteristic is strong economic climate and limited supply due to geography or regulation.
I haven’t seen any others though they may be out there.