Why would the sale of lots be a sign of a shifting market?

Real Estate Agent with Keller Williams Realty 0374754

Lake Front Lot

Why would having 5 lot sales shake the market a bit?
When a market goes south, the first to slow and then come to a complete halt is lot sales.  At this point, in our market, it makes zero financial sense to buy a lot and build on it; as, I can could give you a $200,000 lot for free for you to build on, and I could still find a comparable house that is about a year old that is substantially cheaper than the construction costs alone.  Thus, that is why lot sales go to zero.

In my farm area, there are bit over 100 lots that are on the market, some on the MLS and some not.  In the past 9 months, there have been zero sales.  In the past 4 weeks there have been 5 contracts with 4 closings.....with prices from $100k to $1.7mm.  Thus,  there are 5 people who could care less about the financial decision as they want to build what they want despite that fact that it does not make financial sense whatsoever.

This is usually a major sign that there is a new shift in the market; or, it could be merely a fluke.  The fact that there are 5 in such a short period of time is eye opening.  Though I still think we are in the middle of a bump in the market, this may be a sign that I am wrong and that a true recovery in our market may be forthcoming much quicker than anticipated.

We saw this exact same thing occur in 2004 after our recession in Austin from 2001 to 2004.  Let's see what happens in the next coming months.  Cautiously excited........


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Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Interesting -- will look for that trend in our area and see what it means.

May 16, 2009 12:23 PM #1
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY

Hi Tim~ You are right.  In this market and economy it makes no sense to build when you can buy for less!  Now, some just have too much money and they just don't know what to do with it.....  

May 16, 2009 12:26 PM #2
Connie Lou Barnett
Real Living/Home Realty - Owensboro, KY


     That is very interesting.  Let's hope it means we have bottomed out and the market is turning around.

Connie Lou

May 16, 2009 12:52 PM #3
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

I know people (very successful) who bought lots looking forward about 3 years...1 for planning and 1.5 for construction, marketing and closing.

I think it's a SIGN....

May 16, 2009 01:39 PM #4
Lisa Udy
Platinum Real Estate Group - Logan, UT
Logan Utah Realtor

Hey Tim,

I have seen two lots go under contract this week here in my market, I wonder if that is the same sign as your market. I know our lots have died since 2008, but if they start to pick up, you know it's a shift.


May 16, 2009 01:58 PM #5
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Hi Tim

Sounds like your market has shifted, and is headed in the right direction.

Good luck and success

Lou Ludwig

May 16, 2009 02:02 PM #6
Tom Thornton
Realty Austin - Austin, TX
Broker Associate, MBA, ABR, CRS, GREEN, GRI, SRES

It's tough at times to be patient when clients ask in this market about building, but you make a great point - sometimes it's not about the money, despite the fact that we agents analyze decisions in that way!

May 17, 2009 01:53 AM #7
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