Why are sales prices for raw land so erratic?
Raw land, especially land at the edge of urban development, is volatile. It is perhaps the most volatile of all real estate. How long will it take to secure entitlements? How much cut and fill will be required at grading? Will there be community protests against development? Will an arroyo toad, a burrowing owl or some other endangered species be found on the site? Who will pay for off-site infrastructure? What is the mood toward growth at City Hall? Is it likely elections would bring a slate of anti-growth council members into office? Will the city need to annex unincorporated land? Infill land, although less volatile, still can be held hostage to the whims of local government and the constituents who put them in office. If a conditional use permit is required, who can say with any certainty that it will be granted? The risks are priced into the real estate and every investor has his own perception of, and appetite for, this risk. Differing opinions and projections create “noise” and
Raw land, especially land at the edge of urban development, is volatile. It may well be the most volatile of all real estate. How long will it take to secure entitlements? How much cut and fill will be required at grading? Will there be community protests against development? Will an arroyo toad, a burrowing owl or some other endangered species be found on the site? Who will pay for off-site infrastructure? What is the mood toward growth at City Hall? Is it likely elections would bring a slate of anti-growth council members into office? Will the city need to annex unincorporated land? Infill land, although less volatile, still can be held hostage to the whims of local lawmakers and the constituents who put them in office. If a conditional-use permit is required, who can say with any certainty that it will be granted? The risks are priced into the real estate and every investor has his own perception of, and appetite for, this risk. Differing opinions and projections create “noise” and
