While new construction is a significant portion of the total market, land sales have dropped off faster than has new home building.
Here are the numbers for lot sales for the first 4 months of 2006–2008. These statistics are for the Palmer-Wasilla Core area.
All Land Sales
Lots from 40,000–50,000 square feet
Half-acre development lots
Usually with community water
Here is what I think is going on. You will notice that while the smaller lot median prices have dropped by almost 50%, the larger acre sized building lots have not seen a significant median price drop.
The speculative building boom has stopped. Most of the speculative building was happening on the smaller lots. There still are bunches of these lots out there waiting for the next boom. Bankers are not loaning on specs. They want the builder to have a buyer lined up. Even then, they generally want the builder to front a larger part of the project.
When a buyer is in the picture ahead of time, they are opting for the larger lots. They are turning to the acre plus sized lots for their new home. They know they are paying a little more for the total package but the difference is not much in comparison to the total cost of the project.
The two largest builders are doing most of their work on their own lots. Since they already own the lots, they don’t show up in the lot statistics even though a new house sale does hit the books. These two builders are Hall Quality Homes and Spinell Homes.
So the development boom in the Mat-Su valley is at a pause. Growth is not over because the Mat-Su is the place to go in Alaska. But we have enough empty lots for awhile and we need to fill them up with houses before we develop more. If you are planning to make your killing developing subdivisions, I would wait for a more opportune time.