Is buying land in Joshua Tree a good idea?
October 30, 2018 7:36 AM Subscribe
I can't currently buy a house in Joshua Tree, my dream location, for silly reasons (can't get a mortgage due to lack of tax history in US even though affording it would be quite easy for me.) However, I will be able to in a couple of years. Is buying land there now in cash a good idea? It's a hot rental market and I'm worried that all the good plots will get scooped up in the next [near future].
PS - I know that it's absolutely necessary to get a plot with utilities etc.
PS - I know that it's absolutely necessary to get a plot with utilities etc.
In doing your "good idea" math, factor in both the upsides and downsides of building a home vs. buying a home. There are many, but for starters, building takes waaaay longer and is more time consuming, but you obviously have more of a say in the final product.
posted by craven_morhead at 9:00 AM on October 30, 2018
posted by craven_morhead at 9:00 AM on October 30, 2018
My girlfriend's mom just bought a house there, and the mortgage is cheaper than the rent for a similar place in nearby Yucca Valley. Since the tourist crowds only increase each year, it seems like it may be a good investment. Just know its pretty dull living up there - not much to do, but, again, this seems to be evolving.
A friend who purchased up in Yucca Valley a couple years ago said their property value has almost doubled in a couple years, and due to local improvements expect all property to go up in value significantly in the next few years (they leave close to the main road that goes through it all).
posted by Unsomnambulist at 9:18 AM on October 30, 2018
A friend who purchased up in Yucca Valley a couple years ago said their property value has almost doubled in a couple years, and due to local improvements expect all property to go up in value significantly in the next few years (they leave close to the main road that goes through it all).
posted by Unsomnambulist at 9:18 AM on October 30, 2018
If that's where you want to live and you can afford to do this, including paying upkeep and taxes on the land for now, it's probably not a terrible idea to buy now. If this was some big investment scheme I'd suggest significantly more caution but yes, it seems likely that the price of land is going to go up there and you will probably have less choice (but then again, maybe better choices - hard to say) a few years from now.
posted by Lyn Never at 9:25 AM on October 30, 2018 [1 favorite]
posted by Lyn Never at 9:25 AM on October 30, 2018 [1 favorite]
I'd do extensive checking into the water situation. It's really easy in desert to outpace the water supply, so find out where the water is coming from and who owns it and what the projections are. Good luck, it's a beautiful area now and let's hope it stays that way.
posted by MovableBookLady at 9:51 AM on October 30, 2018 [1 favorite]
posted by MovableBookLady at 9:51 AM on October 30, 2018 [1 favorite]
Just some general real estate-buying advice learned from watching markets over a couple of decades:
"But the price will only go up!" - no. Don't worry. Real estate values fluctuate with the economy, both local and national.
Once you own the land, you'll be paying property taxes on it. The amount might be enough to wipe out any possible price advantage you got by buying it a couple years before you're ready to build.
Watch for price bubbles. Sustained year-over-year increases in value that haven't got seriously justifiable reasons behind them are a sign of a bubble market. You don't want to buy at or near the top of a price bubble. People who bought in 2006 and 2007 learned that the hard way. In much of the country, we're seeing real estate price bubbles again.
Do your research - look at the property sales history and that of properties in the immediate and surrounding areas. That'll help you determine whether the current price is reasonable or unreasonably inflated.
"But interest rates will only go up!" - same thing. They fluctuate. And you can usually refinance a mortgage, but you can never renegotiate the purchase price, so the purchase price is more important. Besides, if you decide to wait, you can spend the interval saving more money for the down payment, thus reducing the size (and possibly the duration) of your mortgage.
Look at the overall economy, too, both regionally and nationally. Economic slowdowns affect real estate values and interest rates. There have been indicators for months that we're in/approaching an economic slowdown. If that happens, you'd be better off waiting for prices to go down and saving your cash.
You'll also want to see how hot the market in that area has been over the past few years. If you end up needing to sell, how long does it look like it'll take? Also: if you buy a lot and later change your mind, you'll find it can be tough re-selling a single lot in an area where there's a lot of vacant lots. Most prospective home buyers would rather just buy the house and lot than go through the hassle and expense of finding a builder. And developers want to buy a large parcel of land for multiple homes, not just a single lot.
Additionally, finding a contractor to build a single home on a single lot will entail more effort and expense for you than buying in a development. You may be fine with that, but that's just something more to keep in mind.
Tl;dr: never be in a hurry to purchase real estate. You can't know what's a great deal and what is overpriced until you've first done the research. Once that's done, you can be more confident about your decisions.
posted by Lunaloon at 9:52 AM on October 30, 2018
"But the price will only go up!" - no. Don't worry. Real estate values fluctuate with the economy, both local and national.
Once you own the land, you'll be paying property taxes on it. The amount might be enough to wipe out any possible price advantage you got by buying it a couple years before you're ready to build.
Watch for price bubbles. Sustained year-over-year increases in value that haven't got seriously justifiable reasons behind them are a sign of a bubble market. You don't want to buy at or near the top of a price bubble. People who bought in 2006 and 2007 learned that the hard way. In much of the country, we're seeing real estate price bubbles again.
Do your research - look at the property sales history and that of properties in the immediate and surrounding areas. That'll help you determine whether the current price is reasonable or unreasonably inflated.
"But interest rates will only go up!" - same thing. They fluctuate. And you can usually refinance a mortgage, but you can never renegotiate the purchase price, so the purchase price is more important. Besides, if you decide to wait, you can spend the interval saving more money for the down payment, thus reducing the size (and possibly the duration) of your mortgage.
Look at the overall economy, too, both regionally and nationally. Economic slowdowns affect real estate values and interest rates. There have been indicators for months that we're in/approaching an economic slowdown. If that happens, you'd be better off waiting for prices to go down and saving your cash.
You'll also want to see how hot the market in that area has been over the past few years. If you end up needing to sell, how long does it look like it'll take? Also: if you buy a lot and later change your mind, you'll find it can be tough re-selling a single lot in an area where there's a lot of vacant lots. Most prospective home buyers would rather just buy the house and lot than go through the hassle and expense of finding a builder. And developers want to buy a large parcel of land for multiple homes, not just a single lot.
Additionally, finding a contractor to build a single home on a single lot will entail more effort and expense for you than buying in a development. You may be fine with that, but that's just something more to keep in mind.
Tl;dr: never be in a hurry to purchase real estate. You can't know what's a great deal and what is overpriced until you've first done the research. Once that's done, you can be more confident about your decisions.
posted by Lunaloon at 9:52 AM on October 30, 2018
It makes me sad to say this, as someone who loves that area (and whose family owns property in the Coachella Valley), but you may want to give some thought to how climate change is likely to impact that part of California, especially if you're thinking of this as a long-term deal.
posted by goodbyewaffles at 12:32 PM on October 30, 2018 [7 favorites]
posted by goodbyewaffles at 12:32 PM on October 30, 2018 [7 favorites]
The whole "Joshua Tree is place for hip people from to visit" thing is like 6 years old. As someone who grew up in Los Angeles, I had to hear it about it being the place to be from people in Boulder ("You're from Los Angeles?? I love JT!!") when I lived there in 2013. So if your "it's a hot rental market and I'm worried that all the good plots will get scooped up in the next [near future]" comment is coming from, I'd be real careful, as in 6 years it could go back to normal. And "normal" is meth addicts living out the desert, and parents getting their kids taken away for being too poor to afford water/electricity/gas/etc.
posted by sideshow at 11:04 AM on October 31, 2018
posted by sideshow at 11:04 AM on October 31, 2018
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posted by The_Vegetables at 8:25 AM on October 30, 2018 [1 favorite]