A land market recovery is imminent, but a return to “peak values” won’t likely occur for at least 10 to 15 years, says Bill Lenhart, managing member of Sunbelt Development & Realty Partners. As the housing market goes, so goes the land market. New home sales continued its 16th straight monthly of year-over-year decline in the third quarter, resulting in the lowest post-peak demand for raw land since 2008, Lenhart said. Homebuilders have been forced to abandon lot option agreements negotiated in 2009-2010 when sellers were unwilling to restructure take down terms to reflect the current market conditions. Few homebuilders, as a result, have advanced on land purchases except for very select, desirable parcels located in strategic markets.Absent end-user demand land investors consequently will play a more significant role in future land sales, Lenhart said. While a sales increase is expected in the fourth quarter, it most likely won’t rise to the level of years past because banks have worked through most of the bad land assets.
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