Land Still Sells Above Asking Price But For How Long

Land prices in many markets, including areas such as Austin, and for developers looking to expand their build-to-rent portfolios, have seen quite the surge.

Northmarq’s Scott Lamontagne, managing director, investment sales, said he recently announced via email a “Coming Soon” blast for land that within 48 hours had five bids that were roughly $500,000 above the list price.

“It didn’t have any other info other than ‘Coming Soon,’ he said, speaking on a panel at IMN’s Build-to-Rent East Conference in Nashville on Thursday.

The post was then marketed in the usual online fashion for the next two weeks and Lamontagne said he anticipates selling it for $750,000 to $1 million over the asking price.

Survey Suggests Minimal Depreciation

Brokers and developers wonder how long that demand will last and at what price.

Land prices in 2023 are expected to stabilize with limited depreciation according to a new report from brokerage National Land Realty (NLR).

“Agents are looking forward to 2023 being another busy year where they expect buyers to make use of opportunities offered by a limited price correction,” NLR said in a release, based on their recent survey. “They remain positive about their business prospects this next year with almost two-thirds [64%] either somewhat or very optimistic.”

NLR’s Jason Walter, CEO, said in prepared remarks that even with the macroeconomic headwinds on the horizon, most of his agents continue to be positive about their business prospects over the next year.

“Buyers continue to look for investments that offer stability in economically volatile times and land continues to be appreciated by investors for the stability it offers.”

Only 7.54% of agents participating in the survey foresee a depreciation of more than 5% this year. Nealy one-third are not expecting any appreciation at all, according to the report.

NLR’s survey showed that there was a notable land appreciation in the rural land real estate sector in 2022 with almost two-thirds [64%] of agents seeing a slight to an often-significant increase in land values, with recreational, farmland, and residential being the standout types.

2025 Land Pipelines ‘Don’t Have Enough’

Jim Jacobi, president, Atlanta-based Parkand Communities, also speaking at the Nashville event, said, “Prices aren’t coming down soon. When we talk to developers about their land pipelines for 2025, they tell us they don’t have enough land. There’s a frenzy going on in Atlanta.”

Jeffrey Lucas, vice president, JEN Partners, also said at the event, “The appetite has really surged in the past year. Everyone is interested in [acquiring land]. More people are getting involved in this.”

Another panelist, Mike Bednarski, managing partner, LyvWell Communities, said, “Land prices were falling and that sort of came to a halt at the end of 2022. Now, it’s going the other way.”