SUBDIVISION LAND PRICES..... WHY VALUE VARIES

Mary A. Tinkler - Real Estate Broker
Shattuck & Co. Real Estate, Inc.
Gresham, Oregon
tinklerm@msn.com

What does sub-dividable land sell for? It’s a question I hear so often I sat down again and looked back in our RMLS data base to search for parcels which are already zoned for some sort of medium to high density residential zoning, which have sold in the past 18 months.

Because of the Urban Growth Boundary, there has not been much subdivision land available. There is a very broad range of already-zoned, sold land prices…..from $223,000 per acre to $465,000 per acre. There are variables that play into valuing land that may be developed. How close is it to existing water and sewer services? Those parcels closest to existing services will sell and be developed first. Others may have to wait for new services to be brought in. What is the topography…will it be difficult to access and grade? How dense is the zoning, what sort of development fees and permits will be required? How much road improvement will be required? What is the demand for the type of dwelling units zoning calls for? Is the parcel in an area perceived to be desirable for schools, shopping, commute time? Are there environmental considerations that will affect the feasibility of a developer’s plan? Insurance coverage for development projects, and all parties involved is also a major expense that must be factored into a business plan.


Keeping track of what has sold, and for how much, is something I do daily, and it was time for a monthly overview, but this time I dug a little deeper and saw evidence of a trend that I found disturbing. Some sellers seem to have sold considerably lower than other comparable properties! Real estate brokers are required by law to keep a written record of the sold and comparable properties they studied in order to recommend a logical and salable asking price for the property of any seller they contract with, or attempt to contract with. We have a fiduciary duty to give our clients, sellers or buyers, the highest standard of care, which includes advising them on a fair listing price. The laws of agency, whereby we legally advocate a client’s best interest, are quite clear. Sellers should always ask their real estate representative to provide written data on similar sold properties.

In Damascus, there are already sellers and buyers speculating on future development. I believe more parcels would have sold within the UGB, were it not for the fact that banks will not lend on land priced with future zoning in mind, no matter how far along the rezoning process is. If new zoning adheres somewhat to the Concept Plan designed by Clackamas County, there are some bargains to be had on land in the UGB right now……parcels that will gain value once the zoning is in place. But, as a rule, even the biggest developer/builders do not use their own money to purchase, and they cannot get bank funding for speculative projects. As soon as the City of Damascus puts some sort of new zoning in place, the banks will show up with money to lend.

And keep in mind, a smaller acre property may not be very desirable as subdivision land unless the developer can acquire the surrounding parcels….enough land to make his or her expenses and fees for development cost effective. Especially if the developer will have to pick up the costs for bringing services to the property, possibly road improvement as well. The developer needs to build enough housing to absorb the cost of infrastructure.


Not all properties will gain value with rezoning. Damascus has a fair share of well-sited and lovely up-scale homes on under 5 acre parcels that due to location and desirability as “gentleman farms”…..are worth as much or more now, as they will be when the new zoning first takes effect. I recently compiled a Comparable Market Analysis for a 2.2 acre parcel with an immaculate and appealing 4 bedroom home and a large shop….all nicely sited. This home is so desirable it has about the same value as a same sized parcel of bare land which is already zoned for development. In my estimation it would be a shame to destroy the existing home and amenities; there will always be a demand for close-in homes with a bit of land.


So if you are planning to market your Damascus land when rezoning take place, do make sure that your real estate broker shows you comparable sales, explains variables and adjustments and gives you information to back up any price he or she recommends for listing your property. You won’t get a sale if you price higher than comparable parcels, BUT you definitely do not want to price too low!

Mary A. Tinkler - Real Estate Broker
Gresham, Oregon
tinklerm@msn.com