There is just about a complete dearth of new construction in mid country priced in the $3-$3.5 range and that’s too bad, because demand for an acre or two and a new house south of the Merritt is huge and unslaked. You’d think that if builders can pay $1.4 for lots on Hearthstone and Bramble in Riverside and build new homes there that sell for $3.4, that same thing could be accomplished in mid-country, but it’s not happening – why not?
Basically, because there’s little good land available at a price that would make such a house profitable to build and sell. I ran the inventory right now from $975-$2,500,000 and of 26 properties, there were six that might have potential, by which I mean an existing home that hasn’t been expensively redone by the owners, who will expect someone to pay for those improvements, a good lot and a good address. And even those six aren’t sure-fire home runs, to mix metaphors.
An end user who didn’t need to realize a profit might go up to $2, even $2.5 million for land and could probably find something but for now, there’s not much out there. Which is too bad, because if there’s an average mid-country buyer it’s a young couple, two kids and planning a third, looking for 1-2 acres, newish construction, south of Merritt, Greenwich address, Central Middle School district and a yard with at least room for a pool, all for $3 million. They aren’t going to find much of that – I believe I just sold the last one, but $3.5 can find them “newish”, not new. A builder who can provide new at $3.5 will sell before he’s even done.
If I were a spec builder I suppose I’d be willing to come to the market with a product as described above at $4.5 million, tops, but I’d sleep better at night if I could get out with a profit at $3.5 – there are so many more buyers in that lower price range. Above $4.5 and you’ll want a patient lender with pockets deep enough to hold on for a while.
So for now, mid country buyers should focus on homes that can swallow $500,000 in improvements and yield an almost-new house. And builders should be knocking on doors of older homes, wearing a persuasive smile and toting a checkbook. There’s business to be had.
Or that’s how I see it, anyway.