One of the most important parts of building a custom home is selecting the right lot to build on. Remember the saying, Location Location Location? Where you live is just as important as the beautiful home you live in.
Your choices for land are generally going to be a city lot, suburban lot, desert lot or tract-style development. Selecting a lot in the right location is crucial, but timing can have a lot to do with when to buy the perfect lot.
We decided to take a look at the current land market, with some help from our friend Rick Sack, a local Realtor and Land Specialist with Long Realty. Here is our Q&A on the current land market, answered by our favorite land expert.
Sombra: Rick, what part of the Tucson metro area do you consider custom home lots to be in the most demand?
Rick: I think currently the area of greatest demand for custom lots is Northwest Tucson which encompasses Oro Valley on the east and moving west to Marana and I-10 and basically everything N. of Ina Rd. With excellent proximity to the shopping, restaurants, amenities, parks, golf courses and medical facilities of Oro Valley along with easy access to the freeway and the downtown area via Twin peaks Rd., The recreational opportunities of Tortolita Mountain Park and the development of the Dove Mountain master planned community this area is experiencing strong demand.
There is still a large inventory of affordable lots including many large , gated luxury communities( La Reserve, Stone Canyon, Canyon Pass, the Gallery), and unsubdivided, estate sized 3+ acre lots. In the past 6 months 53 lots priced above $50,000 have been sold and closed.
Sombra: Separately, which area of town do you consider to be best value, and why?
Rick: For custom lots I see the West side as the area that offers the best values. For example I am currently representing a buyer who's moving here from El Paso who found a 3.3 acre site bordering Saguaro National Park West with electric and phone service for $44,000. Even with the additional cost of drilling a well, which he may or may not choose to do, to find a lot with this type of privacy and exceptional views at this price is an excellent value. There are a variety of 3.3 acre lots available in the gated, luxury communities of Tucson Mountain Reserve, Saguaro Cliffs, Starr Pass Estates and Trails End Estates in the $100,000 range. Further, unsubdivided, 1-3 acre lots with all utilities can be found starting as low as $60,000. With a short commute to Downtown, U of A., St. Mary's Hospital, Pima College and even the airport area, this area is currently what I consider to be underpriced.There have been 28 sales of lots above $50,000 over the last 6 months.
Sombra: Your latest Tucson Land Report indicates its a buyers market, but it looks like sales are trending up. How long do you think the buyers market will last? I know you don't have a crystal ball, but if you were to give an educated guess?
Rick: We're still working through selling a huge inventory of unsold lots from an 8 year Real Estate Recession, 2006-2014. This was a period where most custom lots lost 40-50% of value and in some unusual cases as much as 75% of value. There were very few land buyers during this time creating a large surplus. As the market has begun to get better, many seller's are presuming that land values are going up faster than is actually happening and thus are starting to price their lots unrealistically high. As a result there is a large discrepancy in price between listing price and selling price of lots; in many cases 25-30%.
Buyers are sophisticated and smart and look at sales prices of comparable lots before making offers; asking prices mean very little. The lots that are selling are those that are the most aggressively priced the others are languishing on the market. Buyer's have lots of choices and if they don't perceive they're getting a bargain, they turn to other available lots. Thus, we are seeing a high volume of land sales yet sale prices are relatively soft. I expect the "buyer's market" to continue for the next 2 years or so and then gradually shift to a more level playing field between buyer and seller.
Sombra: Thanks Rick for taking the time to share your insights!
Rick Sack has over 38 years experience as a Realtor and specializes exclusively on land and property. He maintains a very informative blog and website at www.buytucsonlots.com.
Ready to build your new Custom Home? Whether you already have a piece of land or are in the market for one, contact us - we can help you get started!