What are the land sale trends during Covid-19 and beyond? With many industries completely shut down, what is happening in the real estate market and particularly land sales?
The real estate market in general is very dependant on the economy, bank lending and job security. The residential housing market tends to see a slowdown during uncertainty and recession. However, each zip code has its own micro-market.
Transactions in the housing market are still occurring across the country, albeit with a slowdown in some areas. Some housing market analysts think that the crisis is over already. However others think that the worst is yet to come.
The market for land sales is very different to standard residential home sales. And within the asset class “land” there are very different product types available- from land for industrial purposes to residential to agricultural to retail.
Raw land is typically less expensive than standard housing. Many people buy land with cash and are not reliant on bank financing. Some buyers do owner finance deals with the sellers.
Land sale trends show a stable asset without wild fluctuations in price which makes it more attractive. In times of uncertainty, people rush towards assets that give them safety and stability.
We will explore through this article why Covid-19 has fuelled an increased demand for land, not less.
Why Are Land Sale Trends Show Rising Demand For Land During Covid-19?
When industries started shutting down in March 2020 due to Covid-19, nobody knew what would happen and how long “the crisis” would last.
However what happened and is continuing to happen is that demand for land and interest in buying land has dramatically increased.
Here are some of the reasons fuelling the increased demand to buy land:
Factor 1: Land is a stable asset
The stock market wild fluctuations caused fear amongst investors who looked to acquire safe assets instead like land and gold. The stock market dropped over 30% in just a few days during the height of the crisis which took many people by surprise. The value of land stayed the same or increased.
Land sale trends rarely show any decrease over the long term and tends to stay the same or gradually increase over time. Many of the nation's wealthiest people put their money into land for this reason- to keep it safe. Also to own safe haven assets that are not linked to the stock market performance.
(Also as we have discussed before, there are also things you can do to increase the value of land that you own- but that is a different topic that we discuss in our email series. If you are not on our email series but would like to be, let us know and we will welcome you aboard).
Factor 2: During pandemics, cities are less attractive and rural locations are more attractive
As big cities are viewed as “dangerous”places during pandemics with easy transmission of germs and viruses, there is a huge spike in city dwellers looking to own their personal rural retreat.
It is comforting (even potentially life saving) to have safe place to go away from crowds and be outside to garden, hunt, fish, ATV, hike and relax away from the chaos.
During lockdown, we all crave more space and outdoor time. No problem for you if you own some acreage. This is causing a spike right now in land sales trends and we see that trend continuing in the years to come.
Factor 3: Technology enabled work from home
As technology is rapidly improving and access to the internet is improving, rural living continues to be more attractive. As long as people can be connected remotely, so many possibilities open up.
You can continue to work for your company from home.
You can start an online business.
You can get work locally in your rural township.
You can start a small local business selling your homestead produce.
What about write your book and be self-published?
Factor 4: House building technology has improved and become cheaper
Living off the grid is becoming cheaper every day. There are cheaper, faster ways of building a home, whether it is one of the earthship homes that require no heating or cooling, or one of the modular homes where everything down to the flooring and fixtures are completed before the modules leave the factory. They are transported to your land and assembled in a day. Many of our customers are interested in shipping container homes or tiny homes.
Factor 5: Supply of land continues to diminish pushing prices higher
Economics 101: Supply and demand. The demand for land continues to rise for many reasons and the fact remains that every year the supply decreases. This means prices for land sale trends will continue to be pushed up over the long term.
Whether its due to populations rises, or a rush of city folk moving out to rural areas, or companies needing to increase their warehousing space, land continues to be in demand.
Supply:- land is not being made any more. As Mark Twain said "Buy land, they’re not making it anymore.”
Land looks to have continued high demand over the immediate and long term with continuing decreased supply. This equation only results in land prices moving in one direction. No prizes for getting the right answer 😀
Factor 6: Ease of viewing land and technology enables safe transactions remotely
Technology allows you to browse all sorts of land in your state or other states super easily. Many listings have great photos and in some cases, great video footage so you can really get a good sense of what is available.
Of course, nothing beats visiting the land, walking on it and watching the sunset on your future property. Google maps and Google earth gives you the next best thing so you can really get good close ups of the property, see the neighbouring towns, hospitals/airports/schools or whatever else you think you might require.
As you are buying vacant land, not a house, there is very little that can go wrong and there is very little to “inspect” as such, so many more people are happy to buy from photos and their Google earth “sight unseen”.
Also secure banking and digital document signing has improved dramatically so it is possible and more efficient to close the transaction from the comfort of your own home. Land sellers, mortgage brokers, realtors, title companies, banks and county recording offices all accept online signatures and online documents.
I suspect many businesses in the real estate space will close up most of their offices after this pandemic as they realize there is just no need to make someone waste an hour of their day (or more) to fight through the traffic, find a parking spot to walk into a office to sign something when it can be done in 3 minutes online.
Factor 7: Increased desire for a simple life fuels long term upward land sale trends
More people crave a simple life right now. Enjoying beautiful sunrises, breathing fresh, clean air, growing your own food, walking the dogs, horse riding, attending to the goats and chickens, eating, sleeping, doing it again sounds very appealing.
The trend towards a more simple life, being in balance with the seasons, getting closer to nature, reducing clutter and the tiny home movement have been getting more popular also.
We see this trend continuing for the foreseeable future.
Factor 8: Increased desire to “virus-proof” your life and be self sustainable
Covid-19 has fuelled renewed interest in changing traditional lifestyles to alternative lifestyles.
Many city dwellers have been re-thinking where they want to live.
“Do I really need to be living right up close to all these people?”
“Is travelling on the subway the best way to spend 2 hours per day when I can work from home?”
Of course with so many people now forced to work from home, it has give employers and employees a test–run to see how feasible working from home is. For some it has a been a great success with higher productivity and many will not be returning to their office.
Living remotely on your own acreage, with your own food and water source sounds very attractive right now- especially if you can work from home full time or part time and keep some income flowing in.
Living off the grid has also been popular for a while now but Covid-19 has sparked renewed interest in the whole topic of being self reliant and sustainable. This is a massive factor driving upward land sale trends in the coming years.
Imagine slashing your food bills by 50-80% as you grow your own vegetables and raise some animals for milk and eggs.
Imagine having no rent/mortgage bills (as you own your home), no electric bills(solar or generator) or water bills (harvest rain water or well)
Using recyclable materials and living more simply with less clutter is highly appealing.
As we have seen how fragile our economy and our supply chains really are, the interest in being self-reliant has gone through the roof.
People do not wish to be at the whim of their super market but want to create their own safe water/food source and not be reliant on a politician to provide for them.
Factor 9: Demand for land creates opportunities and fuels land sale trends
These trends have been on the increase for many years. Covid-19 did not “create” them, but it certainly accelerated them.
Many people have been actively “prepping” for an impending disaster for decades.
Many people have been considering moving away from cities and opting for a simpler life closer to nature.
Others have been experimenting with going off the grid and embracing a more sustainable and self sufficient lifestyle where they supply their own energy, food and water.
Given that these are long term trends- and did not just start in the last couple of months, we anticipate that they will continue and increase.
This creates many opportunities for people who can spot the trend and position themselves to benefit from opportunities that will arise.
Some just want to make the move to rural land to ensure their own survival and protect their family.
Others can see opportunity in buying land that others may not want right now and having the patience to wait several years until circumstances catch up with their vision.
For example, we have customers who want us to help them buy big parcels of land which they can then go about subdividing. Obviously this requires research, due diligence and long term vision.
We also have customers who like to buy on the outskirts of growing small towns as they know that they can buy cheap land now but in 5-10 years as more people live in that area, the demand for land out of town will become “hot”.
Affordable housing is needed more than ever and increased demand, increased demographics, people wanting to move out and enjoy more space is fuelling a rise in land prices. Also land buyers often track the building of superstores, hospitals and improved transport links and buy land near these areas as a smart play towarsd rising land values in an area.
What are the land sale trends for 2020 and beyond?
Of course, like all real estate, there are many types of land available and each one has its own performance metrics.
For example land for industrial use performs very differently to land for agricultural use to land for residential purposes.
In January 2020, all land sales were swift and upward trending. The economy was booming and could do no wrong.
However in Feb/March 2020 the world changed very swiftly and much of the economy was shut down like we have never seen before.
Land sales for retail and office space dropped sharply.
Land sales for multi family residential slowed down in April but builders and developers are continuing to buy as there is still not enough low income housing.
Land sales for industrial/warehousing use has picked up massively due to COVID-19.
US business seeking to bring more products in and have a greater inventory available to them rather than rely on “just-in-time” supply chains that was popular previously.
There will also be a trend towards bringing manufacturing back to the USA and this will require more storage space, more factory space and warehousing space.
Land sales for agricultural use has been stable- and we predict this will continue to rise over the next few years with the push for the USA to be able to feed itself rather than have to import food from foreign markets.
Land sales for residential use and recreational use is increasing rapidly in the last 2 months due to the factors we have discussed here.
Even on a smaller scale, we are seeing increased demand from families who want to get started homesteading or living off the grid to buy their land and get started on their project rather than continue to dream about it as they swipe through their Instagram feed.
It is no longer a “one-day” dream but Covid-19 has clearly demonstrated how real a threat can be and how vulnerable we actually are.
Rather than rely on government to control its supply chain or ensure enough safe food and water for the population, what if you can create and ensure your own safe drinking water, your own food source and your own acreage to do as you please, away from big cities and crowded places?
Is Now The Best Time To Buy Land?
To roll out an old cliché, the best time to buy land was yesterday. The second best time to buy land is today.
But truly, the best time to buy land is when it suits your goals, your life circumstances and your budget. It is always better to buy land “before” you need to. You do not want to buy in a panic. If you think you want to buy land, start early. Take your time, talk to experts, do your research, see what is available.
There is never a “bad” time to buy land as the asset value does not tend to swing wildly. In general, land will be more valuable in 10 years time than today.