Yesterday I received the 2nd Quarter 2008 lots sales figures and to my surprise there was a 46% increase. That is not saying much though since lot sales increased to a meager 69 for all of Snohomish County from 47 in the first quarter.
The price in which a lot sells for is the most important factor when forecasting what a new construction home will sell for on that lot. If a developer gets into a piece of dirt for X amount of dollars and forecasts a selling price of Y but the current market will only bear Z it leaves little to no margin for the developer as well as the future builders.
Lots can be listed for any price but if they are not selling, which the beginning 2007 to current 2008 have shown (93% decrease in total sales), then the prices are just to high. The price has to be low enough to make economical sense all the way across the board and in a market where inventory is high; prices have to be highly competitive otherwise the lots will have market times of 365 days or more.
| City/Area | Plat Name | ||||
| Arlington | Bryant Estates 2 | ||||
| Arlington | Sun Peak Estates | ||||
| arlington | River Bend | ||||
| Everett | Koon/Grayson S.P. | ||||
| Everett | Jubie Short Plat | ||||
| Granite Falls | Indian Summer Park | ||||
| Granite Falls | Indian Summer Park | ||||
| Granite Falls | Ryan’s Mountain Meadows | ||||
| Granite Falls | Diamond Ridge | ||||
| Marysville | Marysville Meadows | ||||
| Marysville | Sunnyside Ridge Div. 2 | ||||
| Marysville | Waldow Heights | ||||
| Marysville | Emerald Short Plat | ||||
| Northwest | R.I.C. Survey | ||||
| Northwest | Alder Grove Estates | ||||
| Northwest | Alder Grove Estates | ||||
| Northwest | Gregory Estates | ||||
| Northwest | Gregory Estates | ||||
| Paine Field | Yuan Heng America S.P. | ||||
| Sky Valley | R.I.C. Short Plat | ||||
| Sky Valley | Aldergrove Meadows | ||||
| Southwest | Maple Land Master Condo |
What do you think the true value of “Aldergrove Meadows” for the lots?
It would be difficult to say without reviewing the property finer detail but it is safe to say the true value is whatever price the property sells for. In this case, Aldergrove Meadows had 1 total sale for $225,000 which seems that was the true value at that time, not six months from now. The lot was more than likely purchased by a custom builder or person looking to build a custom and not a large scale builder.
In our office, we have seen appraisals higher that what our professional opinion tells us what the property will sell for. This is based on historic data (which is only a few months old) and not accurate of the current real estate climate. Right now there are so many undeveloped lots that it does not make sense for builders to keep purchasing when they cannot sell current inventory.
Kimo, Aldergrove Meadows is a unique plat with the beautiful country setting. Lots in that area have sold in the past for as much in the high two hundred thousand range. So as Toby said it is what someone will pay and normally a custom buyer will pay more than a builder because the builder will typically purchase more than one lot. We don”t have a lot of new recent compareables to say exactly where the value is. So until we have more activity in the immiediate area it is hard to say. I would say the value is somewhere in that low two hundred thousand range for a custom buyer. I hope this helps answer your question. Thank you, John