Today’s housing market is piping hot, and people are asking two big questions: “Where can I buy more land?” and “How can we make more developable land?” Before you resort to creating islands off the coast of California, give this week’s New Home Insights podcast a listen. In this podcast Greg Vogel, founder and CEO of Land Advisors, gives us a rundown on today’s hottest topics related to land. Below are some key takeaways.
- Despite solid to strong market conditions, the 2010s did not see a land-buying spree, since high and rising horizontal and vertical development costs put a lid on land prices.
- Absorption rates and pricing power also played a part in restricting the land market.
- Heightened sales paces and tremendous price appreciation have removed that lid.
- All major markets are hot, hot, hot.
- Larger land takedowns are more common to (1) maintain a steady stream of available lots and (2) tap into land value appreciation during hold periods.
- Builders are generally more willing to buy raw land.
- Lot to home price ratios are up everywhere by about 20% (four percentage points), and this is true across all price niches.
- Competition for land between for-sale and build-for-rent land buyers will increase significantly.
- Major infrastructure needs to be done to ensure continued supply of developable land. Support from state and federal governments is needed to help make this happen.
- Use of structured financing and partnerships with major investors will increase.
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