• Oct 27, 2017 Residential lot sales, prices on the rise
    Gary Sandler
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    Published 27 October 2017

    LAS CRUCES – Before builders can begin construction of a new home, they must first acquire a lot on which to build it.

    With new-home sales in and around Las Cruces up just over 30 percent through the first nine months of this year, it stands to reason that lot sales also had to rise in order to meet the demand. And that’s exactly what’s been happening, according to statistics pulled from the Las Cruces Association of Realtors on Oct. 21.

    Lot owners and developers sold a total of 141 residential lots through Sept. 30 of this year, representing a 20 unit, or 16.5 percent, increase over the 121 lots sold through the first nine months of last year. The hottest segment of the residential lot market currently lies within the quarter-acre, or less, category. A total of 59 lots of that size were sold this year, representing a 29-unit, or 97 percent, increase over the 30 lots sold through Sept. 30 of last year. Lot sales were the same or higher in six of the 10 lot-size categories utilized by LCAR.

    Lot prices are also higher this year than they were last year. The extent to which values have increased depends on the size of the lot purchased. This year’s average sales price of $40,795 for lots containing less than a quarter-acre in the area was $3,550, or 9.5 percent, higher than last year’s average price of $37,217. Lots containing between one-quarter and one-half acre in size also gained value, rising to an average price of $58,455. That’s a $12,438, or 27 percent, increase over the $40,765 average price posted one year ago. As with the number of sales reported, prices were higher in six of the 10 LCAR lot-size categories.

    In years past, lot prices typically accounted for just over one-fifth, or 21 percent, of the price of a new home, according to a 2016 report from the National Association of Home Builders. Today, lot values in the mountain west account for just 17 percent of the price of a new home. In their 2015 proprietary construction cost survey, the NAHB attributed the decline in the lot-to-home-value ratio to the rising costs of construction materials, labor and governmental (i.e., impact) fees.

    Given the high number of disasters this year, including floods, fires and hurricanes, there’s a better than even chance that construction costs will continue to rise well into next year. That fact, coupled with the prospect of a more robust economy and higher mortgage interest rates going forward, purchasing a new or existing home in the near future may be the right thing to do.

    See you at closing.

    Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at 575-642-2292 or Gary@GarySandler.com

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      Gary Sandler