In my continuing effort to understand the underlying forces that determine the value of homes, from time to time it is important to ask, What is the price of vacant land? Can you buy vacant land a build a house for the same price or less than you would pay for a previously occupied home?
In the last week I looked at two parcels help get a handle on what sort of potential there might be to build a home rather than purchase an already existing home. One of them attracted my attention because it is listed for just $18,500 and is about 1/2 an acre fairly close to Grass Valley. In a market where city lots for single family homes are listed and sold between $75,000 and $125,000, I thought this lot might be something of a bargain, so I went to have a look.
13340 Rough and Ready Highway
The second lot I sent to see is located in Nevada City near the upper portion of Banner Mountain. This property is in a subdivision that included many high end homes, thickly forested property, and large lots. The property has a well and soil testing, power is near by, and over 1.5 acres. It is listed for $109,000. Typically lots in this neighborhood sell for over $125,000. I wanted to see if this one was bargain.
11784 Blazing Star
The reality of the land market is that only a very small percentage of the property offered for sale over the course of a year is property where it is practical to build a home. A large number of lots for sale are too steep, have difficulty with wells or septic issues, or are crossed by easements that restrict the building envelope in ways that make the placement of the home impractical. Sorting out which lots are good for homes and which ones are not requires a continuously looking at inventory and watching to see what is offered and what sells.