I can see that little demand exists for residential land. I was curious to know what you thought to be the "obvious reasons" why there is little demand.
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Most buyers I am working with are true end users or long term investors. With that in mind, the most obvious reason is why would someone buy a lot and build when there is more than enough finished inventory available at an equal or better price point?
Currently...most buyers (not all of them) are very cautious and want minimal risk with their real estate transaction. The perception (right or wrong) is that buying a finished product is much less risky then buying a lot, hiring an architect, dealing with the DRB and hiring a builder...and hoping the home comes at or under budget. You know what you are are getting at the time of the transaction with a finished product.
If you were looking to buy a car and there were 15 cars on the lot that you liked...would you buy one of those cars and drive it off the lot or would you have GM order one for you? Assuming there was not much difference in the price of the cars.
The car scenario is good. Ordering a car is not much different than ordering a home to be built. If ordering a car could get me discounts on insurance and tax incentives for efficiency, along with higher resale value, the benefits of ordering a car, would likely outweigh buying an existing car. With houses, we are looking at a slightly different scenario because most existing homes were built prior to 2007 building codes and they many are "used" or in the car business, I believe they would say, "previously owned." A new house should have more value than a similar home built five years ago.
You don't have to hire an architect as many coastal cottage plans are available for less than $1000, including some designs which are built in WaterColor. Many lots do not require a building review committee approval. The biggest difference, in my opinion, is that building today, you would be meeting the newest building codes, which should make for a stronger house than many which were built prior to the 2007 changes in the Codes. Also, in the building boom, building supervisors were spread thinly, and weren't able to keep a close eye on all of the homes being built -- that is one reason why we see so many of those homes with the paint peeling off the trim -- they skipped the primer step. Knowing which types of construction finishes give the largest insurance breaks can also be worked into a new build, giving discounts every month you write the check to the insurance company. Also, there are some discounts given for green building technologies, and that can also reduce monthly expenses. One last advantage I'll mention is that you are getting a new home, which will likely have more resell appeal, and you can build exactly what you want to build, rather than having to choose from the existing inventory.
Sure, there can be advantages to buying existing homes, such as not having to decide on what to build, not having to deal with a contractor whom you don't know (although you will be dealing with a contractor's work if you buy an existing home), you know the final cost (or do you? What will need to be replaced or repaired), and of course the most obvious -- you can move in today.
For someone looking to sit and hold (long term), a lot may be a good choice. It is much less expensive, so you will be better off financially compared to buying a house, if you loose your job or some expensive emergency comes up. Also, you don't have to worry with the expense and hassle of maintenance, nor do you have to worry about utility bills, renters' wear and tear, management fees, higher taxes (compared to a lot), etc. With the lack of interest in lots, I think you can find more growth potential from lots than existing homes, at current prices.
You don't have to hire an architect as many coastal cottage plans are available for less than $1000, including some designs which are built in WaterColor. Many lots do not require a building review committee approval. The biggest difference, in my opinion, is that building today, you would be meeting the newest building codes, which should make for a stronger house than many which were built prior to the 2007 changes in the Codes. Also, in the building boom, building supervisors were spread thinly, and weren't able to keep a close eye on all of the homes being built -- that is one reason why we see so many of those homes with the paint peeling off the trim -- they skipped the primer step. Knowing which types of construction finishes give the largest insurance breaks can also be worked into a new build, giving discounts every month you write the check to the insurance company. Also, there are some discounts given for green building technologies, and that can also reduce monthly expenses. One last advantage I'll mention is that you are getting a new home, which will likely have more resell appeal, and you can build exactly what you want to build, rather than having to choose from the existing inventory.
Sure, there can be advantages to buying existing homes, such as not having to decide on what to build, not having to deal with a contractor whom you don't know (although you will be dealing with a contractor's work if you buy an existing home), you know the final cost (or do you? What will need to be replaced or repaired), and of course the most obvious -- you can move in today.
For someone looking to sit and hold (long term), a lot may be a good choice. It is much less expensive, so you will be better off financially compared to buying a house, if you loose your job or some expensive emergency comes up. Also, you don't have to worry with the expense and hassle of maintenance, nor do you have to worry about utility bills, renters' wear and tear, management fees, higher taxes (compared to a lot), etc. With the lack of interest in lots, I think you can find more growth potential from lots than existing homes, at current prices.
1. b/c you can buy a house for cheaper than you can build it
2. i can't generate revenues from land only (or at least it is difficult)
3. the spouse thinks tents make poor living spaces
4. who wants to live in a ghost s/d
5. you can get a 30 year mortgage on a home but probably only 15 on some dirt (i.e. you monthly payment on dirt may be higher than a home)
6. 10 years of inventory
7. unrealistic prices
8. why buy now when prices are likely to appreciate only negligibly for the next several years
& surely some other reasons
dude, several of your examples also apply to homes.
very true; but the ? was not compare & contrast
Well happily there are still many people who eagerly look forward to working with architects - whilst there certainly exists a high percentage of people who cannot be bothered with the involved design and build process and who are attracted to the idea of immediately finding a house they could live in; there are those people who are entirely engaged by design and who would only purchase raw land IF they can then get the house they are dreaming of.... we need more like them but they do exist!!
We are starting to see a little trend on some sweet raw land deals getting gobbled up. These long term buyers are going to hold and build their dream homes. I recently put 2 lots under contract for $55,000 and $53,000. The original owner paid $450,000 and $600,000! I think these buyers in the $50,s will be ok.;-) Walking distance to the beach!
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An 80-90% drop in value--how is ECAR going to doll that up on their sales statistics?
...did the $395,000 and $547,000 differences just disappear--or are our kids going to end up saddled with that debt sometime down the road? Sweet deal for sure--for the folks on both sides of this trade.
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Not really sure how the differences played out. These were bank owned foreclosures so I would bet our kids will be saddled with the debt sometime in the future.