Which type of property is primarily valued using the income approach?

The income approach to property valuation is a method used primarily for income-producing properties, such as apartment buildings, office spaces, shopping centers, and any other commercial real estate where income generation is a key factor in assessing value. This approach calculates the present value of expected future cash flows generated by the property, taking into account factors like rental income, operating expenses, and capitalization rates.

In contrast, residential single-family homes are generally valued using the sales comparison approach, which compares the property to similar homes that have sold recently. Vacant land typically requires a different valuation method as well, often based on comparable sales of similar parcels or the potential for development. Historical buildings may also need unique considerations, potentially involving factors that include historical significance and preservation costs, and may not be primarily valued based on income.

Thus, the income approach is specifically tailored to properties that consistently generate income, making it the most appropriate valuation method for income-producing properties.