Expert: liznarr - 5/24/2005

Question
Hi, I have 3 lots of land in Florida.  I paid roughly 13 thousand dollors all together for these plots.  Recently I have been getting offers ranging from 35,000 for the 2 quarter acres to 60,000 for a half acre.  It seems as is every few months the offers go up a few thousand dollars at a time.  I am a believer in supply and demand.  I feel that he more the area is developed the higher the offers will get.  Is that true? What options do I have when it comes to vacant land?  If I choose to build on the land what steps would I take to do this? Thank you.

Answer
Hi Michael,

Based only on the information you have given me, it certainly does appear that the value of your lots is increasing significantly.  Vacant lots in new subdivisions in preferred areas tend to have really good appreciation.  If development is on the rise in your area, I would think that you have nothing to lose and everything to gain by not selling yet.  If your lots are “prime” lots, all the more reason to hold onto them for a while.  How long you should continue to hold them is the magic question.  

I live on a large resort lake, and about 50% of my business is with lake property – highly sought after in this area.  Even when other sales are slow and values in other areas are not appreciating much, lake property has always held its own and appreciated much more than most – because of the supply and demand factor that you mentioned.  

Florida is also a highly sought after area with more and more people wanting to relocate there every year, especially retirees and many people who want a second home there.

Unless conditions such as the US economy and world events (especially related to terrorism) were to take a drastic downward spiral, most properties will always continue to appreciate to some degree, and some much more than others.  A news program earlier this evening reported that real estate in some areas has been increasing up to 15% annually, but that this trend surely cannot go on indefinitely … along with increasing talk of the real estate bubble we are in now bursting at a point, but when?

Not knowing what city in Florida you're in or more details about your local market and growth factors, I can only give you a general answer; but the response is definitely, yes, hold on to your lots for a while – especially since offers you have been receiving are increasing every few months.

If you choose to build on your land, you will need to check for restrictions on setbacks, power and utility easements, any architectural approvals you might need to obtain, and the minimum square footage you might be required to build.  Also check on the fees for water and sewer taps, and make sure taps are available.  If public water and sewer are not available, make sure that you have testing done for a septic tank and that you are prepared for the additional cost to drill a well.

I hope the above is helpful.  Good luck to you, and write again if you have additional questions.

Regards,
Elizabeth Narr