[quote=Jazzman][quote=bearishgurl]I agree with svelte, here, as it applies to CA. In buying an SFR in CA, you actually own the land your dwelling sits on. Like it or not (and regardless of what your local assessor says), THE VALUE OF THE LAND is what boosts property value in CA coastal counties. The closer to the coast your property sits, the higher your land value is in relation to your overall property value (market-wise) REGARDLESS of what the assessor says on your tax bill. This is ESPECIALLY TRUE for those properties situated within TWO MILES of the coast![/quote]
That seems a rather archaic way of looking at things, and a bit reminiscent of old conveyancing when agricultural values held sway. It isn’t the actual intrinsic value of land that boosts or undermines prices, but the lack (supply) thereof. It is not just the ground surface, but the space above it when occupied by a structure, which itself has intrinsic—and currently market inflated value—that determines value. A preference for living by the coast adds a premium due to cooler temperatures and better air quality. The land, in the mean time, remains the same; pretty useless for growing anything. But i guess you were implying all that.[/quote]
Well, Jazzman, having “shopped” for real estate in several markets along the CA coast, you must be aware that the vast majority of condos cost half or less than a comparably-sized SFR in the same micro-area …. that is, assuming the SFR micro-area is even zoned for condos at all. The very best SFR enclaves along the CA coast either do not have any zoning in place for condos or relegate condos to a lesser, often more densely-zoned area of that zip code or smaller micro-market. The City of Coronado in SD County is a good example of this. An area must also be zoned for townhomes (avg 2500 sf lot) or PUDs (3000-3500 sf lot) or the developer must successfully obtain a variance for that type of (often “zero-lot-line”) housing at the time of application for their subdivision map. Both of those lot sizes are considered “substandard” in SD County, offering little more than a fenced-in front and/or back patio area to the owner of each individual unit, thus their lower (often much lower) price for the same living space as their nearby SFRs. (5K sf is the “standard-size” lot in the City of SD.) The “standard-size” lot is larger than SD’s in many other CA cities.
There are good reasons why CA coastal land is expensive and the reasons you mention above are minor in comparison to land use, views, zoning (including allowed density or lack thereof) and easements affecting the property. Yes, those pesky “archaic” RE doctrines of the “highest and best use,” the “right of use and enjoyment” and the “limitations on right of use” (or lack thereof) are all still alive and well in CA and always will be! I’ve seen plenty of both heavy and cosmetic “fixers” over the years situated in SD within two miles of the coast (some with extraordinary views from the dwelling and/or lot) which ended up selling for land value only. In nearly all cases, the new owners promptly razed the house down to the studs after paying $800K to $1.4M for the “land.” In almost all cases, the lot involved was 7400 sf to 14K sf. These buying opportunities are rapidly disappearing. There aren’t very many lots that large in tracts constructed since 2000 and those tracts with larger lots certainly aren’t located anywhere near the coast.
The closer to the coast a residential lot is situated and the bigger that lot is, the less the actual “value” of the dwelling matters in determining the property’s true market value, because coastal property in CA is a finite resource.
I understand that you had a problem with this concept when hunting for a retirement home up and down the CA coast in some of the Golden State’s most coveted and prestigious locales during the “recession” years (2010-2011?). IIRC, you became disenchanted with the dwellings themselves on properties which were in your price range and thus didn’t end up buying anything. The reality is that it doesn’t matter much what sits on coastal property. Whatever it is won’t affect its market value much unless it has a completely remodeled, luxurious new or newer home sitting on it. It doesn’t matter what the county assessor lists as its “land value” on its tax bill. And it doesn’t matter what the prevailing mortgage interest rates are in coastal markets.
Market value of CA coastal properties is based upon the value of the lot and its zoning, primarily. This is especially true of coastal view properties.
No one can fix this and so we must all accept it, Jazzman. If one wants to own a CA coastal property (esp a view property) in this day and age, they better be willing to pay 50% or more of the agreed-upon purchase price in cash (preferably all in cash) in order to have a chance at getting their offer accepted and not quibble too much during escrow about the condition of the dwelling which sits on it.
