The Second Half: Buyer's Market

Implications: Bad news for some, though, will soon turn out to be good news for others.  The second half of this year will yield ample opportunities for residential land / lot buyers.  

Analysis: During the first half of the year, homebuyer demand hit new lows, and builders, straddled with finished lots and inventory homes, dropped offering prices faster than at any other time since the beginning of the downturn.  The outlook appears bleak, too, for homebuilders entering their twelfth quarter of the downturn.   

Bad news for some, though, will soon turn out to be good news for others.  The second half of this year will yield ample opportunities for residential land / lot buyers.  

Lenders have been hesitant to push homebuilders into foreclosure, choosing to “work through” technical defaults.  Few projects have gone back to banks, most of which are located in fringe areas.  The projects, largely, are marginal from a marketing perspective.  

Almost as if a bell sounded signaling in the second half of the year, though, banks appear ready for an onslaught of closer-in residential land / lot foreclosures.  The three Taro Properties Arizona projects referred to in the subject article are good examples- which are located in relatively in-fill Gilbert areas and Phoenix.  BREC has received numerous market research inquiries regarding other likely near-future foreclosures.  

To date, opportunists seeking lender “deals” have found negotiations limited on foreclosures.  Transactions, BREC believes, will increase soon- as early as late third quarter / early fourth quarter- as foreclosures increase and lenders seek to unload projects they have taken back.  Several financial institutions appear to be struggling with liquidity, a matter that should benefit deal-seekers.  The offer-bid price gap will shrink in coming months.  

The second half of 2008 should be much more interesting than the first.  For buyers, business should be brisk.