I was honored to be invited to speak about custom lot trends at the recent “Housing and Land: Market Perspective” seminar presented by The Southern Arizona Chapter of the Appraisal Institute. In preparation for my presentation, I produced a vacant land ‘Heat Map’ showing the percentage of change in land sale prices in each of Tucson’s zip codes, from 2016 to 2017. Some of the trends and conclusions are shown on the attached map.
The two zip codes showing the largest price increase (85741 at 371% and 85706 at 300%) can be explained by looking a little deeper into the sales. Zip code 85706 on Tucson’s south side only accounted for 3 land sales during the year and started at an unusually low median price of $10,000. With just a couple of sales above $40,000, you can easily explain this large increase. In 85741, the River Rd/ La Cholla area, with only a total of 2 sales, one of those was an in-fill parcel of 10 home sites that sold to KB Homes for $675,000, thus accounting for a year to year increase of 371%.
The east side zip code of 85748 is an interesting area as well. The median price increase from $105,000 to $183,950 reflects a different trend; increasing value and lack of supply of 3- to 5-acre vacant home sites near the popular Saguaro National Park. 2016 sales in this area were in the $100,000 range and in 2017, they jumped into the 135,000-$150,000 range. One parcel, contiguous to the Park, even sold for an impressive $275,000 — the highest sale price on the east side for many years.
Another area of note is zip code 85701, covering the Downtown area. We’ve seen a tremendous increase in overall Downtown commercial, retail, and office development, and it should be no surprise that residential, vacant land is extremely hot as well. Parcels, when available, sell extremely fast and at premium prices accounting for a year to year price increase of 88%.
Zip code 85641 — located on Tucson’s far southeast side and the home to the Coyote Creek Subdivision — is also interesting. The statistics for this area show an annual 20% decrease in price. Although that is true for the many un-subdivided, rural parcels of the area, there is a completely different story in Coyote Creek (CC). In 2017, CC accounted for approximately one-third of the sales in this zip code and saw a median sales price jump to $135,000 from a 2016 median of $75,000 — an impressive, 80% increase. This reflects the development of a new phase of 50 lots that have recently been brought to market.
A final thought regarding zip codes 85718 1nd 85750, representing Tucson’s, higher end “Foothills” area, should be made. The first, 85718, showed a price increase of 17% while its neighbor, 85750, decreased 9% in value during the same period. The recent upsurge in popularity of the remaining lot inventory in Pima Canyon (85718) and the lowered lot values in the Ventana Canyon area (85750) account for these changes.
In Part 2, I’ve continued to break down lot sales by area and share some trends I see for 2018 and beyond. Read Part 2 here.
