Two years ago, Boise area builders were clamoring for lots at any price.
In a matter of months, prices for regular subdivision lots jumped from $45k to $65k to $85k, and even $125k or more in Meridian.
In some areas of Eagle, lots were selling for $500k or more.
Developers had waiting lists of builders begging to buy lots and many builders lost build jobs because they didn’t have enough lots.
Those days are gone now as 25,883 Ada County subdivision lots languish on the market and many builders are paying carrying costs on lots they don’t need.
Yet, developers keep on mapping new subdivisions, evidenced by 7,740 more Ada County lots receiving preliminary approval during the 3rd quarter.
It will be interesting to see what happens to some of these developers as this market downturn continues to unfold.
Some developers paid top dollar for their dirt ~ as much as $140,000/acre in Meridian, and even more in Eagle.
After factoring in the costs of acquisition, development, financing, and marketing they could easily end up with little or no profit and be thrilled to get out from under their A & D loans before their lender calls them due.
Since most of those developments have been financed, it’s quite possible that we will see some subdivision foreclosure activity.
Then, we could see lenders selling foreclosed dirt/lots at below-market prices in order to recoup their loaned capital.
Yeah, I know ~ some of you think I’m being “negative”, don’t you?
If so, please explain to me how we are going to work off a 25,000+ lot inventory when home sales are down 40-50% from a year ago.