The state of the real estate market in New York and around the United States (and the world) is more uncertain than ever – especially with raw land, since it is often a discretionary purchase. Buyers who need financing to purchase land, or real estate in general are facing higher payments due to rising interest rates, but lower housing and land prices may offset that as affordability becomes an issue. It looks like no end is in site for the war in Ukraine, meaning higher energy, food prices, and now I’m hearing about food shortages coming toward the end of the year. 2022 (really, the whole decade so far) will be a wild ride.
74% of survey respondents think we’re in a land real estate bubble
Let’s get this straight…this isn’t 2008. Consumers, at least at this point, have less debt and are in better financial positions than they were in ’08. Markets with land prices that have risen extremely fast are likely to get hit hard if demand dries up – especially places like Texas, Alabama and the Southeast, but there is still a lot of population growth with people migrating to those areas. Land values in New York have increased over the years, but not to the degree as some of those hotter areas.
Homebuilder sentiment records largest single-month drop in July (except for April 2020)
So the question is, why? For one, building costs continue to increase, but they’ve been doing this for over a year. Interest rate increases are arguably one of the biggest culprits for the lowered sentiments, since people who previously qualified for a loan at a lower rate don’t qualify for the same loan amount at a higher rate due to bigger payments. In certain cases, buyers had standalone construction loans, where they get a loan to build their house, then need another mortgage to buy the house — but many who started construction a year ago don’t qualify for the mortgage now that construction is complete. I can’t imagine how infuriating and saddening that would be as a buyer.
Average 30 year mortgage year to date
July numbers for the Empire State / New York State Manufacturing Survey was released last week
This is the survey of manufacturers in New York, conducted by the Federal Reserve of New York. “Business activity increased modestly in New York State, according to firms responding to the July 2022 Empire State Manufacturing Survey.” Sounds like a pretty positive picture, right? No so fast. The normally optimistic respondents were pessimistic about the future: “Firms turned pessimistic about the six-month outlook, a rare occurrence in the survey’s history.”
While the chart for July looks good, the overall trend isn’t looking all that great.
Eight Signs You’re Buying Land that’s a Massive Money Pit – much of this applies to smaller residential lots where you have a limited amount of land, but it’s worth a read. Soon we’ll also be doing a post on important considerations when buying or selling your land.
About Haystack Land Company
Haystack Land Company purchases vacant and undeveloped land for cash from property owners nationwide. We provide cash offers with no commissions or fees on our side, and we manage the process from evaluation through closing. Every closing is handled through an independent title company or licensed attorney, protecting both parties and ensuring your funds are secure. Founded in 2020, we have acquired thousands of acres through straightforward, transparent transactions.
If you own land and you’re interested in selling, please get in touch with us.
