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Rising Residential Land Prices

Information compiled by the National Association of Realtors found that the dollar sales volume rose on average by 2.2% for all land types between October 2018 and September 2019. 

Residential land sales had the largest year-over-year increase at 2.9%. 

The report says residential lane use sales received a boost from falling mortgage rates during 2019 and three cuts by the Fed to interest rates. 

Land for recreational use (hunting, fishing, and camping) showed price appreciation of 2.7%. 

The rise in prices for residential land use fell from October 2018’s growth of 4.3%. 

The NAR says that the increase in residential land prices is in line with the 2.8% increase in the value of residential land assets of households during 2018 and through Q3 2019. 

During Q3 2019, the estimated market value of residential land help by households was $10.78 trillion—a 2.8% increase from the $10.49 trillion in assets during 2018.

Approximately half of the respondents reported that residential land zoning ordinances have become more difficult in the past five years, which is up from 39% in 2018. 

The rising cost of land is in direct correlation to the climb of home prices. CoreLogic reported that home prices rose 4% annually in December 2019 and are expected to increase 5.2% over the next year. December’s home-price gain was down from the December 2018 increase of 4.4%, but up from November’s 3.5% gain.

Price appreciation averaged 3.6% for 2019, which is a considerable drop from 2018’s average of 5.8%. CoreLogic projects average growth for 2020 to be 4.6%.

CoreLogic’s Home Price Index (HPI) has increased on a year-over-year basis every month since February 2012 and has gained 63% since bottoming out in March 2011. 

The overall HPI, as of December 2019, was 9.8 higher than its pre-crisis peak in April 2006.

Homes priced in the lowest tier once again saw the largest increase, with value rising 5.9% annually in December 2019. Prices in the low-to-middle price tier rose 5.2%, the middle-to-moderate-price tier increased 4.4%, and the homes in the highest tier witnessed values rise 3.7%. 

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.

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