The pendulum has swung from a seller’s land market to one that favors buyers, creating a window of opportunity for people who want to buy land and build a custom home.
As discussed in the previous blog, 2022 was a solid year for Tucson land sales. The year began by seeing multiple unexpected offers on parcels and sales prices above listing prices, a trend that hadn’t been present since 2007-2008. But the beginning of 2023 marked another turn around, and this year, we’ve seen lower prices along with weakened land activity and sales, which has created many opportunities for land purchasers. Let’s look more specifically at this trend as it affects vacant parcels in the foothills area of Tucson, AZ.
In 2022, between January 1st and October 20th, 48 lots were sold in the foothills area. Many lots that had languished on the market for 6 to 12 months finally sold. Additionally, difficult lots because of marginal views, heavy slopes, minimal buildable area, busy roads, and minimal privacy all found buyers. Lots in less-than-prime locations and lesser-known subdivisions such as Little Ridge, Summerset, and Mountain Cove Estates were selling. Price reductions were rare as the average days on the market from listing to closing was 77 days. And lots in the best locations sold quicker than usual.
In comparison, during the same period in 2023, only 28 foothills lots have been sold. That’s approximately 41% fewer sales from the previous 12 months. At the same time, days on the market more than doubled to an average of 159. As a side note, in speaking with a Title Company executive this week, I was told that the cancellation rate of escrows was at 30% in 2023, almost twice the rate of 2022. We currently have four foothills home sites available in the $350,000-$450,000 and all in previously sought-after areas: Hacienda Del Estates, Catalina Foothills Estates, The Foothills, and Foothills II. Last year, these properties would have sold within 2-3 months, but this year, we are reassessing market position, sales, and activity regularly to find the price that will induce an offer and sale. In 12 months, the interest rate hikes initiated by the Fed have taken hold and created this significant market slowdown in land sales and new custom home construction.
Herein lies the opportunity for the serious cash buyer for a highly desirable foothills lot. The window is open to purchase a homesite for a discount of 10-15% below its recent market value and, in some cases, dependent upon seller motivation, maybe more. We recently represented a buyer who had his eye on a beautiful lot in Wilderness Estates in La Reserve that the owner bought less than a year ago for $350,000. Our buyer is closing escrow for $299,000 and is extremely happy.
The tricky thing about changing markets is that it generally can’t predict when it will move in the other direction until after it’s happened. No one can expect how long the current market condition will last, but after being a Tucson Land and Homesite Specialist for many years, I know that buyers are in as strong a position as I’ve seen for quite a while.
There is an old saying that you make your money in a real estate investment when you buy not when you sell. That couldn’t be more true than right now. As the market continues to evolve, this old wisdom remains a beacon for those looking to build lasting wealth in real estate.
If you want to purchase your ideal parcel of land to build your first home in Tucson, AZ, contact me at 352.9189.5477 or rick@buytucsonlots.com. I’ll help you find the best lot of vacant land for your needs!
