https://www.dreamstime.com/stock-photos-sale-signboard-image24323853That’s right – tripled!  How could that happen?

In 2007 and 2008, the housing market dropped off the table – essentially no sales and no income. Developers holding land needed cash to survive and sold land for pennies. The bottom of the land market was in 2010 with an average sale price of 27 cents per square foot per CoStar; investors with cash gobbled up the parcels.

When the housing market finally rebounded to a price point that allowed developers to again build and sell for a profit about a year ago, they were forced to buy back their in-fill land; often times, from the same folks that they sold to and sometimes at more than triple the price. The average sale price for land in Q3 2011 was 92 cents/sf and in Q3 of 2012 was $2.62/sf, almost tripled.

The projection made at a seminar held by Valley Partnership, an advocacy group responsible for development in metro Phoenix, on May 31 stated that metro Phoenix would increase in population by more than one million over the next 10 years. To meet the population explosion, we will need around 350,000 new homes to be built. Obviously the construction industry will not only fuel jobs for houses, but also for all disciplines of real estate. This also means that land will be in strong demand. The in-fill locations have already jumped in value, but land on the outskirts of metro Phoenix are also starting to appreciate, and now provides a strong buying opportunity.

https://www.dreamstime.com/royalty-free-stock-photo-businesswoman-blowing-up-piggy-bank-image9089165One of the main reasons for buying land as an investment is that once the market goes up – land values typically go up at a much faster rate than other real estate investmentsThe number one rule is location and timing and there may be no better time to invest in land in Central Arizona than right now. A buyer has the ability to buy land and do nothing but wait for values to jump, or possibly add immediate value to the property by legally changing the zoning via the entitlement process.

Land can be a risky investment because it almost always involves speculating that the land will increase in value over time. While we believe that metro Phoenix is truly set for a huge boom – events that we have no control over can always happen, be them local or worldwide. Land also has some holding costs like property taxes, and possibly maintenance while the property is sitting vacant and generating no income. On the positive side there are no buildings, plumbing /electrical issues, nor tenants with complaints about accommodations or excuses why they could not pay! Land is easy, but always work with a trusted and experienced land specialist.