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How much does it cost to build a subdivision of houses on a large plot of land?
The basic answer is that you are comparing apples and oranges.  On the one hand, you are considering a case where someone buys a single already-built house.  On the other hand, you are considering a case where someone buys a large piece of land, builds 10 houses, and (presumably) sells or rents the 9 they're not living in. Those are two totally different endeavors.  It might be reasonable to compare the cost of a plot of land sized for a single house to the cost of a similar plot with a house already on it.  But you can't directly compare the cost of buying 10 houses worth of land to the cost of one house.  As other answers have mentioned, building 10 houses involves a massive amount of work: an architect has to design a house, somebody has to get permits to build it, someone may have to get water/power/sewage hookups, somebody has to physically build it -- then multiply all that by 10 for 10 houses.  Once you're done, you still haven't recouped your investment.  You just have 10 houses.  Now you have to sell them, which is a whole other job in itself. Because the things you're comparing are so different, the potential buyers for the two cases are also completely different.  This explains the "inconsistency" between the asking price and your perception of its value.  The two kinds of properties are in two different markets.  The people looking to buy a single home are just regular people looking for a place to live (or maybe trying to get a rental property).  The people looking to buy a 10-house plot are real estate developers with a whole different set of concerns.  There could be many reasons why the land hasn't been purchased yet, but you can't compare it to the cost of comparable houses, because almost no one who is looking for a house is going to consider buying 2 acres of land instead.  It's like asking why filling up your car with gas is so much more expensive per gallon than buying a gas station and giving yourself free gas.  They're just not the same thing.   But given the size of the land, I can join forces with other people which are also in the market and totally bring down the land price per piece to say 100k? You can do that, but basically what you'll be doing is forming a real estate development company of some sort.  This opens a whole other world of possible snafus (for instance, how ownership is to be divided, and what happens if the owners disagree on appropriate development of their portions). It is absolutely possible to make money by buying land and building houses on it, especially in California.  People do it all the time.  But it's not something you should attempt if you don't know what you're doing, and it's definitely not the same thing as just buying a house to live in.