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Land Demand ‘On Fire’ Across the Country

Planning + Development

Land Demand ‘On Fire’ Across the Country

November 23, 2020
House imagined on open land
Photo: Czanner

Nearly all top land brokers reported their markets were experiencing intense demand in the third quarter of 2020. In just the second quarter, 60% of top land brokers reported to John Burns Real Estate Consulting that their markets were “hot” or “on fire.” Three months later and 96% of top land brokers rate their markets as “hot” or “on fire.” While some markets such as Phoenix, Tampa, and Riverside-San Bernardino are seeing the most demand, land demand remains strong across the country. Public builders scooped up land in all forms during the third quarter and purchased more than two-thirds of finished lots across 38 metro areas.

Buy land or shrink. Community counts have declined nationally, and builders are metering new home sales—a clear sign they need more land. In our client webinar this week, John Burns asked the question, “Can supply keep up with demand?” And the answer is that so far, it cannot. 

National new home community counts declined 6% year over year, according to our survey of October home builder conditions. Most public builders reported fewer active new home neighborhoods than in the same month last year. The land shortages, combined with extended build cycle times, mean many builders are restricting sales to align with lot availability and construction capacity.

Builders that start many speculative homes are selling the most homes, and non-spec builders are raising prices because they do not have inventory. While spec building creates exposure to market risk, those with inventory on the ground have more opportunities to grow sales today.

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