For the last couple of years in the greater Myrtle Beach market, the builders willing to stick their neck out and buy low-priced lots and build spec houses have been rewarded with sales to buyers who had been waiting to take advantage of prices well below those of 2003 to 2007. But most of those $10,000 to $25,000 lots are gone, and lot prices have jumped 20% to 50% and more in our area, depending on location and availability. So to get more lots in the more desirable locations of our market, you need to develop new subdivisions with new lots–which means lot prices are moving up substantially. So now what?
What is NOT happening is that the market is not going to be excited about paying $250,000 for a house on a newly developed lot that is right next to the former bank-owned lot where the builder sold the same home for $200,000 a few months ago. Owners of undeveloped land tracts cannot get so excited about lot prices moving upward that they expect to sell their land for 2007 land prices. If they want to continue to hold their land for a few more years, then maybe we will get there—but there is always the risk that prices will contract again OR that the increases will not outpace the cost of holding (property taxes, interest, maintenance, insurance, and lost opportunities).
The market bottom still needs solidifying in some areas, and in other areas, it still needs strengthening. Lenders are still stingy on any type of land acquisition and development loans, so lots of cash is required for land development. And developers of land are still taking a great deal of risk in putting so much money out there in an improving but not abundant market–at least not abundant enough to allow for a big jump in prices.
So if a land owner wants to sell his or her land, no matter where or how valuable a location it is, the market is still more concerned with “price, price, price” than it is with “location, location, location…” at least for today. You CAN sell your land for more–whether a lot or an acre or a 100-acre tract. But if you go too high with your pricing, you are not taking into account all the factors noted above, and you may find yourself still waiting at the altar for a contract for another couple of years.