Everything started with the price of dirt. It’s true what a builder pays for the land impacts what they build. That explains what happened when average lot price doubled and tripled in the early 2000s
As building lots got more expensive, builders were forced to build larger and larger, ever more expensive homes.
It seemed 3000 sq ft or larger homes were everywhere. And, no one offers a big home without including special features. Granite counters in kitchens, 42" cabinets, ever larger amounts of hardwood floors and luxury baths were standards in oversize homes.
By 2006, both the lot boom and building boom were over. Builders finished homes and reduced prices to sell. In 2008, home prices started to come down.
As for the dirt, only a handful of expensive lots sold in 2008 and 2009 while the number of lot listings grew larger and larger. In 2010, a handful became a trickle as lot prices began to slowly drop and foreclosed lots appeared for sale. In 2011, the trickle grew larger. At some point, there will be a flood of foreclosures creating more downward pressure on prices.
Everything started with the price of dirt and the dirt will play an important role in recovery. As lot prices make sense to buyers, they’ll purchase and builders will be eager to help
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