Recent report 'Transitional Land: The Liquidation Phase is Over' examines factors that have affected land prices since 2006 crash
SYCAMORE, Ill., Dec. 16, 2013 /PRNewswire/ — Developers and investors are moving back into the transitional land market, due at least in part to sellers capitalizing on record farmland prices. In their recent report, "Transitional Land: The Liquidation Phase is Over," Mark Mommsen and Josh Waddell detail the factors that sparked the recent noticeable rise of transitional land prices since the 2006 crash. Properties termed "transitional" are those that can be developed by an "end user" sometime in the next 5 to 15 years.
"The vast inventory of transitional land that once commanded $30,000 to $100,000 per acre during its heyday found its bottom near farmland values in the $8,000 to $12,000 per acre range during 2010 and 2011," noted Mommsen. That's climbing now, though, as illustrated in 2013 sales results shown in the report-with sale prices averaging in the $13,000 to $17,000 per acre range for like-kind properties close to population and existing development.
As ag land prices have risen, so have the premiums being placed on transitional land. The market for transitional land has shown new strength and more consistency in the past 12 months. "We are now being contacted regularly by buyers seeking to purchase transitional land on the edge of town, and they are willing to pay a premium," wrote Mommsen. "This is in contrast to previous years in which buyers were seeking farmland and were pleased with the potential for future upside, although it was not a requirement for them."
"We expect this trend to continue at a much more measured pace than what we saw in the early 2000's," Mommsen added. "The majority of buyers and sellers are operating today with a great deal more caution, as the sting caused by the collapse from 2006 is fresh in our memories. As the U.S. economy continues to improve, albeit very slowly, we expect an increased number of investors to provide adequate demand for transitional properties that offer future upside potential."
Mark Mommsen is available for further comment at (815) 901-4269 or Email. Martin, Goodrich & Waddell, Inc. (http://www.mgw.us.com/) assists clients in the acquisition, sale, appraisal, and management of land assets nationwide with a special focus on farm, transitional, development, and recreational land. The firm is consistently ranked as one of America's best brokerage and land auction firms by The Land Report.