SELLING LOTS AND LAND IN YAMHILL COUNTY
Published February 26, 2011
One of the most negatively affected property categories during the past 3+ years is buildable land. In the early and mid part of this past decade, I used to say that if I had enough buildable small parcels in Yamhill County, I could sell one every day. Since the market began to deteriorate in summer of 2007, these parcels are almost unsellable.
Dynamics Hindering the Sale of Land
- Excessive inventory is the most fundamental culprit. During the market surge in 2005-2007 builders, both national production builders and local builders, built fast and furiously. It seemed every sub-contractor now became a general contractor and home builder. Corporations poured amazing amounts of money into purchasing large tracts of land anywhere in the country they could find it, even if it meant moving farther and farther out of urban centers. By the time the housing Tsunami hit and did sudden damage, the amount of new construction in the city and in the country was astronomical. The result has been profound oversupply.
- Lack of Lending: For years now lenders refuse to lend to build anything new. They viewed the oversupply as a systemic problem; this is not surprising since most of their great losses are on development land (think also M37 and M49), somewhat un-built subdivisions, and higher end homes which got caught in the vortex before they could sell. Builders almost universally have been through bankruptcy or suffered significantly damaged credit and cannot afford to build even now. Banks have tight controls on developers and builders and manage them with rigid ferocity. Only the few individuals who are well-qualified, and able to purchase the lots & parcels for cash, can get financing for new construction right now.
- Why the drastic change in people? Why are people not deciding to buy land and build right now? It is because they can find so many bargains that are move-in ready! The inventory is large and the opportunities close-in to downtown Portland are plentiful. You can buy rural estates in the Stafford area of Tualatin, equestrian properties in rural Wilsonville, and luxury homes in the Parrett Mountain View Estates in Sherwood for half price (down by up to $1.5 million)! If you were going to make a purchase which offered the best return in the future would you choose farther out or closer in? So are they!
- The industry is upside down: This past week I went to a Greater Oregon Appraiser Institute Association Meeting in Tualatin to learn more about new construction challenges and particularly the issues for appraisers getting the job done. Representatives from DR Horton, Legend Homes, and Renaissance Homes formed the panel with John DeCosta, an accomplished Realtor®. They painted a picture which is not pretty! Lots have been devalued by more than 50%, builders can only achieve modest margins if they buy really low and build with high efficiencies. Universally buyers are brutal and demanding and all of us are held hostage. But even worse, new homes, not yet occupied are now lower in price than their replacement value. A couple of these companies had the advantage of jettisoning their debt and re-negotiating their high priced lots. It does not seem fair to all but they have lived to build again. The rest of our clients- they get to take the losses personally.
- Demand is almost non-existent: Buyers have too many better options now, yes. Finding a lender is challenging, yes. But there are more dynamics…
- We have experienced a significant cultural change in style in the last decade. The flow from the city to the suburbs to the country which began in the 50’s has been reversed. We have moved-on past country styles and to illustrate that try to find an antique store- they are gone! Urban life is in high demand; just think about the development of the Pearl District in Portland. It boggles the mind what happened to this previously wasted industrial ghetto.
- The Green industry is also affecting building and choices. Some are considering the costs of commute, the utilization of resources, high density rather than suburban spread, and enjoying higher quality but in smaller spaces. Sometimes this translates to influence issues like our location and the size of properties.
- Uncertainty! The times are fearful and we are contracting our lifestyles, doing with less, driving less and cutting commute costs and expenses. Building in the country is something dreams are made of and right now not too many people are dreaming. Most people are becoming quite conservative and protective of their futures. Some believe this recession will thoroughly change the next generation's expectations and lifestyles.
- In our area we have populated rural properties mostly with buyers from the Sunbelt states; that is, the California markets, Phoenix, and Texas (mostly Austin). These people are locked up in their states and cannot sell their homes to save their lives! When things do break through, guess how much money they will be coming with… A safe guess will be less than 50% of what they had before
Is There Any Good News?
Here is my take on that: Land is a limited and desirable commodity; it will come back as the market improves. Land is more limited in Oregon because of our land use laws which are perhaps the most restrictive in the nation. Fads and movements change and are cyclical. I am optimistic that we will see the housing market turn the corner this year but the market return will likely be slow and competitive for many years to come. Since buyers will be few, pricing and presentation are of paramount importance. You will need to be the best value (not necessarily the lowest price) and your property must be presented in its best light with as many amenities (hooks) as possible. Think about clearing areas on the property, identifying building sites, installing a septic system or a well or fencing. Think about adding a driveway or improving it or the road near the property. Of course it needs to be mowed, and berry bushes and weeds need to be controlled for the best expectation.
Actual Sales Data for Sold Land in Yamhill County
Yamhill County is a massive rural county with two ‘cities’ and 8 additional small towns. We have a lot of land on which people can build. Some of this was a result of Measure 37 and then the more limiting Measure 49, but we also get buildable parcels from Forest Template conversions which allows build-ability if your property meets the template/overlay requirements. Land has also become dividable and buildable because a farmer can show proof of $80k in income (often grapes or nursery stock) for 3 years and then consistent with zoning laws it can be made buildable (usually on EFU 80 acre zoning). There are also many legacy tax lots which through persistent and esoteric measures can be made buildable. As towns expand, close-in land may also get re-zoned for smaller and smaller parcels.
In the past 36 months we have only sold 48 parcels between 2-20 acres. Many of these parcels are really residential parcels with sub-standard housing such as an obsolete manufactured home or a deteriorated farm house. Some are still livable while the buyer 'builds their dream home.' Some are just vacant land and then those are differentiated by some having 'improvements' – well, septic, barns or shops, etc.
In the links below you will find the lists and listings of the properties that have sold in the past 3 years sorted by town. In the list you can see the pricing per town and see the number of acres for each. Clearly Newberg, then McMinnville and Dundee can achieve the highest pricing. The listing information on the comparison format (side by side) is near the top and the sold date and price is near the bottom so you can see the last advertised price and the actual sale price. The Client Full version will give you more details in the write-up and will address issues such as water, power, septic, views, fencing, build-ability (some may be questionable), outbuildings and the like.
Let's take a fresh look at the market. I recommend looking at the 3 year attachments first and then zeroing in on the recent solds.
Lots & Land – Sold in last 3 years
Lots & Land – Sold in last 3 years Comparison Format
Lots & Land – Sold in last 12 months
Lots & Land – Sold in last 12 months Comparison Format
Lots & Land – Sold in last 12 months in other Counties in the area
Pricing Lots and Rural Land
Regarding pricing, people have asked, and can ask anything they want. We have seen that in the past 3 years the original numbers have changed dramatically as our markets on average are down about 25-30% from the highs. The SOLDS are our only authority for market value and the only thing an appraiser can use to document value for a buyer or lender. Remember, the appraiser needs 3 good and local comps to substantiate the value so just one ‘good’ comp will not necessarily allow us to score big!
In the last 12 months there have been 10 solds for the whole county, and really only 9 because one of these is commercial land. We will be re-evaluating pricing with all our clients in the first quarter to help with decisions, and if to sell, help to accomplish the task.
Remember, one of our challenges is that right now people may be able to buy economically closer to Portland and have better prospects for equity growth. In the overview of solds in other areas surrounding Yamhill County.I have included the north of Yamhill County which is Forest Grove through Hillsboro (including Bald Peak), east of Yamhill County including rural Sherwood, Tualatin, and Wilsonville, Marion county to the southeast, and Polk county to our south. Some of the areas only contain bigger parcels than the 20 acres in our purview.
Although all of this information can be tedious and disheartening, we are hoping for better days ahead when things will begin to sell again at a more reasonable clip. We want to be ready to move, not to remain on the bench.
Best regards,
Randy
Randy McCreith, Principal Broker
Bella Casa Real Estate Group
503-310-9147 Cell
207 NE 19th Street, Suite 100
McMinnville OR 97128
866-281-6653 Fax
randy@thebellacasagroup.com
Who We Are
We are Yamhill County's most experienced, high-achieving, and successful real estate brokerage. We are real estate specialists in luxury properties, rural properties, equestrian properties, new construction, and residential and commercial properties. Contact us for a free customized home value analysis.
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