Land value is based on its highest and best use as if it were vacant and available for development. Improvements are any man-made objects that are permanently attached to the land, such as buildings. Personal property can include furniture, fixtures, commercial equipment, appliances and even entire manufactured homes which are not installed on a permanent foundation.
Land value is determined by the dynamics of the local real estate market.
When supply exceeds demand, this causes land values to rise very slowly, remain the same or even decline. When demand exceeds supply, this causes land values to rise. However, market dynamics are not quite that simple. For example, ocean front land can increase in value at the same time that nearby commercial land is declining in value, because the two types of property have different supply and demand characteristics. Also, land values can rise while improvement values decrease.