A building lot market update from Frederick County’s leading land expert…
It’s been almost three years since I’ve reported on the market for building lots.
At that time, early 2014, the market was finally starting to show glimpses of recovery from the huge downturn that occurred between 2008 and 2011. So where is the market now – has it continued to improve?
Just about any active real estate professional involved in the market for land would probably say the market for lots remains soft based on anecdotal evidence – but does the data support this? Well, yes it does.
The chart below shows the performance of what I’ll call “custom home lots” in Frederick County over the past 15 years, where custom home lots are defined to be 1 to 2 acres in size, have existing water and sewer or septic supply, and are sold through the local multiple listing service (MRIS).
From the turn of the millennium until 2006 there was a tremendous run up in real estate prices, including lots. In hindsight, it’s easy to see that the market was overheated. The median price of custom home lots increased from $69,000 to $253,000 in six years – that’s a 24% annual increase compounded for six years – it seems insane now, doesn’t it?
As prices reached “pie in the sky levels,” the number of sales declined, and of course, the price bubble burst in 2007. From ’07 through ’11 the median price dropped to less than 50% of its peak and still very few lots were sold. Over the past several years, it appears that the market has stabilized. Both the median price and number of sales have been flat.
This is typical in the market cycle for real estate; after a downturn, the market “bumps along the bottom” for an extended period.
Normally the next phase in the cycle will be an upturn in sales causing prices to rise. When will the expected upturn occur and how strong it will be is uncertain. As of this moment it’s still a “buyer’s market.”
If you’re in the market to sell or purchase lots, land or farms, please give me a call or email me at firstname.lastname@example.org. I’d be honored to assist you in your evaluation and help you achieve your goals.
Dave Wilkinson, Vice President, joined MacRo as Director of Marketing in 1992, and has served as Vice President since 1997. Dave holds a B.S. and M.A. in Economics from the University of Delaware. Dave is a licensed Realtor and brokers most of MacRo’s land and farm deals.