This past week "Anonymous" left a comment on my blog regarding lot prices. Here is what he/she said "...Really enjoy your updates on local real estate. Would enjoy a post on where you think lot prices are headed in general. It seems the empty lots from the last cycle have mostly been bought and its just a matter of time before ranches start getting purchased for tear down again."My initial response is: Yes, building lots are getting scooped up both by builders and consumers; but so are ranches on great pieces of property. Builders have a new formula and this time they are watching their backs. No one wants to get caught again owning lots of inventory at unreasonable prices. This time builders are buying up cleared lots, unfinished homes with potential, and homes that can be renovated and turned into something special. You can see all of these trends throughout Buckhead on streets like Peachtree Battle Avenue, West Wesley Road and East Beechwood Drive.
It's not as easy to put together a report on these lot sales due to the way they are listed in FMLS. From a broad standpoint, here is what it looks like. There is a big discrepancy between where lots have been selling in the past 6 months and where the actively listed inventory is priced. On average, the lots that have sold were 1 acre and closed at $369,000. Now go look at what is listed in Buckhead and the numbers are way off. The average size of building lots actively listed are 1.6 acres with an average list price of $1,055,926. Actively listed lot prices range from $175,000 to $4,950,000, and even one at $14,900,000. For reports on this blog I use the map of Buckhead as defined by the Buckhead Alliance, so the property overlooking the Chattahoochee River on West Wesley wasn't included.
Looking at the active inventory, you see a lot of building lots/teardowns listed in the $6-700,000 range. Recent experience tells me these properties will sell closer to the $550,000 range, maybe a little higher or lower. At this point you need to look at the borrowing power of the builder/investor and the potential value of a new home on that property. Unless the new home built will be over $2,000,000 you aren't going to see the price climb too much higher than that.
I'd love to hear what anyone else has to say about this. Feel free to join the conversation by commenting below. Click here to see available building lots for sale in Buckhead
Carson Matthews
Associate Broker
Atlanta Fine Homes Sotheby's International Realty
678-595-9286
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