Unfortunately for those of us in the land business, few organizations have the wherewithal (or motivation?) to track local and regional land sale statistics. So, while there are no shortage of housing market updates, understanding the impact of COVID-19 on local land markets is an altogether different challenge.
Perhaps I will work on a solution to this lack of regularly published, granular quantitative land market data, but for now I thought I would share some personal anecdotes about what I am seeing in the Northern Virginia land market.
Personal observations from the local land market
Since the onset of the pandemic, I have witnessed a surprisingly broad range of buyer and seller behavior. One set of buyers decided to double down on their search for a rural agricultural site to build a home and start a hobby farm, and their efforts paid off big time. They managed to lock in an incredible property at roughly 80 percent of the asking price.
Another set of buyers withdrew an offer on a residential building site, even though the sellers agreed to extend the settlement date 3 months to accommodate delays and uncertainties stemming from COVID-19. These buyers will likely resubmit an offer when the crisis passes, but for now they have decided that the risk – whether real or imagined – is too high.
One set of sellers has temporarily withdrawn a listing from the market. However, they view the crisis as temporary, and they are taking advantage of the lull to reset “days on market” to zero. When the economy reopens, they hope to benefit from pent up demand.
One of the most interesting trends I have seen is a heightened interest from landowners who are thinking about selling. In the past week, two landowners have contacted me to initiate a listing, and a third is giving it serious consideration.
There seem to be three factors driving the thought process. First is confidence derived from increasing talk of reopening the economy. Second is the notion that COVID-19 may lead some urbanites to reconsider the appeal of rural living. Third is the fact that social distancing measures have comparatively less impact on outdoor land showings than indoor home showings.
Ancillary land industry professionals, such as surveyors, soil scientists, settlement companies, and specialized land lenders continue to operate at (mostly) full capacity, and they are doing excellent work. Fortunately, none of my transactions have fallen apart due to financing complications or disruptions to service. However, I do know other agents and colleagues who have experienced challenges related to financing.
Broader commentary from the Realtors Land Institute
For anyone seeking broader commentary (i.e. not specific to Northern Virginia) on the effects of COVID-19 on land markets, the Realtors Land Institute has a series of articles on the subject, each addressing a different segment of the market.
Commenting on the market for residential hobby farms in Junction City, Oregon, land agent Lisa Johnson echoes what I mentioned above: “People are looking to get back to the basics a bit and out of the suburbs.” Likewise, Colorado based land agent Justin Osborn has observed an increased demand for recreational properties.
The commercial sector is possibly the worst-hit segment of the land market. As Matt Davis, an agent with Cushman & Wakefield in San Diego, notes, “most developers, investors and lenders we’re working with don’t know how to underwrite the risk. They don’t know how much of a discount is reasonable, so, to eliminate the risk, they’ve put their pencils down.” This aligns with what we are seeing in the commercial land market in Northern Virginia.
Other articles in the series address timberland, agricultural tillable farmland, and ranch land. Taken as a whole, the opinions reflected in these articles might be best described as cautiously optimistic.
Suggestions for buyers and sellers who are (or will soon be) in the market for land in Northern Virginia
For buyers, if you’re in a financially stable position and can get your financing lined up, it’s an excellent time to be writing offers. There are still plenty of sellers who remain confident and firm on price, but there are others who would rather take a haircut today than risk a potential downturn in the coming months.
In other words, don’t be afraid to write an offer, even if you think it’s lower than the sellers would accept. You’ll never know until you put an offer in front of them.
For sellers, take advantage of the fact that buyers are still out shopping for land, and position your property in the best possible light. With other sellers withdrawing listings, there’s a great opportunity to stand out among low inventory.
Make it as easy as possible for buyers to view your property. Aerial videos, interactive listings on platforms like Terrastride Pro, and paid Facebook ads can all help with this. Advertising your property on the major land listing websites, like Land Watch, Land and Farm, and Lands of America is also a great way to get your property seen by the right people.
If you are thinking about buying or selling land in Northern Virginia, please reach out anytime. You can reach me directly (text or phone call) at 202-750-4050 or by email at firstname.lastname@example.org. Thanks for reading, and I hope to hear from you soon!