Appraisal Articles 2019 Free Appraisal Articles for Appraisers and the Public
As a land appraiser in Las Vegas / Clark County Nevada looking at sales activity in December of 2012 I am seeing the similar dichotomy develop in almost every submarket area, the average sales prices per acre are still near their 6-year lows and most asking prices are dramatically higher, higher than any closing price seen for years. The psychology of owners seems to be effectively saying, "most of us want higher prices" but only the select few who are willing to or forced to part with their property at recession affected prices become closed transactions.
The big question for owners and investors is, "will 2013 have the same poor market conditions as occurred over the last few years?" Since commercial / industrial land values generally increase when land is converted for development, and most developed properties in those markets have reported vacancy rates that are breaking records, it is unlikely that demand for commercial / industrial land will increase in 2013.
The demand for residential land may be stronger than that for commercial in 2013. Las Vegas took a big hit economically in the recession but a strange thing happened, its population didn't decrease. The supply and demand for residential property may not be sustained since there are options for solving supply issues (i.e. the BLM, the removal of residential deed restrictions, etc.).
There is another possible demand factor that could improve / drive up the value of land in 2013. The "money seeking hard assets" scenario that happens when individuals and businesses figure out that their money needs to be in an asset that is not "evaporating." It doesn't take a Ph.D. Economist to figure out that a volatile stock market and hundreds of billions of newly printed or digitized dollars entering the world each month is a recipe for disaster. Would you rather suffer the long term commitment of a land deal with periods of non-liquidity or a paper dollar based investment that may be worth much less if the dollar declines? Being saddled with tax payments and no income for an extended is not for everyone, so you want to be sure that you are willing to accept the pain associated with holding a property in favor of the risk of the gain that would be associated with the potential boom in hard asset values.
If your a contrarian like I am, it sounds like with everyone being against land investments for so long, and some bargain basement deals still around, that maybe it's not such a bad time to consider an investment. If you don't like to be personally involved there are now a lot of real estate investment trusts (REIT's) that deal with real property and you can remain in the background.
1st Quarter 2013 Update: There has been evidence of increasing residential land prices for residential land in the 1st Quarter. Applied Analysis statistics, as evidenced by newspaper reports, have noted an increasing land sales volume and increasing prices. Demand appears to be isolated to the residential land sector since new home builders are buying, while commercial land has remained stagnant. There are reports that some properties that appeared to be best suited to commercial development have been sold for residential development due to the demand shift.
For more appraisal information contact Glenn Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada appraiser who can be contacted via email or via his business website Appraiser Las Vegas (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/.
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