Southern California Land Values Deep In Recovery Mode
- Jul 30, 2010
Irvine, Calif.–In Southern California, the bottom of the land market came and went a long time ago, according to a report by The Hoffman Company.
Hoffman released some eye-opening numbers in its report. Money is always a benchmark, and the cost of land speaks volumes. As per the survey, in 80 percent of the Southern California region, the price tag attached to finished lots hit rock bottom in the first quarter–of 2009. Additionally, land values have skyrocketed since that point.
And there’s more. The Irvine, Calif.-based land brokerage firm’s new Hoffman Land Index demonstrates that in 38 of the 50 geographic markets surveyed, the price of a 7,300-square-foot finished lot jumped substantially from early 2009, when the market reached its low point. Of course, as is the case with most real estate assets, land in areas closer to major job centers is fetching a higher price than sites on the fringe. In the Inland Empire, for example, over 12 submarkets in the busy Interstate 15 Corridor saw land values rise 50 to 86 percent.
“Prices have gone up considerably for finished lots as homebuilders come back into the market,” Tom Dallape, principal with Hoffman, tells MHN. “But the run up in values has plateaued. There may be another bump in early 2011, but until then, it will stay in the same trading range we’ve been in for the last two quarters.”
While homebuilders are eagerly getting back in the game, multifamily developers are not so prevalent among finished lot buyers. “We will see less multifamily development because of the affordability levels today for single family housing,” Dallape says. “Between incredibly low interest rates and low retail housing prices, we are seeing some of the highest affordability levels seen in decades for single family housing.”