What does the second sentence mean?
Buffett said he sold his Laguna Beach home for $3.5 million. He figured the house was worth $500,000, so the one-twentieth of an acre lot went for $3 million. He surmised that $60 million an acre is a pretty fancy price for any kind of land.

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He sold his house (which sits on land) for $3.5 million.  He thought the house itself (independent of the land) was only worth $500,000, which means that the remaining $3 million must have been for the land.   The size of the land in question is only 1/20th of an acre (an archaic measurement of land area still in use in the US, I believe), so on that basis, a whole acre would be worth $60 million - which in his view, is rather a lot of money.