Interesting to see the disconnect between asking prices and buyer’s opinion of land values these days. Right now, commercial builders are pretty much off the market because, at least from what I hear, banks won’t lend on speculative projects: no buyer signed up before ground is broken, no money. Without those people providing a critical mass and a floor, there’s a very, very limited market for raw land. And those who are looking seem to be parsimonious in what they’re willing to pay.
There are a number of good-looking building lots on the market right now and the only activity I see from them is price cuts. Langhorne Lane has dropped well over a million dollars, 718 North Street (there’s a house on it but it’s listed as land as well as residential so we can assume the seller is just trying to get land value from it) has dropped from $4.350 million to $3.2, a bit of a whack since the seller paid $3.583 for it in 2001, and right next door, 714 North just dropped from $5 million to $4. There’s a foreclosed, bank-owned six acres on Round Hill (507?) behind the church that’s sitting unsold for $1.9 million. Six acres on Round Hill Road and no one wants it! Admittedly, the land is challenged by its steep slopes and back-lot location but there was a time when someone would have wanted it. Not now, apparently.
Low end land is even deader, if possible because there’s almost no value there (in my opinion – my brother Gideon disagrees, so take your pick). When I see land on a street that, at best, would support an $800,000 house, I can’t see attributing any value to the land itself. It would cost just about that much to build a house, so where is there room to pay for land? Perhaps some of these sellers should offer to pay people to take the property off their hands.
The land sales that have occurred in the past six months have hovered around $3 million (waterfront on Indian Head sold for $10,000,000 but that’s different). The disconnect here is that most land for sale is asking far, far more. Land is cheap to hold, relative to maintaining an empty house, and that’s good, because I think these land sellers will be holding on to their property for a long time.
UPDATE: Here’s a thought for you land sellers. I just pulled the statistics: there are 77 active land listings on the market as I write, ranging from $450,000 to $25,000,000. There have been 2 (two) land sales in the past 12 months, each for under $500,000 and a couple of house/land combinations for more: 226 Round Hill Road, $3 million, 384 Round Hill, six acres, restored 1745 house, $3.4 million. With the exception of the bank owned six acres behind the church, everyone else with land for sale on that street is asking $5 million or more. Why? Because their land is special, you dolt – don’t you get it?