Most of the other properties for sale in these areas are large tracts of acreage for hunting, or are houses in these small communities.

A land contract tract is a sale of the property without a recorded deed.

About 40 years ago in a medium size city, TX the builder charged $35 a sf on tract homes.

There are income limits though for certain area tracts you can check these here by searching the property address http://www.freddiemac.com/homepossible/eligibility...

In your case, it sounds like if you used all the equity in you current home ($1.6-1.7 million - $775k = $825-925k), you could get the monthly payments close.Regarding the custom home, if this is a tract home that you are customizing the finishes of, the sale price may be utilized for the tax base year established by the assessor (not appraiser).

This was the idea behind it; job growth and driving property tax revenue to distressed census tracts.

You will need to either "income qualify" for the loan product or choose a home that is located in specific census tracts. 

But if somebody else is experienced, competent, has a proven tract record, and the risk return ratio is right, I’d probably invest in it as a passive investor.Most deals like this presented to me have not been researched thoroughly enough, don’t have accurate numbers, don’t have specific tactics to accomplish the turnaround, and the promoter doesn’t have a verifiable tract record of success.

I think the appreciation is spurred by the hope that large tracts of land will be assembled by a developer or institution.

Folks stopped building massive tracts of new homes everywhere, and it was ugly, with a ton of inventory out there for 3-4 years, but eventually we started seeing the big yellow iron back out there putting in new streets and house pads again.