What to Know About Land Sale Trends
There is only so much land available, and as they say, they aren’t making any more of it. So if you are looking at buying land, is now a good time? Should you go out and get a loan for land to eventually build your dream home?
Your reasons for looking at land sales could be quite varied. Whether you are looking to build a home, buying land as an investment to develop later, or if you just want to own some land, working out whether now is a good time is always going to be difficult.
When buying stock shares, you are looking for a dip in the market, but the situation may not be quite as clear cut with land. We look at the up-and-coming selling land trends to help make it easier for you to decide.
The Economic Downturn in Selling Land
The pandemic has affected almost everything, and selling land hasn’t been immune. At the very beginning of the pandemic, banks slowed lending, builders stopped their construction projects, and homebuyers stopped looking for new homes. These conditions didn’t last long as you may remember. In fact, real estate markets across the country took off like a rocket ship due to low inventory and high demand.
The downturn was short-lived almost everywhere, and things picked up quickly. We have already seen an increased demand from homebuyers, and with restrictions lifted in many places, they are now desperate to buy property they would have otherwise bought months ago.
This has increased the demand for finished lots that are ready to be built on. If you are selling development-ready land, you will likely see an uptick in interest from buyers and an increased sales price.
Also, investors are looking for subdivisions that have only been partially completed to offer a fast return on their investment funds.
Increased Demand for Walkable Neighborhoods
There has been a push for more walkable neighborhoods from house buyers, and many cities have rejuvenated downtown areas at the same time.
While this might affect land value close to cities that might otherwise have seen future suburban development, this might only be short-term. This has led to land nearer to the center of cities being more valuable, but more rural plots of land are increasing in value too.
Farmland has become more popular because it allows people to really get away from urban developments. This is something more popular thanks to the pandemic and also allows for harvesting crops and even biofuels.
The suburbs have also seen an increase in land values, with more people not having to commute into the city for their work.
Working from Home
The pandemic, and improvements in technology, have pushed more and more people towards working from home. And with more people working remotely, this will increase the number of people that want to live in rural areas.
Living in a rural location also means that homeowners can live a more simple life if they want to. It can mean growing a lot of your own food or just enjoying the fresh, clean air while participating in outdoor activities. More people are likely to be interested in buying land in rural locations, whether to build a home there or as an investment.
Many land sales are completed using land loans, so the willingness of banks to lend affects the overall market value of lots. The financial crisis of 2008 led to banks being more cautious than they were before, and the pandemic might have added to this.
However, as we move on from the pandemic and the financial situation seems more stable, we will likely see increased interest rates. This could change the financial analysis of anyone looking to invest in land and is something you need to consider.
As inflation grows, interest rates tend to rise. It is something that bears watching closely over the coming years.
Buying Land as a Safe Investment
While the stock market and other investments are always at risk of sudden crashes, the same isn’t true of land. Land is less likely to be susceptible to sudden crashes and will generally increase steadily over time.
There is also the supply and demand of land to consider. Since there isn’t any more land being created, and the population is increasing, the price of land is only heading in one direction – UP!
Investing for the Long Term
Even land that isn’t ready for development is likely to increasingly become a good investment choice. As the restrictions of the pandemic become more of a bad memory, even raw land will be more appealing for a long-term investment.
With an increased demand for housing, developers are on the lookout for parcels of land. Despite the greater reluctance for lenders to fund new developments, increases in house prices will fuel demand for land.
Parcels of land in the best locations will naturally attract the highest prices, but demand will spread beyond the best locations if the prices remain strong. This increases the value of an investment in land and is getting the attention of investors. The value of an acre of land has continued to rise year by year.
Should You Buy Land Now?
Since the value of land is generally increasing, you could make a killing when buying land if you could go back in a time machine. But since that isn’t possible, is now the best time?
When you buy shares in the stock market, buying when prices dip should make you a good profit, but the same situation doesn’t quite apply with land. Ultimately, the best time to buy is when you are ready to make a purchase.
You need to do some research and make sure you have the budget to buy land that you might hold onto for a while. If you don’t currently have the budget to buy all the land you want, you don’t have to purchase it all in one go. You could buy some now, and more later on.
Staying Ahead of Regulations
Even with the downturn in the housing market during the pandemic, government regulations haven’t gone away. In fact, there were increases in some regulations during the downturn to add to the cost of developing land.
Part of your research before you purchase land should be to check the regulations. This will show you the costs to develop the lot if that is what you are planning to do.
What Will Happen to Land Sales After the Pandemic?
Of course, no one knows when or if the pandemic will be over. A new variant could come along that is even more deadly than earlier versions of the virus, or it could increasingly become a more manageable problem. Either way, land looks like a fairly safe bet.
You should search for the right plot of land for your purchasing goals, and if the price is right, purchase before someone else snaps it up. Even if the price of your land does drop in the short term, it’s almost certain to make you money in the long run.
Land is a commodity that we are not making more of. The value of land should continue to rise as the economy grows and the population continues to spread out. Hopefully, you have found the information on land trends to be helpful. You should now be better equipped to make a smart land purchase.