Land Sales Could Slow

Posted by: Peter Coy on October 31, 2005

Owners of undeveloped land still have dollar signs in their eyes. But with the housing market cooling, builders aren’t so willing to pay up for buildable lots. That means there could be a huge gap between the price owners are demanding (high) and the price builders are willing to pay (low). When that happens, sales slow dramatically.

The always-interesting John Burns of John Burns Real Estate Consulting in Irvine, Calif., spelled out this argument in a brief analysis today. Check it out.

Reader Comments

Wes

October 31, 2005 4:14 PM

I was considering buying a 3 acre lot just outside of town last year. The landowner wanted $45,000 ($15k/acre) and I noticed in the property tax roll that he paid $150k for the whole 20 acre tract the previous year.

I remember less than a decade ago when land was $5k an acre. Greed makes people do stupid things.

Boe Clark

October 31, 2005 7:17 PM

The blogger speaks of land (improved and unimproved I assume), as if it were a homogeneous commodity. Prices are going down...in which markets? In Florida, Arizona, and Texas? Or in California and Colorado? In urban, sub urban, ag, commerically zoned, or residentially zoned land? 10 miles, or twenty miles, from population centers? In urban infill areas? With or without utilities/services?

Generalities get us nowhere...specifics you can use to make prudent investment decisions with.

Peter Coy

November 1, 2005 10:30 AM

Boe,

Point well taken. Specifics are always better. In fact I'm going to point out your comment on the Real Estate Investment Ideas? thread.

Peter Coy

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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