Land sales are a large part of our business in the mountains. By all accounts land sales are really really slow. Some communities have a 2 year inventory at the current rate of absorption. There are 3 things that effect land sales here.
1 Investors. In the not so long ago days of easy money investors could buy land to hold for investment with less than good credit for very little down. Those days are over. So the easy money that fueled speculation has dried up slowing the land markets price increases incredibly
2 But the Question of building has effected us as well. In today's market you can build home all things being equal for about 105 thousand dollars. This is a 1 /2 with about 1500 square feet. Now we are talking laminate counter tops and we are not using Viking stoves. This is good. And with land prices where they are you would thing folks are jumping. However you can buy an existing home of this size for the same money. And since my building example did not include the land price it is less expensive to buy existing.
The other factor is buying a foreclosure or a distressed property. You can buy a property for under 100k that needs work and rehab it for less than a new property. In the end you have in effect an updated property.
3 Loans are harder to get for construction. On the other hand you can get a package of loans for rehabs (FHA 201) or USDA at 100 percent financing.
So in the end land sales here are sluggish. They will lag behind the housing recovery. If you are buying for investment.be prepared to hold for a while. On the other hand if you are looking for your "Green Acres" Now is a great time to buy.
****************************************************************************************
Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog
On line at www.allmountainrealty.com Call at 706 579 1098
Our next door neighbor is a home designer...he says one of the problems he has now is that people add every bell and whistle into their plans that they can....and then go to look at financing and now the house won't appraise for what they have designed in it...urggggh...
If you can hold, land in a down market is not a bad investment. Things will go up again.
We are having issues with land sales here. Currently it's much less expensive to buy an existing home and rehab or even tear down compared to prices for land.
Until the foreclosure market settles down in about 18 months, it's going to be really tough for builders and resale sellers in many markets.
Charlie,
With all the inventory out there there's no way you can build for the cost of existing building.
Hi Charlie! I too am experiencing this crunch in regards to the sale of lots to builders by developers I work with and raw land that I have that would be very appealing to developers if they did not have such a high inventory of lots! That along with the high cost of building materials has made the resale market with its low prices much more appealing and left the Builders that I represent with homes sitting on the market or cut to the bone with no profits. Hopefully things will turn around soon! Thanks for sharing your market info.
Charlie Although I don't live in a mountain area - our radio is filled with ads offering big discounts on retirement sites in WV, Karen