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The Rising Cost of Real Estate

The fact that the price of real estate ishouses has sent land prices skyrocketing as
constantly on the rise is not really ahigh as 100% over the past four years.
surprise to anyone, is it? After all,Builders are scrambling for parcels. One such
everyone knows that they stopped making landparcel of ground, just 4.7 acres close to the
a long time ago. In elementary school, wefreeway in Del Mar, California, was recently
learned about the famous Law of Supply andoffered at the stunning price of $6.7
Demand. As the supply shrinks, the demandMillion!!!
always increases. Because the supply has been
getting smaller and smaller, since the dawnThere are a few times, however, when land
of time, it makes perfect sense that theprices tend to stay flat, or even decline.
demand  has  been  increasing  significantly.Southern California in the early '80s is a
good example. During times of severe, and I
As a rule of thumb, the price of real estatedo mean severe economic slumps, real estate
doubles every 10 years. So if you buy landvalues have a tendency to stay flat. When the
today, for $10,000, it’ll beeconomy recovers, and buyers, builders and
worth about $20,000 ten years from now.investors begin purchasing again, the prices
Again, this is a rule of thumb, butquickly  increase.
historically  it  has  proven to be accurate.
Inflation is another key to the rising cost
One of the major reasons for the rising costof real estate. Remember how a loaf of bread
of real estate is the growth of our worldused to cost less than fifty cents? Now it's
population. Take Phoenix, Arizona, for$1.99 or so. The same is true in real estate.
example. In 1940, the population was a smallThe same dollar today just won't buy as much
186,000. By 1994, the population had reachedproperty as it did yesterday. Inflation,
over 1.5 Million. Las Vegas, Nevada, isespecially when combined with rising wages,
another fast-growing area. Today, thehas created an environment in our real estate
population is nearly 1.1 Million, up frommarkets where the value of the dollar is
just 460,000 twenty years ago. Yes, thediminished versus our buying power in times
population more than doubled in twenty years!gone  by.
You don't have to look very far to see theRemember the Law of Supply and Demand and
effects of rising land prices. How many timesinflation, and remember that they quit making
have you talked to an old timer who said toland  a  long,  long  time  ago.
you "Twenty years ago, I had the chance to
buy that place for only $32,000. And theyWith land Auctions, you get the chance to
just sold it for $250,000." These aren't rarename the price you're willing to pay for the
circumstances. They are normal, common,land you want to buy. There are some
everyday  events.incredible bargains that people walk away
with at land auctions.
In the San Francisco Bay Area, demand for new



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