Q. Have you seen an increase in land/lot acquisitions this year?
A. If you compare the first nine months of 2011 to 2012, Northeast Florida has seen a 40 percent spike in land/lot acquisitions, also known as “lot takedowns”. In 2011, 1,839 lots were closed increasing sharply to 2,575 in 2012. The numbers of players in the game rose slightly by 2 to 56 in 2012 over 54 individual builders in 2011. At the time of writing this report, a very large purchase of $7 million was executed by a large national builder buying 211 lots in St. Johns County. In total, they spent over $8 million in October alone. A small local builder spent over $1 million buying lots in the same community.
Q. What areas of Northeast Florida are you seeing the biggest increase in land/lot acquisitions?
A. Considering the number of lots bought over 100 for a given sub-market, the top area was the St. Augustine market seeing a 432 percent spike followed by the Jacksonville airport area seeing a 322 percent spike year over year, trailed by the World Golf Village with an increase of 198 percent prior to these recent large acquisitions. Credit has to be given to Fruit Cove which ranked 4th but showed a solid increase of 108 percent. The most popular lot frontage size is a 60-foot lot. Twenty-five percent of the 7,635 lots developed yet to have a home built on it remain on the books, hence competition will be fierce for these premium lots. Who’s selling lots? In 2012 builder to builder sales account for 5 percent, rising 3 percent over 2011, Developer to builder also rose 3 percent to 63 percent while bank owned lots fell 3 percent and third party holding companies saw a sharp decline of 4 percent to 24 percent. This is good news for banks and holding companies; it means inventory is getting off the books, leaving room for future new development opportunities.
Q. How are these areas rated?
A. The minimum number of lots to be bought had to be 50. Case in point: No. 1 St. Augustine closed 63 in 2011 to 335 in 2012. Jacksonville airport had 77 in 2011 and closed 325 in 2012. World Golf Village had 62 in 2011 and 185 in 2012.
Q. Now that the inventory of homes has decreased, are you seeing an increase in new construction?
A. Only in selected counties; I call it the “bookend effect”. The exterior counties Nassau and St. Johns are really carrying the market. Single family detached closings as of September rose 15.3 percent. The median size home also saw an increase rising to 2,317 heated square feet from 2,271 heated square feet in 2011. Unfortunately, prices fell! The cost fell $1.88 from $97.08 per square foot to $95.20. Speculative building is out; the new strategy is buy a lot and build and close a home within months.. One piece of good news is median home prices rose 7 percent to $225,000 in 2012 from $210,000 in 2011.
Q. If so, is the increase with large or small builders?
A. Mainly small builders, with one seeing a 107 percent increase in closings year over year. Some of the other small and large builders are seeing a 52 to 62 percent increase year over year.
Q. Does this mean an increase in pricing for new construction?
A. Slightly, if you look at the average foot frontage cost a builder paid for a lot in 2011, the rate was $54 per front foot increasing to $645 in 2012. Of course, cost will vary depending on frontage and location, but overall prices are rising. Be aggressive in marketing, decisive in purchasing and conservative in construction.