Monday, May 11, 2009

Residential Land. Where are we headed?

Posted by: Ryan C. Judson
Land Specialist
775 336 4641

Ryan C. Judson works at NAI Alliance as an associate for the Land Department. His responsibilities include market data mining, researching and tracking distressed properties, and analyzing off-market vacant land opportunities. Ryan received his Bachelor’s of Science in the Business Administration Real Estate Program from San Diego State University in December of 2007. Shortly after moving to Reno in 2008, Ryan obtained his Nevada Real Estate License while working for NAI Alliance and now assists in the acquisitions and sales of vacant land in the Northern Nevada area.

According to Ticor Title’s recent stats, resales have been increasing for the past few months (starting with Feb 09). If this trend continues and foreclosures start to drop we will see median home prices settle on a bottom. Once this happens, new home sales should begin to increase and overall housing inventories should decline.

With inventories dropping, and an increase in demand, the remaining developers will snatch up any abandoned unfinished subdivision projects they can get for a steal. Only with a readjusted basis will most of these projects make sense to build. Bank financing will be available for only the most stable of companies and due to the difficulty of this, developers will need to find new equity relationships with investors who’ve been waiting on the side lines.

The national builders will most likely be slow to re-establish their land development operations as they increase their share of housing starts on their current projects, although, we are currently seeing LOI’s floating around on finished lots in the area from a couple of the publics. This is a good sign and could provide evidence for an earlier than expected market return. Could we see another Great Nevada Land Rush as we did for several years leading up to this mess, or will it be a more conservative process as developers and investors are weary as to not get ahead of themselves? With stabilization of housing prices, a leveling off of foreclosures and a continued increase in number of homes sold, the Reno Residential Land Market could start its return later this year into 2010?

1 comment:

Toomuchcoffeethisamwheeee said...

Excellent article written by Mr. Judson. You seem to be onto something. I too, agree, that we may see another land rush. People are bored of being weary. It's time to kick this up a notch, come out from the rocks we've been hiding under, & recoup our lost savings. Buckle your seatbelts & get ready for a wild ride!