California Land Is Ripe for Real Estate Development
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
This article was updated on 8/22/2023.
Land for sale in California is ripe for real estate development. With economic fears brought about by the aftershocks of the COVID-19 pandemic, rising interest rates, and concerning inflation, more landowners are liquidating their land directly or posting it for sale with listing agents and brokers, overseeing development potential and creating possibilities for wise investors and real estate developers alike.
Also contributing to the value of California's land is its housing market, which is beginning to cool off after several overheated years. Surges in house prices in most areas of the state negatively affected buyer interest. More are turning to rental properties and fewer are closing on homes. But with the real estate markets in California now moderating, the window of opportunity is starting to close.
How Much Does an Acre of Commercial Land Cost in California?
Prices per acre of commercial land for sale in California vary widely by county. Because of some prime locations, some counties in California that have available lots for sale require more per acre than others.
- San Diego County, California: With its sweeping coastline and prime locations, San Diego County's land for sale won't be inexpensive: An acre of commercial land may cost as low as $10,300.
- Kern County, California: An acre of commercial land for sale in Kern County, California may go for as low as $6,000.
- Los Angeles County, California: Prices per acre of land for sale in Los Angeles County, California vary greatly: An acre of commercial land for sale in Los Angeles County may go for as low as $12,000, according to some of the currently listed lots in the county.
Real estate developers who do their due diligence can locate land for sale in California that's ripe for development at a reasonable cost per acre. Investors may want to purchase vacant land now and let it appreciate for a while or immediately begin plans for construction.
Here are a few reasons why land for sale in California is yearning for development.
#1 – The Coronavirus Pandemic
The pandemic shocked real estate markets in California as political leaders implemented mitigation measures and other restrictions in response. With little buying activity in the market, many landowners saved what return they could and sold off their properties, unable to develop the land or use it profitably. This, coupled with California's decreasing population, covered the market in vacant real estate.
Now, as California continues to navigate its post-pandemic economy, what's left of its vacant plots is ripe for real estate developers to snag and develop for a profit. Keep an eye out for sales due to liquidation and buying opportunities to work directly with the land's current owner.
#2 – The Undeveloped, Central Valley Land
Undeveloped land for sale in California, especially in Central Valley, is a great buy at the moment for real estate developers. Developers can take these open agricultural plots and convert them to other property types for a profit.
Compared to income, those in California pay some of the highest rents in the country. Real estate developers with an eye for multifamily rental properties should take advantage of the agricultural land left behind by fleeing farmers in the exodus that occurred after COVID-19 hit the state.
#3 – High Price-to-Rent Ratios
According to Forbes, in January of 2021, the price-to-rent ratios of 28 markets in California all favored multifamily rentals. Such is still the case today.
Right now, the price-to-rent ratios in many California markets still heavily favor multifamily rentals, but this may not last long as California's housing market continues to moderate. But even with the housing market cooldown, land for sale in California will still favor real estate developers looking to construct new multifamily rental properties; more areas are prime for doing so than are for building, buying, or selling homes.
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