Builders are facing rising lot
prices due to a shortage in suitable lots, and the rising costs will
likely get passed on to buyers of new homes.
The average price of a finished lot suitable for building was up 40
percent in the second quarter compared to a year ago, according to John
Burns Real Estate Consulting’s analysis of 27 leading markets. In some
places, the increase has been even more. For example, in San Francisco
and Oakland, finished lots were up 87 percent; up 75 percent in Atlanta;
and up 70 percent in Las Vegas.
The big jumps are "making up for lost ground" during the housing
downturn when lot prices dropped, says David Crowe, chief economist for
the National Association of Home Builders.
Finished lot prices represent nearly 22 percent of a new home’s price, Crowe says.
Source: “Higher lot prices may boost new home prices,” USA Today (Sept. 3, 2013)