Bay Area – Land Prices Have Gone Through the Roof!

Since the 2011 trough in land prices, the worst markets in the Bay Area have seen a significant increase in lot prices – an average of about 44%. As the available land in the core markets has dwindled, builders have turned to the tertiary markets that were once off the radar. This trend will likely continue in areas such as the Central Valley and Monterey and Sonoma Counties. Although they may be considered unbuildable zones today, they will see a similar lot appreciation over the next few years as builders move farther out of the core to build.

Lot Price Appreciation for a 5,000 SF lot

Oakley 53.33%
Antioch 53.13%
Pittsburg 51.52%
Martinez 51.11%
Brentwood 48.57%
Livermore 46.67%
Mountain View 46.67%
Sunnyvale 46.43%
Hayward 46.15%
San Jose 45.45%
Fremont 40.00%
Hercules 37.14%
Concord 33.93%
Gilroy 33.33%
Dublin 30.00%

Source: Steve Reilly, Marketing Consultant, (925) 368-3128

WANTED: FRESNO LAND DEVELOPERS

According to Fresno real estate blogger, BoNhai Lee, the City of Fresno says ±16,000 acres of land remain for housing development.  With that being said, Fresno is in need of land developers to entitle and process new tentative tract maps.

Land Advisors Organization’s Fresno office is happy to announce the San Joaquin Valley is (finally!) coming alive in “A” locations.  Builders are complaining there are not enough improved lots to choose from in Clovis and northeast Fresno.

POLL: 

RECENT CLOSINGS (September 2012): 

  • An investor purchased 36 finished lots in Madera (brokered by LAO)
  • A farmer purchased ±37 unimproved acres in Clovis (brokered by LAO)

NEW COMMUNITIES:

HOME SALES: According BoNhia Lee (@bonhialee), new home sales accounted for 5% of the Central Valley residential transactions this year compared to 26% in 2006.

Source: Mark Utman, Marketing Consultant, (559) 549-6326

Sacramento: Where’s the Dirt?

The Sacramento region finally appears to be emerging from the homebuilding doldrums.  Over the last several months, homebuilders seem to have a new found confidence as new home absorption levels have begun to tick up to levels not seen for several years.

Pricing on the other hand, is still lagging with maybe a small bump in appreciation.  All of this said, ready-to-build lots are becoming scarce within the Sacramento submarket, and at this rate, some areas could possibly end 2013 with a lot supply of zero.

The key drivers to getting builders back to Sacramento will be continued increased scarcity of deals in the San Francisco Bay Area, in addition to sustained new homes sales that we have seen in the area over the last several months.

The Wall Street Journal recently reported that the recent rise in homebuilding could be thwarted by an unlikely factor, a shortage of land in desirable locations.  Homebuilders are realizing they cannot focus strictly on the Bay Area locales just due to the fact that high land prices and land scarcity will forbid them from ramping up deliveries and allowing them to grow organically.  If they want to be able to produce new home delivery volume, they will have to start looking in the Sacramento region as well as some parts of the Central Valley.  If and when they move eastward, we will start to see homebuilders look at “paper” lot or entitlement deals, where in the past they were only focused on finished lots.  Time will tell.

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329 ext. 16

Rebound in Sacramento …and We’re Not Talkin’ Hoops

The data says it all.  A look at the latest Ryness Report will tell you that new home sales are solid across the board in just about all actively selling communities in Sacramento, El Dorado and Placer Counties.

Pricing is still flat but absorption is clearly picking up.  Builder anxiety for the spring selling season seems to be subsiding and confidence in the market is growing.

More evidence to a turnaround is the fact that a very prominent publicly traded homebuilder who vacated the Sacramento Region a few years ago is back.  A new division president is once again at the helm and looking to grow the Sacramento Division, including the Central Valley and Reno.

See the data: Sacramento Regional Real Estate Trends for March 17, 2012

Sacramento foreclosures down 8.8% from a year ago: Foreclosure activity in Sacramento during February fell when compared with the same period a year ago but remained largely unchanged from January, according to figures released Thursday from RealtyTrac, an online foreclosure information company.  Full Story

Region home sales up by 16.6%, but prices are down: Homes sales in the four-county Sacramento region were higher by 16.6 percent on a year-over-year basis in February, according to data released Thursday by real estate information firm DataQuick.  Average prices were lower from a year ago, however, for all four counties.  Full Story

Source: Jim Radler, Senior Marketing Consultant, (916) 784-3329 ext. 11