WHAT IS YOUR MCCORMICK RANCH LOT WORTH?
“Under All is the Land.” –National Association of Realtors’ Code of Ethics, 1913
It’s easy to come with a general home value. But what if you were considering tearing down a house and going with new construction? Or if your insurance agent needs to break out land vs structure values to underwrite a new policy? Finding out what your lot is worth isn’t quite as easy as having someone pull comps for you – we’re built out and land sales are very few and far between.
McCormick Ranch has not seen a true lot sale since 2011. That lot sold for $225,000 or $17.24 per square foot.
During the first week of August, Cachet Homes of Scottsdale closed on a 3.3 acre property (home, outbuildings, and land) in between the office buildings on Gold Dust and Hayden and the community of Fox Hollow. Granted, this is not McCormick Ranch but it certainly flirts with the boundary as close as possible.
Cachet’s project calls for new homes on 7 lots. The price paid? $2,185,000 or $15.15 per square foot.
Let’s break this down.
This equals $312,143 per conceptual lot. Add in demo of the existing structures, infrastructure, required landscaping, and access costs, and the end price will most likely exceed $350,000 per finished lot – a lot that is ready for construction of a single family residence.
After development requirements the 7 lots will average 17,225 square feet. Using simple math, let’s consider these finished lots to cost the developer conservatively $20 per square foot.
Let’s examine a few other finished lot sales in several nearby neighborhoods:
Paradise Valley Farms:
Last sale: $18.19 per square foot (2014)
Currently available for sale: One property at $22.16 per square foot
Indian Bend Ranchos:
Last sales (2): $11.63 psf (2013), $9.04 (2014)
Brusally Ranch (Cholla and 84th St):
Last sales (3): $14.71 / $14.39 / $15.32 (all 2014)
Lastly, the common “builder’s formula” for land price versus finished product price tops out at 30%. Using backwards math & a typical McCormick Ranch lot, a 3,200 square foot home with a highly finished value of $275 per livable square foot on a 12,000 square foot lot yields a lot value of $22 per square foot. Subject lot in this case would hold a high dollar value of $264,000. The larger the home, the higher the lot value.
Given these numbers, we would consider a typical single-family home building lot in McCormick Ranch to run in the $20-$25 per square foot range, based on neighborhood & site premiums. This assumes a clean & level lot with all utilities in place.
Granted homebuyers have paid more for an existing home and torn it down, but this exercise gives McCormick Ranch homeowners a general idea of what their land is worth in simple appraisal scenarios, and the techniques used to arrive at the value.