A dearth of suitable land for residential development is posing a big challenge for the real estate market. The 2017 REALTORS® Land Institute survey shows that the overall number of land transactions over the past year for residential use is up, clocking in at 25 percent of the total.
Prices are rising, too. The survey shows a 5 percent increase in total dollar volume of closed residential land transactions compared to the previous year.
“Land prices [in the Northeast] are escalating higher and higher almost to the point of spiraling out of control,” notes Michael Durkin in a recent RLI article. The Northeast has been leading in residential land sales, along with the Northwest and Southeast, according to RLI’s survey.
“One challenge will be finding enough affordable land on the outskirts of populated areas,” says Jessa Friedrich, marketing manager for RLI, who recently blogged about the upswing in residential land transactions for RLI. “On the other hand, all of this is great news for current landowners and land real estate investors looking to sell, as well as those who serve them in those markets.”
Read more: Best Year for New Construction in a Decade?
The majority of survey respondents foresee prices continuing to rise. RLI members are predicting at least a 2 percent increase in residential land sales to continue through September 2017.
RLI expects this trend won’t wane in the coming year, either. “The lack of housing inventory across the country and the demand for residential land for new-home construction will continue to drive up land prices through 2018,” Friedrich says.
—Melissa Dittmann Tracey, REALTOR® Magazine
