July 20th, 2021 – Market update:
Residential, recreational land transactions grow with homebuying spree
The 2020 Land Market Survey, released in April, documents just how well the land market held up to the pandemic’s severe pressure. Land sales increased 3% on average, and prices rose 2% on average. The survey was conducted by the REALTORS® Land Institute and the National Association of REALTORS®.
The survey’s 314 respondents reported that the number of land sales rose the most in residential, at 6% on average, followed by sales of land for industrial use at 4%, and recreational and ranch lands, each at 3%.
Underpinning the strong demand for residential land is robust homebuying activity. COVID-19 has heightened people’s interest in open spaces, driving the demand for land in the suburbs and for recreational land. NAR’s monthly REALTORS® Confidence Index Survey of members primarily engaged in residential transactions shows homebuying activity in the suburbs and in vacation-home areas was on the rise in 2020. Eighty-three percent of homes sold by REALTORS® last year were in the suburbs, an increase from the 80% share in 2019. Vacation-home sales accounted for 5.5% of existing-home sales in 2020, up from 5% in 2019.
On the commercial side, the continued shift toward electronic and mail-order shopping supported sales of land for industrial use. Industrial accounted for 16% of retail sales, up from 13% in 2019.
Demand for timberland, however, remained flat. Timber production declined in 2020 because of COVID-19–related work stoppages and falling U.S. wood exports. Exports of wood products fell 10% in 2020 as the global economy shrank by 4.4%.
Looking at prices, the sales price of residential land rose 6.8% on average in 2020. Recreational land had the next highest price gain, at 3.6%, followed by land for industrial use at 3.4% ranch land at 3.1%.
Land sales and prices for all types of land—except for office, retail, and hotel use—are expected to increase in 2021 as well, according to respondents to the land survey. As in 2020, the strongest sales growth is expected to be in residential land (5.9%), with prices rising 5% on average, and the strongest price growth will be in industrial and recreational land, each increasing 3% in 2021.
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