Under All is the Land

The first five words in the Realtor’s Code of Ethics declare that “Under All is the Land“.  Combine that with the first and most famous rule of real estate value “location, location, location” and you pretty much know the key principles that drives real estate prices.  Let’s look at some examples to help understand Sonoma County underlying land values.

There are two world class town centers in Sonoma County. No offense to Santa Rosa and the charming Railroad Square area or the Petaluma river front, but the plazas in Healdsburg and Sonoma are true destinations.  All else being equal, the closer you are (location, location, location) to the center of the action in those towns, the higher price you will pay for the real estate.  As of the writing of this post, a half acre lot near the Healdsburg Plaza is selling for over $700,000. For buyers coming from San Francisco that may seem like a bargain, but to most other folks, that’s a hefty hunk of change for a lot that will be expensive to build on. Things are equally tight close to the Sonoma Plaza. There’s a lovely two acre lot not far from the plaza for sale for $1,550,000. You could say it’s a bargain at only half the price per acre of the lot in Healdsburg, but that’s not the point.  The point is that you will pay dearly for the privilege of having a significant lot in the heart of the action in either Sonoma or Healsdsburg.

If you’re starting to think like a real estate shopper, your next question is going to be, “How far do you have to go for cheaper land?”.  There are two correct answers.  Prices drop as you get farther from town, but after about fifteen minutes, a lot of buyers will say, “Too far.”. That’s true of going up hills, into the woods, out dirt roads or out paved roads. Most buyers just don’t want to drive farther than that for a cup of coffee or to go to a restaurant.  For many people the line is drawn at closer to ten minutes than to fifteen. (It’s probably useful for you to start timing your own shopping and dining expeditions to figure out what is comfortable for you. ) That fifteen minute drive radius from the town center helps define standard pricing. Once you get farther than that, the price begins to drop, often significantly. Of course, by the time you are fifteen minutes from town, the per acre price is much lower, but you will probably have to buy a much larger piece of land to satisfy zoning requirements. More about that in another post.

The other concept I want to introduce can be called core home site value. A piece of land has some value by itself, but is made more valuable by the development of key elements necessary to have a structure. In northern California or other areas with strong zoning laws one of the key elements of value is the “entitlement” to build a house (allowed to get a permit). You have to show availability of water year round. There has to be a way to dispose of household waste. Sonoma County fire departments require that the home be accessible to fire trucks and have water available to fight fires. Most people want to have access to the internet, phone service, gas and electricity, and regular trash pickup.  If your proposed lot has positive answers to that listing of service questions, it has most of the necessary elements to be a buildable lot.

Of course, necessary isn’t optimum. Buyers bring their own life experiences to the process. For some, privacy will be an absolutely key element. For others, a wonderful view is their main goal. Yet others will want peace and quiet, forest cover, open meadows, vineyards, areas for gardens or horses or some other amenity that is important to them. So, as you start to look through the listings on the site, please keep in mind that the inexpensive lots are almost always at a stage where no development work has been started. The money you save initially may get used up on roads, wells, septic systems, grading, or providing power (PG&E or solar). The costs of building an infrastructure from scratch is why so many people turn to a tear-down of an existing structure as a cost-effective approach to obtaining a site to put up their new home.

Interesting Listings as of June 2, 2013 (PDF file)

These have not been certified as accessible by the Blu team.  They are just available real estate listings.

 Cloverdale Land Listings

Healdsburg Land Listings (with Windsor and Geyserville)

Sonoma Land Listings

 

 

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