Buying Land in the Path of Growth: Pinal CountyMay 24, 2018 / Blog / 0 Comments
I’ve had great success following the advice of my longtime friend, and now business partner, Kevin Petersen, who once recommended I use a simple land investment strategy: Study the growth patterns of the Phoenix area, then shop for deals ahead of and in the path of the growth. That formula is so simple I’m almost embarrassed to confess that’s all there is to it. But that’s it.
Growth radiates out from the center of the metro area. As the developed areas climb in density the cost of housing climbs as well, which pushes shoppers to the outskirts. Builders find they can buy larger parcels of land at more attractive prices outside the population centers, and new buyers will drive the distance to get a more affordable home. “Drive until you can afford it” is destined to be a truism in any growing metro region.
Exploiting Growth Patterns for Land Investments
But what is interesting, and useful, for the land investor is how easy it is to know where that growth is going. To a casual observer, it might seem that it can go in any direction whatsoever. But growth is actually quite constrained into a handful of specific channels. We know where the growth is headed.
More than 80% of the land in the state, including that surrounding the Phoenix Metro Area, is not developable! Let that sink in. Most land is not developable. It’s owned by the Federal Government, Indian Reservations, National Parks or Reserves, the State of Arizona, or the Bureau of Land Management. Only a fraction of the land is owned by individuals or corporations. Only privately held land is readily available for a developer.
Where the Growth is Going: Invest in Pinal County
The growth radiates out from the city along the path of privately held land. Like water finding the path of least resistance down a hill, the growth of our metro region follows the path of least resistance for developers.
Once you remove the undevelopable land from the map, clear and inevitable paths for future growth emerge, and one of them leads right through Pinal County. Florence, Coolidge, Eloy, Casa Grande, Maricopa (and others). Those names seem like remote areas today. But the growth statistics make it clear that they will soon be the hot spots.
Passage of the Transportation Plan
The recent passage of the Pinal Regional Transportation Plan, approved June 5, 2017, clarifies exactly where Pinal county is anticipating development for the coming decade. Not only did the summer election pass the plan, but a funding model was approved through sales tax in the region. That’s a big deal.
That transportation plan is both the product of anticipated growth and the producer of it. It’s a product of the growth in that the municipalities are studying the same economic dynamics that land investors do and have come to the same conclusion: the southeast valley will need major road expansion in the coming years. But the plan is also a stimulant to growth. When developers see a commitment to road improvement by local government, they are emboldened to invest and build.
My advice? Familiarize yourself with that transportation plan. Then buy land in Pinal. Or better yet, partner with us as we continue to do just that. I have every confidence we’ll be selling our pieces at multiples of what we pay for them.
For more information:
Watch the video that outlines our investment strategy. It uses a power point presentation that will graphically illustrate the growth channels for greater Phoenix.
Elliot Pollack is a well regarded local economist that addresses the greater Phoenix growth cycles in speeches and articles. His economic forecast for Pinal last December lays the case out carefully. His website is also a great source of data in regards to growth and economic statistics for the Phoenix Metro Area.