Land sales making a comeback
December 30, 2011
"Activity is way up across the board," said Cassidy Turley Fuller Real Estate Vice President Russell Baker, who specializes in land sales. "Last year we were selling more to investors; this year it's been to builders."
It is likely to be years more before land sales reach peaks seen before the downturn, but Baker said he began to note a rise in lot sales over the last six to nine months.
In one of the larger deals, Landmark Homes, a Windsor-based developer, purchased 88 condo lots and associated water credits from CTF in the Centerra development in Loveland. The development is called Lakeshore at Centerra, and its homes are priced between $138,000 and $144,000, according to Landmark CEO Jason Sherrill.
The development is currently under construction, but those homes that are complete have already been sold, Sherrill said.
A lot of the movement in land sales is a result of distressed property sales, allowing builders to acquire sites at much more affordable prices, according to Sherrill.
"People want the best with interior features, like high-quality finishes," Sherrill said, "and buying distressed land at a good price allows builders to be able to offer those things at a competitive price."
Being able to sell homes at a lower price with higher quality finishes allows new-home builders to better compete against existing homes on the market including the inventory of residences in foreclosure, he said. Landmark is planning on buying up a few more distressed lots in the new year, according to Sherrill.
Baker also expects to see more land sales in 2012, as banks try to cleanse their books of the distressed properties they acquired during the recession.
Investors also are taking advantage of the lower prices, according to Peter Kast of Realtec Commercial Real Estate Services.
Kast has seen an increase in land sales in the last four to five months, and said that often investors are holding on to what they acquire, either to develop later or sell for a higher price when the market recovers more fully.
The deals are plentiful
In some cases, prices are down 60 to 80 percent from their peak in 2007, according to Michael Ehler of Realtec.
Ehler cited a recent sale in Loveland in which 8.6 acres of industrial land sold for $2.50 per square foot, down from as much as $8 in 2007.
Ehler also said demand is slowly picking back up.
"I've seen more optimism in the fourth quarter," he said. "Things are looking good for 2012 as well. I believe that we talk ourselves into a recession, and we can talk ourselves out of it. The positive thinking is going to go a long way."
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