Madison Wisconsin Homes and Real Estate: Good Dirt on Recreation and Ag Land--Good for the Soul

Tuesday, October 5, 2010

Good Dirt on Recreation and Ag Land--Good for the Soul

Rural land experts do exist in our real estate community, and I won't pretend to be one. But what I can sort out as well as anyone, is the fact that competition for land is almost a non-factor today. Unlike a few years ago when money was available for recreation land purchase financing, cash buyers are king again...and they aren't builder/developers with deep pockets.

I reviewed the sales of 35 transactions where more than 30 acre parcels were sold in Iowa, Dane, Green, and Columbia County since January 1, 2010. Obviously the land closest to Madison is most likely to sell as a home site and you will see greater dollars per acre spent. Move out a ways and you can find parcels of 40, 60, 80, 120, acres selling for $2400, $2900, $3,000 per acre to $5,000 per acre. These might be reasonable prices for recreation land for hunting, riding, hiking, and just getting out. Some have a building site available, some don't--but that's why God invented the camper trailer.

Financing is hard to come by as lenders have no appetite for recreation or development land purchases, so I suppose the appraised value has little power in swaying an owner to concede on asking price. But the elimination of the leveraged buyer means little or no competition for the cash buyer. A fair number of sales have closed this year so you have solid evidence to determine a reasonably smart price. It's possible the inventory of land will increase in the next 24 months with three and 5 year ARMS coming due on properties purchased around 2005. Just like vacation homes, recreation land will be let go before the home. If you have a connection with rural property lenders, ask to be kept informed of land which may be coming into the bank's real estate inventory.

My degree is in political science not economics. So don't ask me if recreation land is a good investment. I have no idea. I like to spend time on land for its serenity benefits. Outdoor recreation may help keep you young, or it may not; it will certainly help you enjoy life. And being a responsible land steward is good for one's soul. Let's walk some land this fall, winter, and spring.

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If Not Sold in the First 30 Days, Successful Sellers Conceded The Price

Through Mid-September, thirty seven percent (37%) of 126 home owners who sold in 2010 sold without making a single price concession. They typically attracted a buyer within 40 days of going on to the market. These successful owners conceded little on price as they sold for about 97%-98% of asking price.

Those who counted time on the market by months or even quarters eventually sold for an average of 91% of their initial asking price. Price reductions improved their success opportunity. Once their price was reduced to a price favorable to a buyer, the time on the market was short--about 34 days from last price change to accepted offer.

See September 20, Buyer Enticing Pricing

Disclosure

The source of data: South Central WI MLS Type of data: Single family homes and maybe condos and maybe other Areas: Madison and other areas such as McFarland, Shorewood Hills, Middleton, Maple Bluff, Oregon, DeForest, Cross Plains, Dane County, Fitchburg, Verona, did I say Middleton? Dates covered in these blog posts: January 2010 and continuing.

All comments are the relatively well thought out opinions of Tom Meyer. Those opinions are not necessarily shared by Restaino & Associates, other brokers, or the national, local, or state associations of Realtors... in fact, they may be significantly different.