With rising interest rates and commodity prices still depressed, land sales and land prices continued to increase, although at a modest pace, during October 2017 – September 2018, according to the 2018 Land Market Survey of the REALTORS® Land Institute and the National Association of REALTORS®, an annual survey of land practitioners.

Land sales in dollar volume rose two percent during the reference period of October 2017 – September 2018 compared to the level of sales during the prior 12 months, a smaller rate of increase compared to the four percent growth during the October 2016 – September 2017.

Among types of land, residential land sales posted the highest increase at 4 percent, followed by commercial and recreational land, each growing at 3 percent.   Residential and commercial land sales rose at a modest pace compared to the pace of growth during October 2016 – September 2017.  The slower growth in residential land transactions reflects the slowdown in home sales since the second quarter of 2018 and the slower pace of price appreciation. During the same period of October 2017- September 2018, existing home sales were down by about 1 percent compared to the level during the prior 12 months, while the median sales price of existing home sales were up at a modest 4.2 percent on a year-over-year basis compared to the 5.5 percent price gain in November 2017.

Commercial land sales also rose at a modest pace, as higher interest rates exerted a downward pressure on commercial land prices to keep returns in line with rising interest rates.

Agricultural land sales rose at a slow pace of one percent, with commodity prices still depressed, with prices of cattle, livestock, and grains still below 2015 levels.

Residential and commercial land also posted the highest price appreciation. On average, residential land rose five percent during the reference period, while commercial land rose four percent, the same pace in the 2017 survey.

In addition to market conditions (rising interest rates, low commodity prices), respondents noted several issues affecting land market transactions such as getting the right appraisal/valuation for land, especially in rural areas, the lack of lender financing, and changes in zoning and local regulations that slow land development.

Among land practitioners who participated in the survey, nearly half of land sales were for recreational land (28 percent of land sales) and residential land (27 percent). Timber, agricultural non-irrigated, and ranch land transactions accounted for 10 to 12 percent each.  Commercial land transactions accounted for four percent.

Regions 7, 8,9, and 10 accounted for 70 percent of land sales among the respondents.

About the 2018 Land Market Survey

The Land Market Survey is a collaboration of the REALTOR® Land Institute (RLI) and the National Association of REALTORS® (NAR) that started in 2016.The objective of this survey is to gather information and insights about land transactions among land real estate professionals that can be used as a resource in conducting land business.

RLI sent out the survey to 1,323 RLI members and approximately 5,000 prospects who are engaged in land transactions, 809 of which responded to the survey.  NAR and RLI conducted the online survey from October 8–November 23, 2018. The 2018 survey gathers information on transactions during the reference period of October 2017–September 2018.

The annual Land Markets Survey is a tool for landowners and land real estate professionals in all sectors of the business to use for bench-marking and as an informational resource when conducting business. This year marks the sixth consecutive year that the survey has been conducted to reveal current trends and the ever-changing state of land markets within the industry; and this year’s survey had the highest participation rate ever. The Realtors® Land Institute has made the full survey results available for free to the public on their website.                                                                         

The Realtors® Land Institute, “The Voice of Land,” continually strives to maintain its status as the acknowledged leader for all matters pertaining to the land real estate profession. The Realtors® Land Institute provides the expertise, camaraderie, and valuable resources that are the foundation for all land real estate professionals to become the best in the business. For more information, visit rliland.com or call 800.441.5263.

At the national level, housing affordability is down from last month and down from a year ago. Mortgage rates rose to 4.99 percent this November, up 19.1 percent compared to 4.19 percent a year ago.

• Housing affordability declined from a year ago in November moving the index down 10.6 percent from 161.0 to 144.0. The median sales price for a single family home sold in November in the US was $260,500 up 5.0 percent from a year ago.
• Nationally, mortgage rates were up 80 basis point from one year ago (one percentage point equals 100 basis points).
• The payment as a percentage of income was up from last month at 17.4 percent this November and up from 15.5 percent from a year ago. Regionally, the West has the highest payment at 23.8 percent of income. The Northeast had the second highest payment at 17.1 percent followed by the South at 16.8 percent. The Midwest had the lowest payment as a percentage of income at 13.7 percent.

• Regionally, the Northeast recorded the biggest increase in home prices at 8.2 percent. The South had an increase of 3.8 percent while the West had a gain of 2.4 percent. The Midwest had the smallest growth in price of 1.6 percent.
• Regionally, all four regions saw a decline in affordability from a year ago. The Northeast had the biggest drop in affordability of 14.4 percent. The South had a decline of 9.3 percent followed by the Midwest that fell 9.2 percent. The West had the smallest drop of 7.2 percent.
• On a monthly basis, affordability is down from last month in all of the four regions. The Northeast region had the decline of 5.5 percent. The South had a decline of 2.0 percent followed by the Midwest with a dip of 1.8 percent. The West had the smallest dip in affordability of 0.7 percent.
• Despite month-to-month changes, the most affordable region was the Midwest, with an index value of 181.9. The least affordable region remained the West where the index was 105.0. For comparison, the index was 148.8 in the South, and 146.4 in the Northeast.

• Mortgage applications are currently up while credit availability is down. Rates are higher this month but are still historically low. Home prices are up 5.0 percent while median family incomes that are growing 3.0 percent. The job market is steady. More inventory is welcome on the lower end of the market whereas there is more supply of inventory for high priced homes.
• What does housing affordability look like in your market? View the full data release here.
• The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.