The low cost of purchasing an abandoned residential lots in the West is causing a number of investment groups to take advantage of an open opportunity to buy and wait for the bruised housing market to recoup. Since 2007, Western markets from "Phoenix through Las Vegas to Sacramento and Riverside," are creating a market of investors to buy vacant lots that have been left since the recession took hold.
Building and buying already built is a question on the mind of any new homebuyer or investor. According to Inman News "The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price." Since there are plenty of lots available on the market right now, at "about half of what they actually cost to prepare," investors are jumping in and praying for the demand to increase on those properties.
"The country needs 1.2 million new units for the next 10 years just because of population growth," states Scott Clark, president of American Development Partners, "[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant."
The decrease in foreclosures in January is a sign that the market might be stabilizing soon enough, but foreclosure rates are still up 30 percent from last year. Either way, a slight increase in home sales, along with a slight decrease in foreclosures could put recently purchased vacant lots in demand because their finishing costs.
Bankrate.com urges investors to research thoroughly before purchasing vacant lots, especially in rural areas where highway development is possible. "It can be a complex thought process," says Stephen Roulac, CEO of the Roulac Group, a real estate consulting firm in San Francisco. "When you buy an existing house, someone has already gone through the issues of what's allowable on the land."
Source: Inman News, Steve Bergsman
Written by Amy Munday
Huliq.com
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