Photo by Bart Jaillet on Unsplash
It’s no surprise that land values in Los Angeles are expensive. Earlier this month, developer Mohamed Hadid listed a vacant 70-acre site near Franklin Canyon for a cool $100 million.
But even small parcels of La La Land will cost you a pretty penny these days, according to a recent Realtor.com report which analyzed how undeveloped property prices have risen since the onset of the COVID-19 pandemic in the United States.
Los Angeles was named the third hottest market for surging raw land prices, coming in behind North Port/Sarasota, Florida and Portland, Oregon. The Realtor.com data team came to this conclusion by comparing average price-per-square foot increases in the first half of 2020 to the same period in 2021 across the country’s 100 largest metros. They also considered the median price per square foot for land when creating their ranking system.
In Los Angeles, the average price-per-square foot soared 67 percent year-over-year, most notably in the outer regions of the city, which were once considered relatively affordable. “Those who want to find more affordable housing options are forced to seek out drier, hotter areas—often more prone to wildfires—farther away from the Los Angeles Basin,” explains the report.
The median price per square foot for land now amounts to $1.38, which is lower than many other metros on the list due to Los Angeles’ immense size. Faced with a severe housing shortage and geography challenges, LA land values aren’t expected to fall anytime soon.
“Unfortunately, with the ocean on one side, desert on another, and steep hills in between, there isn’t a whole lot of space left to develop,” continues the report.
Realtor.com used the example of a half-acre lot in Sunland, a far-flung neighborhood in the San Fernando Valley. Priced at $1.35 million and zoned for an 11-unit apartment building, the property is asking twice as much as what it sold for in late 2019. Home values in the area have risen simultaneously — a three-bedroom bungalow on an 8,000-square-foot lot recently hit the market for $735,000, a 46 percent price jump since 2017 when it sold for $460,000.
This analysis comes on the heels of the Zonda New Home Lot Supply Index for the first quarter of 2021, which dubbed Los Angeles the tightest market for new home lot supply. The number of vacant developed lots for single-family homes in Los Angeles and Orange County have plummeted 61 percent year-over-year, making it a “severely undersupplied” market.