The Rising Cost of Real Estate

The fact that the price of real estate is constantly onIn the San Francisco Bay Area, demand for new
the rise is not really a surprise to anyone, is it? After all,houses has sent land prices skyrocketing as high as
everyone knows that they stopped making land a long100% over the past four years. Builders are scrambling
time ago. In elementary school, we learned about thefor parcels. One such parcel of ground, just 4.7 acres
famous Law of Supply and Demand. As the supplyclose to the freeway in Del Mar, California, was
shrinks, the demand always increases. Because therecently offered at the stunning price of $6.7 Million!!!
supply has been getting smaller and smaller, since theThere are a few times, however, when land prices
dawn of time, it makes perfect sense that the demandtend to stay flat, or even decline. Southern California in
has been increasing significantly.the early '80s is a good example. During times of
As a rule of thumb, the price of real estate doublessevere, and I do mean severe economic slumps, real
every 10 years. So if you buy land today, for $10,000,estate values have a tendency to stay flat. When the
it’ll be worth about $20,000economy recovers, and buyers, builders and investors
ten years from now. Again, this is a rule of thumb, butbegin purchasing again, the prices quickly increase.
historically it has proven to be accurate.Inflation is another key to the rising cost of real estate.
One of the major reasons for the rising cost of realRemember how a loaf of bread used to cost less
estate is the growth of our world population. Takethan fifty cents? Now it's $1.99 or so. The same is true
Phoenix, Arizona, for example. In 1940, the populationin real estate. The same dollar today just won't buy as
was a small 186,000. By 1994, the population hadmuch property as it did yesterday. Inflation, especially
reached over 1.5 Million. Las Vegas, Nevada, is anotherwhen combined with rising wages, has created an
fast-growing area. Today, the population is nearly 1.1environment in our real estate markets where the
Million, up from just 460,000 twenty years ago. Yes,value of the dollar is diminished versus our buying
the population more than doubled in twenty years!power in times gone by.
You don't have to look very far to see the effects ofRemember the Law of Supply and Demand and
rising land prices. How many times have you talked toinflation, and remember that they quit making land a
an old timer who said to you "Twenty years ago, I hadlong, long time ago.
the chance to buy that place for only $32,000. AndWith land Auctions, you get the chance to name the
they just sold it for $250,000." These aren't rareprice you're willing to pay for the land you want to buy.
circumstances. They are normal, common, everydayThere are some incredible bargains that people walk
events.away with at land auctions.