I noticed prices rising at a pretty brisk rate for the past 10 yrs but more of a steady climb, not a huge spike which did seem to occur early this year. The properties that I have researched are along the California coast, although not oceanside properties, typically these are raw land properties are inland a few miles of the Coastal zone located from Fort Bragg down to Jenner, Ca. Typical uses would be light farming, tree harvesting, vacation spot, Cannibus.
Something odd happened right around the time interest rates began climbing – prices for raw land mysteriously doubled. 10 to 20-acre parcels doubled from prices of $200k - $300k to 500k or slightly over. So far there are NO COMPARABLE SALES LISTINGS to support the price increases. Needless to say, sales have all but ceased. One realtor told me that it was Zillow and realtor that came up with the “new asking prices” and that everyone just “went along with it”, but on Zillow as one example, I see “we don’t have enough information to calculate a Zestimate”.
For the following reasons I see these new high asking prices to be conflicting.
1.] Rates have practically doubled the payment costs of land purchase in this area due to interest rates increases (assuming someone is taking out a loan for the purchase) That coupled with the new asking prices - that’s a staggering change.
2.] Property value is impacted by softening of the Cannabis market. The counties have done a good job going after unlicensed growers using tax liens, permit violations etc. Not the mention large corporate scale farming of Cannabis happening in the central value.
3.] The softening of the lumber industry where demand is decreasing due to falling builder demand
4.] In the case of a small farm or even say a remote vacation spot, at the new price point it becomes way cheaper “not to own” and just visit
5.] Inventory. Contrary to what the MSM has been saying there is no inventory shortage with raw land. If you look at the parcel maps of the areas in question there are A LOT of parcels - thousands of parcels, that soon or later will be positioned for Sale. Many of these properties were partitioned into APN’s before the ordinance in the coastal areas mandated that a lot be 150 acres or more.
The best perspective on land values in this market would be to use the Sold Comparable listings to derive a market value. At the moment, it does seem to be a fake market fed by the fake the news media which is driving the irrational pricing.