California Real Estate Practice Exam

Why is suburban land preferable to urban land for development purposes to a land developer?

1. Development costs are lower

2. Low-cost housing for single persons can be provided

3. Suburban land has the potential for containing a complete community

4. The value of adjoining land is increased

The correct answer is: Development costs are lower

Development costs are often lower in suburban areas compared to urban areas due to several key factors. Suburban land typically has more available space, which allows for larger projects without the constraints of high-density building requirements often found in urban settings. This abundance of land can lead to lower acquisition costs and potentially fewer regulations and fees associated with development. Additionally, suburban areas often have lower land prices than urban areas, where land is much more expensive due to demand and scarcity. Lower land costs can significantly impact the overall budget for development projects, making suburban land a more attractive option for developers looking to maximize profitability. While it is true that suburban areas can offer low-cost housing options and the potential for complete communities, these factors are often interlinked with the broader consideration of overall development costs. The increase in value of adjoining land is usually a result of successful development rather than a primary reason for initially selecting suburban land for development. Therefore, the aspect of lower development costs stands out as the principal reason suburban land is regarded as preferable for developers.