The spread between entitled and raw land in the Phoenix metro has never been wider. Two years ago, entitlements added 30–40% to the per-acre price. Today, in corridors where utility infrastructure is constrained, that premium has stretched to 60–100%. The reason is time — and time is the one cost developers can't engineer away.
What's driving the spread
Three factors have converged to make entitled land dramatically more valuable relative to raw dirt:
- Utility timelines. Water and sewer capacity in growth corridors — particularly Queen Creek, San Tan Valley, and west Buckeye — has become the binding constraint. Developers who bought raw land expecting 12–18 month utility hookup timelines are now facing 30–48 months. That carrying cost changes the math fundamentally.
- Entitlement uncertainty. Municipal planning departments are understaffed and overloaded. Zoning applications that used to take 6 months are taking 12–14 months. Environmental review timelines have extended. Every month of delay is a month of land carry at 7–8% interest.
- Builder demand for pad-ready sites. The national homebuilders — DR Horton, Lennar, Meritage, Taylor Morrison — are paying premium prices for fully entitled, pad-ready lots because their internal ROI models penalize entitlement risk heavily. A $120K finished lot that's ready to build on today is worth more to them than a $70K raw lot that's 24 months from a grading permit.
East Valley vs. West Valley
The dynamics are different on each side of the metro:
East Valley (Gilbert, Queen Creek, San Tan)
Entitled residential land in the East Valley is trading at $130,000–$180,000 per acre for medium-density product (6–10 DU/acre). Raw land in the same corridors is $50,000–$80,000 per acre — but the entitlement timeline is 24–36 months and water availability is uncertain in several planning areas.
The premium for entitlements here is driven by scarcity. There's limited raw land left in desirable school districts (Higley, Chandler Unified) that hasn't already been tied up by builders or land banks. What remains is either in flood zones, has access issues, or faces utility constraints.
West Valley (Goodyear, Buckeye, Surprise)
The West Valley has more raw land supply but faces different challenges. Entitled acres are trading at $90,000–$130,000 for residential, while raw land is $25,000–$45,000. The spread is percentage-wise even wider than the East Valley.
The driver is infrastructure. EPCOR and Liberty Utilities service areas in west Buckeye and Surprise have capacity constraints that are adding 2–3 years to development timelines. Developers who bought $15,000/acre raw land in 2021 expecting to develop by 2024 are now looking at 2027–2028 start dates — and their land carry has eaten most of the basis advantage.
How developers are pricing entitlement risk
Smart developers are using a simple framework: what's the time-adjusted cost of entitlement versus the premium for entitled land? The calculation:
- Raw land cost: $50K/acre
- Entitlement cost (consultants, fees, engineering): $15–$25K/acre
- Carry cost (24 months at 8%): $8–$12K/acre
- Time value (24 months of delayed revenue): hard to quantify but real
- Risk premium (entitlement may be denied or modified): 10–20% of total investment
When you add it up, the all-in cost of taking raw land through entitlement is often $85–$100K/acre — surprisingly close to what entitled land trades for. The difference is risk and certainty, and in a market where builders are paying premium for certainty, entitled land deserves its premium.
Our take
If you're a land developer or builder, the current market rewards two strategies: (1) buying entitled land at a premium and moving immediately to vertical development, or (2) buying raw land at a deep discount with a long time horizon and the financial capacity to carry it for 3+ years. The middle ground — buying raw land and expecting a fast entitlement — is where developers are getting hurt.
We advise developers on land acquisition financing and capital strategy across both valleys. If you have a site under contract and need to structure the capital stack, we'll tell you what the basis needs to look like for the deal to work.
Evaluating a land deal?
We'll help you structure the capital and underwrite the basis.
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