The following MacRo Report entry is written by Dave Wilkinson, Vice President of MacRo, Ltd. regarding the current land market in Frederick, Maryland.
Recent data indicates that residential real estate has hit the bottom of its cycle and is improving. My clients are asking how, and when, this will a ect the market for land in our region.
Home prices are trending upward while the number of foreclosures are down. September data for Frederick County shows the average home sale price is up 8.5% from the previous year, while the number of active listings is down 29%. While most housing experts are forecasting an extended period of modest price increases, a recent report from Barclays Capital indicated that housing prices could rise between 5% and 7.5% annually through 2015 due to robust demand coupled with constraints in supply.
Typically, land lags behind the residential sector, and the market for land hasn’t been a ffected by the improving residential market yet. While CoStar reports that 2012 may be the first year since 2005 that the national volume of land sales will be higher than the previous year, buyers are proceeding with caution. Builders and developers require well located properties with low development risk, and all buyers are motivated by low prices.
The market for individual lots in Frederick County is still soft. The number of “buildable” lots sold thus far in 2012 and the median sale price are on target to match the low levels experienced over the past five years. One area of concern is the market for large properties: while four properties over 100 acres sold in 2011, only one has sold in 2012, and the number of active listings has swelled to twenty. Demand from investors and ‘gentleman farmers’ has all but evaporated and ‘full time farmers’ are only willing to purchase at prices that yield a positive return from agricultural activities. Agricultural preservation programs can reduce the cost of acquisition for established farmers, but government funding for these programs is down substantially over the past few years.
Regardless of the economic climate, opportunities always exist for buyers and sellers. Rocky and I have each been in the land business for over 20 years and are well-qualifi ed to assist in the acquisition or disposition of farms, development land and buildable lots.
Please give us a call if we can help you in any way.
Dave is a licensed Realtor and brokers many of MacRo’s real estate building lot listings, using his knowledge of zoning and subdivision regulations, real estate market conditions, and land development options to help MacRo’s clients achieve their goals. Contact Dave at 301-748-5670 or dave@macroltd.com
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