Pros and Cons of Selling to a California Land Company

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Pros and Cons of Selling to a California Land Company

Bart Waldon

As the most populous U.S. state boasting nearly 40 million residents as of 2022 spanning 163,696 square miles, California contains vast diversity in both social and physical landscapes for prospective land buyers to consider. With the new USDA land value report showing agricultural real estate averaged $10,400 per acre in California as of 2021 over 618 million total acres – second highest nationally behind Nebraska, the state presents varied opportunities but also risks for land investors and developers. While California offers relative land value stability historically and sizable development demand tailwinds in metropolitan areas as the population expands, water resource constraints and public policy complexities impact certain land usage potentials which must be weighed.

This piece examines key advantages California provides land buyers through climbing property values, climate diversity, rich natural resources and high buyer competition which must be balanced against challenges like drought conditions introducing uncertainty, lengthy permitting delays for projects and some of the nation’s highest tax burdens which can inhibit returns on vacant land holdings over the longer-term.

Why Buy Land in California?

For land buyers, California brings major perks to the table. Home values keep climbing thanks to high demand but low supply. Booming industries like tech, healthcare and agriculture mean plenty of well-paying jobs. That gives buyers more purchasing power for scoring great properties.

Beyond the strong investment potential, California simply offers an unmatched lifestyle. Majestic scenery, endless beaches, year-round sunshine - it's a recreational paradise. Ski one day, surf the next - no problem! The Mediterranean climate means superb comfort. Jobs, weather, natural wonders - California has huge appeal.

Sure costs run high. But wise investments should pay off long-term as values rise. Still, you need realistic expectations - this is one competitive market with very real risks involved. Do your homework, work with the pros, and set yourself up for success.

Even with some drawbacks, California remains hard to top for land buying potential. For investments or future homes, the Golden State presents a compelling opportunity. Do it right and the rewards can be great.

Pros of Buying Land in California

Appreciation Potential

Home values in California keep climbing well above national rates. Over the past decade, median values are up over 50% statewide. In popular coastal spots like San Francisco and San Diego, they've nearly doubled!

Future projections look strong too. Desirable lifestyle, booming tech jobs, low housing supply - it all points to continued upwards price pressure. Play your cards right and California land should deliver healthy investment returns.

Awesome Recreation

California's got it all - famous beaches, national parks, ideal weather. Iconic spots like Disneyland, Hollywood, Napa wine country, Lake Tahoe, Yosemite - they draw visitors worldwide.

For outdoor lovers, the options are endless. Surf in the morning, ski in the afternoon, camp under the stars at night - no problem! With over 800 miles of coastline, 3,000+ lakes, and 28 million acres of public land, the recreational possibilities are incredible.

Owning a prime piece of paradise enhances lifestyle and offers rental income potential too. As tourism rebounds post-COVID, demand should stay strong.

Job Growth Galore 

California is an absolute economic powerhouse and home to booming industries. Think tech, healthcare, agriculture, renewable energy, tourism - the list goes on. Silicon Valley dominates in tech and innovation. Major companies flock here eager to tap the skilled workforce.

From 2010-2020, California saw over 30% job growth compared to 11% nationally. Influxes of highly paid tech and professional services workers feed the real estate demand. Owning property in this vibrant region helps hedge against downturns.

Ideal Weather

California dishes out sunny days, moderate temps year-round, and decent rainfall. The famous Mediterranean climate means ample outdoor living. Northern California stays relatively cool and wet, while Southern Cali boasts arid deserts.

Coastal zones see 60s-70s even in winter. Inland gets more extreme but still sunnier than most of the U.S. With varied regions, you can pick land tailored to your preferences. For many buyers, the California lifestyle is ideal.

Cons of Buying Land in California

Expensive Real Estate

Without question, the prime disadvantage of California land is the high cost. Residential real estate values in California rank among the top 5 nationally. In major metros like San Francisco and Los Angeles, the median home price eclipses $800,000.

Even lower-cost rural land isn’t exactly cheap. As a benchmark, the median price per acre in California is around $18,000 compared to $5,000 nationwide. Limited inventory coupled with intense demand pressure keeps values lofty.

For buyers on a tight budget, affording California dirt may prove difficult. Financing costs are also higher for such expensive properties. However, those able to clear the affordability hurdle stand to benefit from enduring value.

Competition is Fierce

Matching the steep prices is an ultra-competitive real estate market. Multiple offers and bidding wars are the norm in California, especially within hot job markets. All-cash institutional investors and foreign buyers aggressively scoop up properties as well.

For the first half of 2023, over one-quarter of California homes sold above asking price. This intense competition extends to vacant land too. Entering the fray requires perseverance, patience, and a willingness to pounce when opportunities arise.

Securing your dream California property may involve compromises or overpaying. Working with an experienced local real estate agent is key to gaining an edge. But purchasing power ultimately rules the day.

Complex Regulations

You can expect copious paperwork and red tape when buying land in California. State and local regulations strive to protect resources and residents, but also hamper development.

Navigating zoning, environmental rules, building codes, and permitting processes takes considerable time and money. In some cases, parcels sit vacant due to restrictions blocking any viable use. Failure to do proper due diligence can leave buyers stuck with undevelopable land.

It pays to consult land use attorneys and surveyors early when evaluating a property. Understanding the governing limitations before purchase helps avoid nasty surprises. The extra hassle is worth it for most, but regulations do complicate matters.

Costly Development

If you hope to build on your land one day, brace yourself for high costs. Construction expenses in California run about 15% above the national average. Rampant demand allows contractors and crews to charge premium rates.

Building materials and labor shortages plague the state as well. Completing projects often takes longer than planned. Between inflated expenses and delays, developing land can try one’s patience and budget.

Homeowners insurance also comes at a steep premium in wildfire-prone areas. Factor in utilities installation, permits, architectural fees, and more. Do your homework to estimate accurate development costs for the property and locale.

Natural Disaster Risks

California's volatile geography contributes to elevated risk of natural disasters. Wildfires, earthquakes, floods, landslides, and drought present very real threats. Climate change appears to be amplifying these hazards as well.

Catastrophic wildfires now rage nearly year-round, destroying thousands of structures. Massive quakes along the San Andreas Fault are a looming danger. Coastlines, hillsides, and flood plains demand caution when selecting land.

Mitigating risks involves preparation, insurance, and proper land stewardship. Disasters don't deter most buyers, but do require additional considerations. Assess your risk tolerance and research past activity on any land you’re evaluating.

Water Access Challenges

Western states broadly face water scarcity challenges, and California is no exception. Drought and climate change squeeze supply as demand rises. Wells are drying up in some regions as aquifers shrink.

New residential wells now require permitting and approval. You may need to truck or pipe in water if acquiring remote land. Costs add up fast for installing and maintaining water systems.

Ask sellers for a recent well report and research county regulations upfront. Negotiate terms to address any deficiencies threatening your water security. Access could progressively worsen, so enter with eyes wide open.

High Taxes

Taxes exert a drag on real estate investments, and California piles them on thick. The state income tax rate peaks at 13.3% for top earners. Property taxes also run about 40% above the national norm.

Expect closing costs around 2-5% of the purchase price. You’ll pay recurring property taxes of 1-1.25% of the assessed value. Local assessments like Mello-Roos taxes often apply too.

Run detailed tax projections to understand carrying costs. Fortunately, Proposition 13 provides some protection by capping assessment increases. But California still consistently ranks as a top high-tax state.

How Land Boss Can Help Buy Land in California

With over 5 years of experience and 100+ land transactions completed, Land Boss has the expertise to guide you through buying land in California. We focus specifically on land deals, so you can leverage our specialized knowledge.

Our team takes pride in providing excellent customer service as we help clients find ideal parcels meeting their needs. We use local market insights to identify discounted properties with promising potential. Land Boss has existing relationships with sellers that can facilitate win-win deals.

Rather than tying up your capital long-term, consider allowing Land Boss to purchase land on your behalf. We buy property at discounted prices using cash, then transfer ownership to the buyer. This avoids financing hassles while still securing you the perfect plot of land.

Selling your land? Land Boss offers quick and straightforward cash sales too. We eliminate the stresses of traditional real estate transactions. Our valuations are fair and we close quickly.

Let the professionals at Land Boss simplify your California land purchase or sale. Our personalized service combined with discounted pricing delivers results. Contact us today to start the rewarding process of owning a piece of the Golden State.

Final Words

The pros of buying land in California generally outweigh the cons for many investors and homebuyers. Sure, you’ll pay more compared to other states. However, you’re buying into premier locations with phenomenal lifestyle offerings.

Job and wage growth coupled with housing shortages should continue to support real estate values. And you simply can't beat California's climate, natural beauty and recreation options.

Just be realistic about costs and risks involved. Seek knowledgeable representation to identify parcels matching your needs and budget. If buying land in California makes sense for your goals, take time to find the right opportunity. The extra effort pays dividends for tapping into the state's enormous potential as a place to live, work and invest.

Frequently Asked Questions (FAQs)

How much does land in California cost?

Land prices vary greatly depending on location and amenities, but expect to pay a premium. In rural areas, average prices are around $18,000 per acre compared to $5,000 nationally. In metro areas, vacant land can easily top $1 million per acre.

What restrictions apply to developing land in California?

Stringent zoning laws, environmental regulations, and permitting processes control development in California. Consult local codes, conduct due diligence on the parcel, and involve land use attorneys early in the process.

Is it difficult to get water access on California land?

In some regions, drought and drying aquifers are impacting well water access. Research the property’s history, get a recent well report, and understand county permit requirements for new wells before buying.

Does California land offer good appreciation potential?

Historical data shows strong, steady home value growth in California surpassing national rates. Ongoing population growth and desirability should continue to drive appreciation. However, economic fluctuations can temporarily impact values.

What natural disaster risks exist in California?

Wildfires, earthquakes, floods, drought, and landslides are top hazards. Assess risk profiles in the specific area you are considering. Mitigate through preparation, insurance, proper land management, and factoring in risks when determining value.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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