After the housing market took its big nosedive late last year there have been many homebuilders left with a lot of red ink on their books due to large parcels of undeveloped land that they could not sell and so many homebuilders simply just walked away from that land.
However, homebuilders are once again on the hunt for land particularly large parcels in heavily foreclosed markets such as Orlando Florida, Las Vegas, and Southern California because prices are much more affordable now as there are new signs that the housing market is making a recovery.
It's not a rush like California saw in 1849 when gold was on everybody's mind, but it is a land rush though not as big. Since early summer, as home sales and home prices began to stabilize, there's been a big surge in land deals. Competition has also been propelling bids well above their asking price especially for prime lots.
Now as builders are rushing back in, keep in mind that previously it was the homebuilders that were really the ones that were feeding the housing market by selling lots to investors.
Meritage Homes Corp. and the Ryland Group Inc. are just a couple of the major players that have jumped back into this new feeding frenzy for land.
Just recently Meritage signed contracts to purchase 2,500 lots that are spread throughout several states with California being one of them. Builders are planning to open about 10 new communities late this year or in early 2010.
A spokes person for Ryland Group Inc. has said that they are seeking out more land deals today than at any other time in the last several years.
Since new home sales are up 22 percent from the start of this year, builders are more confident and expect they can still make a profit after construction costs.
One way they are doing this is that they are looking to buy land that has already been cleared for home construction. Doing so lowers their overhead and the land will be ready to build and sell in just a matter of a few months.
With foreclosures still the hot ticket, their inventory is slowly diminishing and that is when new homes will become a bigger part of the housing market recovery.