122 Catalpa Cabin in Grass Valley that has been stripped to the studs, listed for $139,000

I am always on the lookout for unusual properties that are good deals. This property is certainly priced at the lowest end of the scale, but unlike 156 Harris, which I looked at last month, which has a similar home but a much nicer lot,

156 Harris Street Home may need to be torn down? Sold in August for $119,000 relisted by the new owner for $147,000. No changes or improvements made.

this house has already been gutted out, but the lots is not nearly as large or in as nice a neighborhood. The home on Catalpa is right near the Highlands subdivision, which has 2 bedroom and 2 bathroom single story homes with single car carports, which are nicely appointed and sell for about $280,000. It is hard to see how this one bedroom house, even when it was fixed up nicely could sell for more than $250,000. Among the obvious challenges are the foundation, which appears to have been added sometime in recent past by pouring concrete inside form boards around an existing post and peer foundation. Instead of jacking up the house and then setting it down on the new foundation it looks like the home was left in place and foundation was added around the existing posts which means that the foundation walls are intermittently broken by post that originally held up the walls. I doubt that would satisfy the building codes.

Darkhorse, a South County Subdivision with seven lots for sale ranging from $110,000 to $297,000

Darkhorse is a subdivision with some 200 lots, but only 40 or 50 homes. Most of the subdivision is empty lots waiting for builders. It is not surprising that at any given time there are 5 to 10 that are for sale. People buy them thinking they are going to build a house, then change their minds, or just decide they want to use the money they paid for the lot for some other purpose, and the lot goes up for sale.
Darkhorse is not for everyone. In fact they have some of the most restrictive CCR rules of any subdivision in the county. Along with an architectural review process for every home, no home can be less than 2500 square feet, every home must have a garage, manufactured homes would not be able to meet the architectural requirements without changing the roof lines, and that would defeat the purpose of the manufactured home, so basically, if you are going to build a home in Darkhorse, it is going to have to be $750,000 home or higher. You can’t camp or put a trailer on your property, and you cannot build without obtaining all the permits.
So, why bother looking ant property this meets the needs of a very small number of buyers? The logic is simple. Anyone who looks for property in Nevada County sees these lots for sale. They are not advertised as “special” and the various restrictions on building do not show up in the online advertising, so these lots are mixed in with everything else that is for sale. It is important to know which properties are in this subdivision. Regardless of the home you want to build, prices in the county rise and fall based on the demand in every sector of the market. When premium priced lots in this subdivision go up or down they are responding to similar market factors that impact lots all over the county. This subdivision will take years, decades before it is completely built out with homes. The process of how it changes, and the price buyers pay for lots is bell weather for lots everywhere.

11751 Colfax Hwy. a 4.89 acre property listed for $171,000

I call this one, a “sleeper” because it is a large property tucked away in residential neighborhood that has lots as small as 1/2 acres surrounding it. The property is divided by a lush creek and has a 36″ culvert with solid road over the creek. There is some freeway noise, as this property is less than 200 feet from Hwy 174, but the privacy and undisturbed forest are not found anywhere except Banner Mountain and North Bloomfield. This one is absolutely unique.


Property Along Dog Bar Road and Oak Meadows

Over the last few days I have been looking at land in the area south of Alta Sierra and along dog Bar Road.
The properties in this video include a wide range of undeveloped land priced from $59,000 to $199,000. There are differences in topography that primarily impact the cost of development by limiting the location of the building envelope and the length and type of driveway that would be required to reach the building area. Most of these lots are so steep they would be not suitable for single story homes, and would require substantial grading to put in a flat area for a garage. There are many already developed lots in these same neighborhoods and home owners have mitigated every type of topographic challenge with grading, retaining walls, and homes that follow the contours of the land, but every mitigation has a price, and also restricts the functional character of the home that is built. You can’t build a single story home on a lot that has 20 degrees of slope for the entire property. It is not financially practical to build a home at the top of the hill, even if there are great views from the top of the hill, if there is no road to get there, and the property is not wide enough to allow the necessary switchbacks in the driveway.

None of these lots are easy to build on. 19711 Payton is the easiest to imagine putting in driveway and home, and it is listed for the highest price of the group, at $199,000 for 8 acres. The other lots seem like they would take extreme engineering and grading to make them workable for a home. That’s why I go out and look.

Two New Listings, both one bedroom and one bathroom homes under 700 sq ft on less than 1/10th of an acre 111 Stennet listed for $167,000 and 11175 McCourtney listed for $209,000

If you have been following my blog over the course of the summer you are aware that there are a fair number of homes in Grass Valley that are quaintly referred to as “miner’s cabins.” Back in the days when the mines operated the lowest wage workers lived in shack and cabins scattered all around the Grass Valley area. The surviving remnants of this original housing stock that dates back to the first for of the 20th century creates a legacy of single room homes that are scattered in various neighborhoods around Grass Valley. The East Colfax neighborhood has the highest concentration of these old miner’s cabins, but the stretch of McCourtney right near the fairgrounds has a few of these homes as well.
Because there are quite a few of these homes that come up for sale every year there is a comparable sales market just for these homes. Fixers and homes that are very run down can sell for as low as $100,000 while a super cute and updated and upgraded home might sell for as much at $250,000. A lot depends on parking, some value is given to the neighbors on the right and left of the subject property.

11540 Marilyn Court in Alta Sierra, 1352 sq ft 3 and 2 needs cosmetic work, listed for $299,000

Classic single story ranch style home located on a short cul-da-sac near the entry to Alta Sierra. Built in 1977, the exterior is worn and shows evidence of differed maintenance. It needs paint and probably a new deck. Windows look to be original, dual pain, but now 40 years old. Garage has sheetrock, but portably is not insulated. This home would make a great rental, but it has very strong pet odor which might dramatically increase the mitigation costs if subfloor has to be removed to get the smell out of the home. The lot is flat, but the landscaping is neglected. All fixed up and bright new paint and carpets inside and out, this home, with a bit of curb appeal landscaping, could sell close to $350,000. There probably is $50,000 in work to be done. Let’s watch this one and see what it sells for.

10 Lots Currently Listed for Sale in Alta Sierra, located along Brewer Road. All these properties are within mile of each other and about 2 miles from the Club House and Golf Course

18 land listings in Alta Sierra on Excel Spreadsheet with my notes

The other day I looked at 7 properties within 1 mile of the Club House. They were all smaller lots, in fill properties within otherwise fully built out portions of neighborhoods where the average age of the surrounding homes was over 30 years. The 10 lot shown in this video are about a mile or two further away from the Club House, still within the Alta Sierra subdivision, along Brewer Road, which is topographically defined by several year round creeks, a dozen seasonal drainages, a large long flat valley where Brewer Road cuts down the center of the valley, and the surrounding hills are extremely steep and filled with water courses that drain into the long valley where Brewer Road is located. All the properties in this portion of the subdivision present challenges to builders that require engineer for driveways and septic systems. All the easier to build lots have homes on them, some home owners have gone to great expense to build bridges and install culverts to make their property buildable. The large portion of undeveloped lots in this portion of the subdivision it itself an indication of the general difficulty and expense involved in developing these properties. That being said, the lots follow the general rule that the further you get from the golf course the large the lots tend to be, so most of these lots are one acre or more, and one of the properties in this group includes a collection of lots totaling over 13 acres that are being sold as single parcel. The explanation is in the video- The spreadsheet attached has all 17 properties I have reviewed in these two separate blog posts.
Conclusions- OK, so here is what becomes clear. You cannot just compare properties on the basis of the total acreage, the cost of developing the building envelope, the expected size of the building envelope, the location of the expected building envelope on the lot, and topographic viability of the lot are the real determinants of value. I hope this video and spreadsheet make that point clear. List price only measures the motivation of the seller, not value of the lot!
So are I have seen 18 properties for sale and comparing them straight across the board does not exactly give a useful measure of value because the lots as so different. However I am comfortable dividing the lots up into three different classes with a bit of overlap between them. If you look at the attached spreadsheet you can see how I divided the 18 lots into three classes and compared them only to other lots in same class. This classification can be further refined as I start to look at property outside the Alta Sierra Subdivision, but I wanted to start with this basic primer on land because Alta Sierra is microcosm of land in the entire county.

Of the ten lots I looked at today, only one was under one acre, that was the lot at 15788 Brewer with the water course right in the middle of the property. For all practical concerns this lot is untenable for use as a single family home, so for lots under 1 acre in size, my first pick is still the lot I looked at yesterday at 10847 Henson, .31 acres listed for $47,000. But you can’t really compare that with the much larger lots I saw today. In the second tier or size group, lots from about 1 to 3 acres, there were three properties I looked at today, all on Annie and none of them represented easy builds. One had the PGE power line and driveway so steep as to make it untenable without expense and engineering, one had no driveway but a serious water course encroachment that would cost tens of thousands to resolve (my listing) and one had evidence of a previous owner doing a makeshift grading plan where they build a driveway by pushing dirt into a water course, which will cost more to repair than if they had done nothing, and probably will cost five times the list price to make a viable building site. This information will be important in considering other lots that are roughly the same size outside of Alta Sierra, but I would not recommend any of these properties unless a buyer has a sophisticated understanding of the engineering challenges each one presents.
The third class of properties I looked at, are lots over 3 acres. So far I have looked at 7 of those. These lots are also the ones that are listed at the highest portion of the range so far, starting at $69,000 and going up to the most expensive property I have looked at to date, listed for $164,000 for the one property that is over 10 acres, at 16709 Brewer. It is this 3rd class of properties that requires deeper consideration. When purchasing a property over 3 acres the entire calculus of the development costs change. Not only do you have to consider how steep the driveway might need to be in relationship to the street, but there considerations about where on the property you can build a house. A larger property may not have a large building envelope, and what factors go into determining where you build almost certainly depend on your budget. What we can say is if you plan on building a 2000 square foot home that will cost you $200 per square foot to build, so your home is going to cost $400,000 and all the surrounding homes are valued at about $500,000, if you pay more than $100,000 total for the lot and development, you probably be better off buying an already existing home, which is why nobody is building homes on these lots! But say you want to build a manufactured home, and the home will only cost $250,000 to have installed. That allows you a much larger budget for development, but realize, development costs are never returned in increased value of the final home. if you spend $200,000 on your driveway it does not add $200,000 to the value of the home! In fact, a $200,000 driveway, if it is not done perfectly right, might work OK for you, as the home owner, but when you go to sell the house, the driveway that cost you $200,000 to install might actually cause a buyer to offer you less for your home. Things that cost on the front end of the development costs of a property are the worst for valuation purposes when you go to sell the property.
On properties over 3 acres there is tie, or a least a toss up between 12145 Rainbow, the 6.2 acre property that has the spring and a well, and needs a new culvert listed for $99,000 and the more developed property at 12357 Rainbow with 6.12 acres but already has the well, power, septic, and a building pad, listed for $142,500. The two properties are pretty equal in terms of what you get if you add the development costs the additional $40,000 you pay for the more expensive property is more or less equal to the development already included in the other property. I call these two a tie in terms of valuation, but both a better value than the other 5 lots are simply too expensive to develop or offer far a far less desirable building envelope.

Two Houses on the same street, one a brand new spec home at 920 Donald for $299,000, the other a fixer at 946 Donald listed for $239,000

Compare and contrast, a tale of two homes.
920 Donald is a brand new spec home, never lived in just completed by a contractor this summer on newly created lot at the corner of the Donald and Ridge Road. It is a small lot, and the home lacks curb appeal but the home really packs a nice punch inside, with new granite counters, open floor plan, and nice finishing touches that make very good use of the 1480 square foot three bedroom ranch styling. A new privacy fence helps mitigate the busy corner lot. Now, this home has been on the market for 60 days, and the original list price was $319,000. Now priced under $300,000 it is a far better value than just about everything else seen this year under $300,000. I think the reason it has not sold has to do with the busy corner lot. There is quite a bit of street noise coming from Ridge Road. We will just have to see how much this sells for.

But here is the ultimate market test of value. Just one vacant lot away, here is a 1966 fixer that has a lots of differed maintenance, a shabby appearance, and a garage that was converted into a an extra room with very poor workmanship. Siding, roof, and all the fixtures and appliances need attention. It is rental, and so it is not uninhabitable, but it needs paint, carpet, floor coverings, doors, windows… in sort, it needs a total rehabilitation. The good aspect of this house is the lot size is quite large, just under 1/2 acre, and it sits back off the main street so there is little or no impact from traffic. It is questionable whether this home would qualify for conventional financing.

So here is the question: if you can’t sell a brand new, never lived in, nicely appointed home for $300,000, how much money would have to put into this home if you paid the asking price of $239,000 to get it up to the same condition as the home next door, and what would it be worth when the remodeling was done? Clearly, an investor could not expect the home to sell for more than $300,000, and it surely looks like it would at least $60,000 to get the home back into near new condition. Does the price of $239,000 make sense here? That is exactly what buyers will determine over the next 60 to 90 days. Before Christmas I will give you a report on this head to head battle for the hearts and pocketbooks of buyers.

Lots in Alta Sierra priced under $70,000 less than 1 mile from the golf course

Excel Spreadsheet with Lots in Alta Sierra

OK, the link to the spreadsheet gives a summary of seven properties in Alta Sierra all priced under $70,000. The video is about 22 minutes long, a few minutes walking around each property.

So, I walked these seven properties today in Alta Sierra near or around the golf course neighborhoods. They ranged in price from $19,000 to $69,000. Several of the lots have been for sale for 5 years or more. The simple reason these lots don’t already have homes on them when every lot around them already has a home is because these lots present very difficult challenges to the home builder who takes them on. Every easy to build lot within a mile of the golf course long ago had a home built on it. The last home built on any street in this portion of the subdivision was in the 1990’s. No easy build lots left in this part of Alta Sierra.

So, what about pricing? Well, these lots hardly ever sell. In the last two years, maybe one of these type of lots has sold. We simply do not have comparable sales. Every lot is worth whatever seller is willing to accept and a buyer is willing to pay. List price is nothing more than the seller’s want, or need, or just plain fantasy.

One more point, the cost of the land is almost irrelevant compared to the development cost. A water meter and water hook up fees run on the order of $25,000. Some property owners have already paid some or all of those fees, but never buy a lot in Alta Sierra without making a call to the Nevada Irrigation District to verify that a water meter is available, and to confirm the cost. And remember, once you pay all those fees and get the meter installed, you still have to pipe the water to your home. That expense is in addition to all the other costs.

Septic is another huge cost for development. No septic system costs less than $15,000 even on any easy build lot, but add in the slope, and costs immediately rise to minimum of $25,000, and some septic systems cost $35,000 to $40,000. With the exception of the lot on Lawrence, not a single one of the properties I looked at today had any soils works done, and the lot on Lawrence had a perc test in 2008 that showed it had very poor soil and predicted a very expensive system would be needed. That in addition to fact it was steep lot to begin with. Just to find out what sort of septic system you need costs $2000 and requires an engineer. Since the sellers purchased these lots without doing soil testing, and have owned them, sometimes for decades without ever so much as sticking a spade in the ground, it is hard to imagine they will pony up for a soils test included in the price. Some of these properties have been listed for sale for over five years! How motivated to do you imagine these sellers are?

OK, so what is my recommendation? Well, actually, I did have preference: … drum roll…. And the winner is: 10847 Henson Way… .39 acres… $48,000… downslope, but not so steep that you wouldn’t be able to have some choice about where to place the home.

14373 Lodgepole Drive, 3bedroom and 2 bathroom home in Wildwood listed for $285,000

This is a pleasant home with lots of upgrades on the frame of a 1988 ranch style home on an upslope lot. The driveway is flat drive in, so the garage is 10 stairs below the main living level of the home. It is walkout flat into the backyard. Nice landscaping in front and back, and some additional parking next to the house. Interior is in good condition with granite counters, tile bathrooms, can lighting, upgraded floors, and there is a bonus room above the garage that could be an office, or extra guest bedroom. County records show the home is just 1120 square feet, so the bonus room probably not included in the size of the home. This home is one of the best value homes on the fall market. Just for reference, this home was briefly on the market back in July, listed for a week or so for $299,000. It was taken off the market and came back on today at the lower price of $285,000. I was told by the listing agent the seller is planning on painting the front stairs. When that is done, this home will be a complete package and move in ready. I rate it as a very good value.