How will land sales be affected by high gasoline prices?

US population growth in general and growing wealth in our top 25 percent are the fundamentals driving sales of second homes, land, and land investments in the country. Neither of those engines are likely to change.

But the countervailing trend is the probability of increasingly high energy prices, particularly for petroleum-based transportation fuels. The more it costs to drive to a weekend place, the fewer times the owners are likely to drive it. That’s the theory anyway. The related idea is that the high cost of fuel will discourage buyers from acquiring country property in the first place. This, if true, could depress sales and prices.

At the margins of the second-home and land market, I think $5/g gasoline will discourage purchases and trips. But at this price point–and higher, which I expect–consumers will start substituting fuel-efficient electric and hybrids for the SUV dinosaurs. The market is the self-selected upper one-third, or upper 20 to 25 percent of all taxpayers, so I doubt that the cost of a weekend trip rising from
$50 in gas to $100 will actually discourage sales to this group.

But I could be very wrong.

Let me hear your thoughts.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.

Be “choicy” when making buying decisions

I learned the word “choicy” many years ago in southern West Virginia. I understood it to mean a person who was a bit choosier — more careful in deciding among alternatives — than simply choosy, which is pretty choicy to start with.

Choicy is a good standard to apply to spending large sums of money for real estate. It also helps in deciding spouses and cigars, both of which benefit from careful aging.

Several weeks ago I was asked to help in choosing from a menu of three properties. The buyers could afford to spend about $750,000 in an area about a 90-minute drive from a major city.

Choice A was 40 acres of hilly woods with a relatively new 4,000-square-foot, post- and-beam second home. The land had little value other than privacy protection and woodland recreation. We estimated that about 75 percent of the property’s market value was in the house and three-car detached garage.

The buyers liked the house—lots of windows, granite counters, spacious deck. They could move right in, and friends could be invited for a celebratory cookout on July 4th.  The seller hinted that he could sweeten the deal with his ATV. Read more »

The implications of a conservation easement

I talked with an old friend last week about selling a large New England farm that’s been in his family since the 1930s. The farm is in a pretty setting, at the foot of publicly owned mountains. Land prices have risen dramatically during the last 15 years, driven by second-home buyers and retirees from southern New England and, primarily, the Boston area.

Of the 300 or so acres, about one-third has been used for cattle grazing and haying. This area is bounded on two sides by state-maintained highway. It is flat. It’s not particularly productive dirt, but it has dramatic views, easy access and many potential lots. The rest of the ground is a mix of woods and wetlands, which is not suitable for much of anything except recreation.

My friend placed the agricultural field in a conservation easement that prohibits any use other than agricultural. Not a single house is permitted to be built in perpetuity. He did this with the best of intentions some years ago. His health has changed for the worse as he’s gotten older. His income is limited. The farm is his major asset, and most of its value was in the 100 acres of field.

Without this easement, a developer might pay $10,000/acre for the right to divide it into five to ten second-home lots. With the easement in place that keeps this marginal farmland as marginal farmland, the price might be $1,000/acre on a really good day for the seller. My friend’s life would be a lot more comfortable going forward with $900,000 more in gross sale revenue. Of course, sale to a developer means five to ten newly built second homes where hay once grew.

At the time he placed this easement on his land, he wanted to preserve the 100 acres as open space and keep it in agricultural uses. He got tax benefits for the easement. Now he needs the money. Now he’s stuck with the personal consequences of what I would consider a questionable choice.

Many good reasons exist to place conservation easements on property. Owners, however, must consider the long-term consequences for themselves and their heirs of prohibiting all development forever.

Had my friend allowed one residence to be built on the 100 acres, the value of the easement would have been marginally reduced. But he would have been able to sell the property in his time of need for maybe $7,500/acre or more. The land would have still been kept primarily agricultural and open.

I have seen other cases where economic fortunes have turned against a landowner whose last asset was land–burdened with a conservation easement. The surviving spouse and the heirs received substantially less inheritance than the calculation at the time when the easement was donated.

I’m interested to hear from advocates on both sides of this question.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.

What does acreage “more or less” mean?

My understanding is that “more or less,” was originally conceived and used to reflect the inherent imprecision of early surveying instruments and techniques. A chain or metal tape, for instance, will sag a bit when stretched.

My sense of things, however, is that “more or less” has come to be used as a general shield for sellers who convey acreage short of what they’ve advertised and short of what the deed sets forth. Judges, I expect, will use some form of the reasonableness test to determine whether a short-acreage sale reasonably falls with more or less, or, alternatively, exceeds it.

I know of examples where relatively small acreages — under 50 acres — were short by ten acres or more, and the buyer was told he had no legal recourse because of “more or less” in the deed.

Would appreciate hearing incidents/examples from around the country.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.

 

Country property is not a buyer’s market

A buyer’s market exists today for much of our real estate. Too many properties for sale and not enough buyers have cut asking prices in some — but not all — urban and suburban markets.

Buyers are advantaged in a buyer’s market, except when they can’t buy. With our economy producing less and energy costing more, buyers are wary. The pinch on mortgage money in distressed housing markets keeps them sidelined.

Country property — farms, undeveloped land, upscale second homes and timberland — does not look like a buyer’s market. Asking prices in most places appear to be holding their own, and are trending up in certain markets.

My completely unscientific look through the listings of the major country-property websites shows asking-price strength in most areas. Selling prices and sales may be off here and there, but I couldn’t determine that from the asking prices. Read more »