Tallahassee Land And Lot Sales June 22, 2010
Currently, demand for residential lots continues to fall, as barely more than 30 lots per month are selling in Leon County.
Considering our normal level for the past twenty years is closer to 175 lots per month, this is a major drop. And prices have followed the trend set by unit sales. The average price trend of a lot has dropped from $113K set in 2006 to $51K this June, for a whopping 54% drop.
New home sales are needed for lot sales to flourish, and we have already seen that new building permits are down as well.
Prices will continue to drop in lot and land sales, as banks and developers dump inventories of developed lots to investors who are willing to wait until the market returns.
Monitor Home Building
The large drop in lot prices means that some builders can purchase lots significantly lower than the cost paid by current home owners. This will allow builders to bring new construction to the market cheaper than existing home sales, which of course will create more pricing pressure on the existing inventory. Watch for this to occur in some of the “newer” neighborhoods, and resales in those neighborhoods will be worse off then neighborhoods that have little to no lot inventory remaining.