According to a recent Wall Street Journal article, inventory isn’t the only issue facing the buyers and sellers within the real estate industry: right now, the United States as a country is short on land, specifically buildable land.
The article mentions that land values in Manhattan have grown by an average of 13% annually between 1977 and 2019. But before that, from the 1880s to the 1970s, land values barely increased in the Big Apple.
Also, land has become an attractive asset for the institutional investors and also other wealthy investors such as pro golfer Phil Mickelson, who began buying land in the Sunbelt a number of years ago.
The recent pandemic has had a dramatic effect upon property values in the Sun Belt due to the work from home economy. Cities, such as Nashville, saw increases in the prices fir vacant lots zoned for residential building climb, while the number of buildable lots fell dramatically by 43% from 2016 to 2021.
In general, prices for buildable lots, high construction costs, labor shortages and inflation have created a trajectory of higher prices that many builders have not been able to keep up with. Even in Nashville, rents over the last 12 months have increased by 31% year-over-year.
As more and more Americans are able to work remotely, towns within the Sunbelt seem to be the beneficiary of the migration out of the big metropolitan areas such as New York, San Francisco, Philadelphia and Chicago. According to the Wall Street Journal article, “once land inflation sets in, it can be hard to reverse.”
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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