As the real estate market continues to improve, we are seeing sales increase and inventory decrease. I am now experiencing land owners surfacing again. Within the past two years, they submerged with their land into hibernation. There was such a glut of new construction available that no new projects were being presented to the planning board.
Now that we are seeing light at the end of the tunnel in our area, I need to replenish my land supply for developer/builders who need to continue to develop new projects. Life goes on, even during a recession and certainly during the recovery period.
The prices have to be adjusted to coordinate with the new values for the end product, and that's half the battle. Convincing the land owner that his finished lot is no longer demanding a price of $250,000 to $300,000 will be the next challenge. The new price range will sound more like $150,000 to $200,000. The land developer/builder will use the realistic end price and work his numbers backward to establish what an undeveloped lot may be worth. The finished lot price and the price of a new home on that lot are the two numbers that the real estate agent needs to provide to that developer/builder, so he can determine what his raw land cost will be. I will make my recommendation for the size of the home to be built for that price and the list and magnitude of amenities for the home. I will determine an absorption rate for the developer/builder for that home in that specific area of town.
The challenges are many, but when (not if) we are successful with our land presentations to our developer/builders, our inventory will continue to be replenished, as our current subdivisions sell. Right now, there are still no new presentations at our planning board or town council meetings, but I feel they will soon be visible again. The time has come.
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