Raw Land PIcking Up?

I don't handle much raw land, so don't follow that segment of the market closely. But in the last week, I've picked up that there has been some land moving — and for the construction of a personal residence, not for gas leasing or speculation. A beautiful 33 acre piece with big views, listed at $299K, has a deal on it, as does another 4 acre Beechwoods view parcel listed at $88K. On Lake Devenoge, a 1 acre lakefront lot listed at $249K also has a deal. And over the past month, I've gotten a number of calls from buyers looking for some nice land for personal use.

I wouldn't call it a land rush, but it's a positive sign that there is serious buyer interest in raw land. Back in the spring, nobody was looking for raw land to buy and build, and the only parcels moving were a handful of dirt cheap distress sales. By the way, I understand from the scuttle I've picked up that the 3 pieces I mentioned above are all selling at or pretty close to their asking prices.

Comments

[Dr. J]

David, your remarks do more harm than good. Trying to create demand by flaunting 3 parcels that were overpaid by 200-300% is not going to draw customers to buy raw land. Furthermore, lakefront does not compete with other raw land. It lies within a category of its own.

If you take the average price per acre (APPA) for raw land larger than 40 acres in size that has actually sold since January 2009 in Sullivan County, you will find the APPA to be less than 2000 per acre. Astonishing!

I challenge you to do the math.
I have and it is depressing for sellers.

[ralph]

#...and somebody say to me at CAFE DEVINE that ChasP bought a few vacant lots in Tusten for close to 40% (!) off the asking price.

Now, David - THAT was a distressed sale,

Ralph

via twitter

[David Knudsen]

Where, exactly, are you getting your numbers, Dr. J.? Yet again, when a naysayer posts data on here I can't replicate the data. In the Sullivan MLS there have been 3 sales of 40+ acre parcels since 1/1/09:
64 acres - $455,000
69 acres - $320,000
55 acres - $ 90,000
The total is 188 acres for a total of $865,000, or $4,601 per acre. Definitely down from where those parcels may have sold a year or two ago, but no matter how many times I try to divide those two numbers, I can't come up with $2,000 per acre.

The point of my post wasn't to pump land sales, but that there have been some buyers in the market looking to buy land to build a house. That wasn't the case 6 months ago. Just like when we went a few months with no lakefront sales, and then have started to see some lakefront sales, it's another indication that there is buyer interest returning.

I happen to know the 3 parcels I mentioned, and all are very nice pieces. The 33 acre parcel in the Beechwoods, in fact, is one of the most stunning view parcels on the market in the last couple of years, with 180 degree, 50 mile western views.

Even if your price per acre number was correct, it's not a particularly useful indicator. It's similar to saying that houses in Sullivan County cost so much per square foot. You can buy a house here for less than $50 per square foot or for more than $250 per square foot. But they're not in the same category. Likewise, these 3 pieces of land are very nice.

I work with very few clients any more on raw land. Not because I don't like land; I do. But because there is so little very nice raw land available that it can be just a lot of wheel spinning. There is a lot of 'commodity' land on the market - 5 acre wooded building parcels, or larger wooded parcels. But there is very, very little land available with special or unique features, like beautiful views, ponds or nice streams or creeks.

[David Knudsen]

Ralph, there were 3 Catskill Farm purchases reported in the Sullivan MLS in Tusten --- at 76%, 65% and 77% of asking price, respectively. Good deals, but the rumor of 40% off isn't quite accurate.

[Dr. J]

David,

You cannot limit yourself to MLS data.

You must look at ALL SALES including June SC auction and private sales by owner.

[Dr. J]

By the way, if you are looking for good deals on huntable raw land, I suggest Columbia County.
Prices over the river have declined much faster due to the steep incline they experienced after 9/11. I have seen non-mls land sell for around 3k per acre. Much better deal than for depressed Sullivan. I wouldn't pay more than 1800-2000 for raw huntable land in Sullivan.

[CF]

and the rumor that the sales were distressed is not true either. We've bought 98 acres of land over the last 5 months (10 building lots) and while Catskill Farms definitely got a good deal for buying when no one was, none of the sellers were distressed. They just wanted to sell, and we found a price that worked for them, and for our homes (and subsequent homeowners).

[David Knudsen]

Dr. J., that is a good point, and if someone was paying me big bucks to do nothing but analyze data, I could get really accurate. But if you look at total sales that come through property recording rather than the MLS, you need to review every sale individually to determine it's applicability. For example, sales that show "Co of Sullivan" as the seller could be arms length auction sales, but they could also be tax redemptions back to the original owner after the county has taken title. You can tell that may be the case by looking at the owner history in the property record. You also need to qualify anything where a land conservancy is either the seller or buyer. In the case of the Open Space Conservancy being the seller, with a particularly low sales price, the sale could likely be part of a land swap, and if they're the buyer, the sales price could be low due to the sale being tax advantaged to the seller because the land is going into conservation. You also need to take into account whether a property is landlocked, which is the case with a few particularly low priced sales this year.

I went through Realquest, an online property records database I subscribe to, and came up with 9 apparently arms length sales (no tax redemption, no conservation involvement) of 40+ acre raw land parcels since 1/1/2009. Full disclosure here: because Sullivan County doesn't electronically report sales, the Realquest database is a few months behind, and the latest sales recording date in this group is 7/10/2009. So any June auction sales wouldn't have come through yet. But nevertheless I came up with a total of 907 acres sold in this category with a total sales price of $5,692,000, or $6,275 per acre. Prices ranged from a low of about $900 per acre for a landlocked piece to $25,700 per acre for a parcel off of Hiram Jones Road above the Neversink River.

I don't think you can draw any more conclusion from the $6,275 per acre price as your $2,000 per acre claim, Dr. J., because land is so, so different, with different values that derive from different uses.

[Ralphie]

Dave,
There have been exactly five vacant lot sales in Tusten for all of 2009 - nine plus months to date.

Not exactly gangbusters, eh?

Count 'em - Five.

ChasP and his enterprise accounts for three of those sales.

In addition, if you run the numbers comparing the OP the final sale, you'll see that:

* they were purchased at 34% of the original price (believe me, that was a deep discount for the seller when you factor his original cost basis, survey, engineering and annual taxes).

* fair value {September 2009} for vacant buildable (pit/perc approved) wooded lots in Western Sullivan County are now priced at about 5k to 6k per acre for parcels in the 4 to 10 acre size range - no longer 8k to 15k - and there are plenty of inventory. And, if the size range is from 11 to 20 acres - drop the unit price to 3.5k to 5k.

~it's Ralphie

via twitter

[David Knudsen]

Ralphie, not sure where you're getting "34 of original asking price." Here are the 5 Tusten raw land sales from the MLS, with the sales price, final asking price, original asking price, and sales price as a percentage of that original asking price:

Sales Price Final Ask Orig Ask % of Orig Ask
$20K $20K $20K 100%
$37K $57K $60K 62%
$37K $49K $52K 71%
$81.5K $89K $89K 92%
$11K $145K $169K 66%

I'm not disagreeing that prices are down. I would, however, disagree with the "plenty of inventory" comment. Yes, there is plenty of inventory of wooded building lots, but not plenty of inventory of parcels with special features, like big views, large streams or ponds.

[David Knudsen]

I think this thread is a pretty good illustration of danger of less-than-accurate information. I hear it all the time from buyers --- they've "heard" that land in Sullivan County is going for less than $2,000 an acre, that a lakefront house on such and such a lake just sold for $175,000, that 'everything' is selling at fire sale prices, and on and on. There is a lot of real estate rumor mongering here; it's practically a parlor game. I probably hear more than my share because lots of folks buttonhole me with "Did you hear ...?" in the grocery store and at dinner parties. I'm happy to get the scuttlebutt because every rumor isn't wrong. But I approach every "Did you hear?" with a wary eye until I can confirm it.

[CF]

I look for land all the time and I can pretty much say it's not easy finding good land at reasonable prices. You would think it would be easy, but it never seems to be.

[David Knudsen]

Amen. I second CF's comment. There may be a lot of land on the market, but not much good land. Let's see, we can rule that out because of road noise from Route 17. Thumbs down on that one because half of the acreage is designated wetlands. And that one? No road frontage and access via a right of way that doesn't include a utility easement. That one? If you like a moonscape aesthetic, you'll love it, since half of it was an old gravel quarry.

[Ralph Von Strasser]

C'mon gents.

Run the numbers.

For example.

=====================

I. 59.9 --------> 57 ---------> SOLD @ 37
[DOM was 512]

II. 52 ----------> 49 ---------> SOLD @ 37
[DOM was 506]

III. 169 --------> 145 -------> SOLD @ 111
[DOM was 505]

===================================================

It's a bit disingenuous of CF to say that "it's not easy finding good land at reasonable prices" especially when these wallflowers had been listed for a little less than a year and a half.

Dave, these parcels were mostly wooded - no water with mediocre views - in my opinion, run of the mill vacant lots in Western Sullivan.

One good thing - these sales exemplify that buyers should pay no more than 25k to 32k - not 40k to 60k for an average five acre lot in September 2009.

They will be less come winter.

Ralph

via twitter...do you twit?

[Sam]

Good land is hard to find but it depends what you are using it for.
If it's just for hunting, 1500-2000 per acre is sufficient and there are lots of it.
If you are looking to build (not sure why as demand for housing is dead) and it has lots of road frontage, then 3-4k per acre is more appropriate. Spending more than that would require great views or lakefront, etc...

[David Knudsen]

SAm, I beg to differ. I think a buyer would be very hard pressed to find a reasonably nice 5 acre wooded building parcel for $15,000 to $20,000. Yes, there are some parcels in this size and price range, but they usually involve some compromises. And there have been some sales in that range as well. But I think it's a disservice to set the expectation that $3,000 to $4,000 per acre should "be sufficient" for any similar sized parcel anywhere in the county. To use another analogy, one could say that $500 per person is "sufficient" for a vacation, and you can certainly buy a vacation for that. But it might not be sufficient for your vacation, the vacation you want.

[CF]

If you can buy land for 4-7 acres for $38k-$44k, you've done well for yourself at the moment.

[Mary Ellen]

I have a high pasture with great western views, a pond, and road frontage. If I ever sold it for 3 or 4 thousand an acre, my family would either come after me with kitchen knives, or have me committed to Bellvue.

[Bix]

As I've mentioned before, I have an overseas friend who was interested in buying a lot for investment purposes, and he came up with nothing. The prices were just nuts of the lots he was shown from the MLS. I think I may have mentioned one lot in Bethel in which the asking price was only slightly less than a nicer lot WITH HOUSE and outbuildings a half mile away. True, the lot in question was closer to Bethel Woods.

I think a lot depends on whether you are the end user or investor. If the latter, there is no market to speak of, except for the few distress sales.

[VonStrasser]

If you can buy land for 4-7 acres for $38k-$44k, you've done well for yourself at the moment.

Posted by: CF | September 24, 2009 at 04:40 PM

------

4 acres or 7 acres?

You're throwing numbers around like they're...SEEDS!

A 7 acre wooded lot is now valued at 38k which is what you paid - or $5,500 per acre. A 4 acre wooded lot with about 200 feet of frontage is valued at about $24,000 to $28,000 - or $6,000 per acre.

And that's being generous fella.

VonStrasser.

[Bix]

Mary Ellen's post illustrates the problem I ran into in trying to see if there was a lot my friend could buy for investment purposes. If a lot is desirable, and the seller is not motivated, there was no impetus whatever to cut the price. The low carrying costs, which make lots desirable as investments, also make them easier to hang on to.

It really surprised my friend, as he thought my house was a good value. But he could not have bought my house as an investment--carrying costs too high and no rental market.

[CF]

VonStrasser - when you find good land at $25k for 5 acres, let me know. I'll let you broker the deal.

[VonStrasser]

Ix-nay Chas.

I might buy it on the low side { < 18 to 24k for 4 to 6 acres } and... resell it!

If it happens this winter - great.

If not - well, no big deal.

There have been other opportunities for investors during the past six months which will probably continue into the new year.

Yours,

Vs

[LandBuster]

It is people like Mary Ellen who do not need to sell who make the market appear elevated for raw land.

IT IS AN ILLUSION

If she was forced to sell today, 2500 per acre would be the right price.
Even at that asking price, it would take at least a year to sell.

Dave, do you know anyone looking for 70+ acres and willing to spend more than 2500 per acre?

[Netto]

Case - Shiller - released this morning:

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092955.pdf

David, indices are now back to _Fall 2003_ levels.

Regards,

Netto

[David Knudsen]

Except, Netto, Case-Schiller in it's release also pointed out that the price picture has been improving for the third month in a row:

http://finance.yahoo.com/news/US-home-prices-up-in-July-rb-659280016.html?x=0&sec=topStories&pos=main&asset=&ccode=

[Adam]

The only thing I see lifting prices above the 3k-4k per acre range on smaller lots is a nuclear attack on NYC.
Only then, might we see post 2002 prices.

[CF]

Adam - please send all quality listings at 3k-4k per acre on smaller lots to my attention. If they are attractive, I will buy them immediately. Look forward to hearing from you. Thanks.

[bluelite]

VS and other naysayers,

Please report back to us after you find all these quality lots for 3K-4K per acre and post the details so we can be jealous of your success.

[Dr. J]

CF,

Listing Price: $24,999

Address: White Tail Drive
City: Callicoon
Zip Code: 12723
Township: Delaware
MLS #: 26437
Acreage: 6.01