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how much does it cost to build a subdivision of houses on a large plot of land?
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a bank may not like loaning money to you for this. that is one snag. you listed 500,000-600,000$ for a monster of a house (3000 sqft is over three times the average size of homes a hundred years ago). add in the price of the land at 60k (600k divided ten ways). where i live, there is a 15% vat tax on new homes. i can't find out if california imposes a vat tax on new homes. anyway, returning back to the topic, because of the risk of loaning you 660k for a piece of land and construction, the bank may only let you borrow half or less of the final expected cost (not value). another huge snag is that you say in a comment to quid "i came up with this conclusion after talking to someone who had his property built in early 2000s in bay area for that average price". let's apply 3% inflation over 15 years to that number of 200$/sqft. that brings the range for construction costs to 780k-930k. even at 2% inflation 670k-810k. edit: op later expanded the question making it an inquiry on why people don't collaborate to buy a plot of land and build their homes. "back in the day" this wasn't all that atypical! for example, my pastor's parents did just this when he was a young lad. apart from the individual issues mentioned above, there are sociological challenges that arrive. examples: these are the easy questions.
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