NAR/RLI: Land Sales Up 2.2% – But Challenges Persist
WASHINGTON – Land sales and prices both rose across property types last year, and an uptick is likely to continue into 2020, according to the 2019 Land Market Survey, a joint survey from the Realtors® Land Institute and the National Association of Realtors (NAR). The latest sale increase rate was slightly down from the year before.
The study notes headwinds for land sales, with zoning regulations and financing as top issues affecting land transactions. The survey is based on responses from more 800 real estate professionals involved in a land transaction over the past year.
Dollar sales volume on land sales rose, on average, by 2.2% from October 2018 to September 2019 compared to the previous year. Residential land sales saw the largest annual increase at 2.9%. Housing experts say low mortgage rates helped boost sales volume and demand for land over the past year.
Survey respondents expect land sales to increase at about the same pace of 2.2% over the next 12 months. Sales will likely increase across types, but they expect to see the largest increases to continue with residential land at 2.8%.
While the sales pace will likely continue, the real estate pros surveyed expect prices to moderate and move up at a slower pace for most types of land. Their prediction: Land prices will increase at 1.6% from September 2019 to September 2020.
Several challenges persist for the land industry, with 40% of respondents considering U.S. economic conditions and access to financing and zoning regulations to be the top land issues. Nearly half of respondents said that residential land zoning ordinances have become more difficult over the past five years. Commodity prices were cited as an issue by 32% of respondents, followed by weather factors at 23%.
- On average, respondents reported a 2.2% increase in land dollar sales volume from October 2018 to September 2019 compared to the level in the prior 12 month period. Sales rose for all types of land, led by residential and recreational land, although at a slower pace compared to the prior period.
- On average, respondents reported a 2.1% increase in land prices per acre in September 2019 from one year ago. Land prices rose for all types of land, led by office/retail, residential and industrial use.
- Respondents expect a 2.2% sales volume increase in the next 12 months, with the strongest growth for residential, industrial and irrigated agricultural lands.
- Respondents expect slower land price growth of 1.6% in the next 12 months. Land prices will increase for all land types but at a slower pace compared to the pace in the past 12 months.
Source: “2019 REALTORS® Land Market Survey,” REALTORS® Land Institute/National Association of REALTORS® (2020) and “Land Sales Rose 2% in 2019, With Steady Growth in 2020, According to RLI-NAR Survey,” National Association of REALTORS® Economists’ Outlook blog (Jan. 30, 2020)
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