“Don’t wait to buy land, buy land and wait.” This quote by William Penn Adair “Will” Rogers has been an investment strategy by many, and others have followed the advice of “Buy land; they’re not making it anymore,” a quote first accredited to Samuel Langhorne Clemens, otherwise known as Mark Twain.
For most real estate investors, residential land is purchased to hold for long periods of time, and land appreciates when there is a strong residential market, which creates a stronger demand to use the parcels for building new homes.
Both the inventory of homes on the market and the inventory of buildable lots can determine a change in value. Like any market, a strong demand, coupled with low inventory, will create increases in value. The other factor that impacts the cost of land is the ability and cost of producing new parcels. Government regulation, the planning process, development costs and holding costs all impact the value of creating a new parcel.
Buying land in La Plata County appears to have been a good investment over the last year, as prices have increased by 29 percent this year over last year in the first eight months. Overall, there have been 166 land sales reported in our Multiple Listing Service for that period compared to 113 land sales in the same period last year, a 47 percent increase. The Durango market, both in-town and rural, accounted for 56 percent of all sales this year, followed by the Bayfield market with 31 percent of land sales, Ignacio with 6 percent, the resort market with 5 percent and Vallecito with 2 percent.
The median price for La Plata County land this year is $155,000, compared to $119,900 last year. Through August this year, the median price for Durango in-town lots is $215,000, with the Durango rural market at $132,500. Bayfield in-town has a median price of $34,205, and Bayfield rural was $54,450.
The most popular subdivisions are Edgemont Highlands, representing 14 land sales this year and a median price of $132,250, and Dove Ranch in Bayfield with 17 sales, which includes some with multiple lots and an average price of $27,059. Forest Lakes reported 14 lot sales with a median price of $23,000, and Skyridge had four sales and a median price of $192,450.
The highest demand for lots is in subdivisions with less than 1 acre. Those small lots account for 73 sales and 44 percent of the market. Small-acreage parcels from 1 to 10 acres have represented 48 sales this year, which is 29 percent of the market.
Currently, there is a high inventory of land parcels on the market. In La Plata County, there are 735 properties on the market, with 35 under contract. Durango in- town has 67 properties on the market with six under contract. Durango rural has 328 parcels with 18 under contract. In the Bayfield market, the rural area has 121, with five under contract, followed by the in-town market with 24 properties on the market and one under contract.
Don Ricedorff is a Realtor at The Wells Group in Durango, and a past president of the Durango Area Association of Realtors. He can be reached at email@example.com.