Laclede County MO stats for September 2008

Deb, Do they have a lot of land parcels for sale?   I too am surprised, once gone it will be exactly that, GONE!

Wonder if the lack of land sales has anything to do with land being one of the types of property that is harder to get financing on?

Bank of America and Countrywide both had LOT loans a few months ago, and both companies, along with many others, have suspended lending for lots.

Vacant land loans have always been harder to come by apart from Farm Credit's speciality loans.

The difference between "vacant land" and a "lot" is the lot is in a subdivision's recorded plan with utilities available, road access, etc, while "vacant land" may not even have road access, etc.

Deb,

One thing for sure is that you have some nice size fish and clear streams there in Lebanon.  The number of sales, is that a real slow down or just about normal?

Debbie,

Two main distinctions on the risk of vacant property vs. that with a home on it.  The first is the availablity of a buyer, should the collateral be foreclosed on.  As we can see in the current market, banks don't want to have an inventory of homes because they can't liquidate them for a profit in most cases after a foreclosure, and that is even more true for vacant land.   A lot or land with a home on it is much more likely to sell faster than a vacant lot or land where the buyer has to actually build a home on it.  The current market is a very good example of this since we can all see that new construction is pretty well dead on a relative scale compared to existing home sales.

Secondly, in the case of vacant land, it may not be acceptable for zoning laws, which can always change until built upon, and, in some cases, roads can't even be built to get to the property without a recorded easment in place....let alone right of way easments for utilities, phone and cable.  Lending is always about the risk of both the borrower and the property and the property is just important as the borrower...more so than ever now.  Banks have to stay "liquid" to stay in business, and no matter how valuable a property may be "some day", if it can't be liquidated for a profit immediately so the money can be used to lend to other clients once it is foreclosed on, it is bad news for a bank.  Again, today's marketplace is evidence of this.  Banks own a LOT of properties right now that will undoubtedly be very valuable in the future.  But if the banks don't have enough money to stay in business because they are not getting payments in on the loans they paid out for those properties, it doesn't help them.

It's all about liquidity and the less liquid the property, the less desireable it is as collateral.  The longer it might take to sell, the less desireable it is.  Just like equity for a homeowner...it doesn't really affect your "net worth" unless you sell it or borrow against it.  That is only wealth on paper until it is sold or a loan is closed taking cash out that you can use.