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Land Run: Builders Drive Up Land Prices As Homes Sell
Marilyn Alva / Investor's Business Daily / April 25, 2013
Goodyear, Ariz., became a dot on a map in 1917 for one reason: land.
Goodyear Tire & Rubber (GT) wanted the area’s farmland to grow cotton for its tire manufacturing plants. A town was born.
Cotton has long given way to suburban homes. And like a lot of fast-growing Phoenix suburbs, including Gilbert in the Southeast Valley, land is a valuable asset again.
Land values have soared in recent months as the housing market has roared back to life in the region. And run-ups are happening in lots of places around the U.S. as homebuilders literally plow through their “A”-location stock and look farther out for big tracts to build on.
“You could go to virtually any growing metropolitan area in the country and see the same condition: The price of lots and land is up to way up,” said Greg Vogel, chief executive of Land Advisors Organization, a land brokerage firm.
Finished lots in Goodyear that went for $15,000 to $20,000 after the crash have been selling for $50,000 to $60,000 in multiple subdivisions, he says.
As finished lots get gobbled up, builders and other land buyers are turning to raw land. Unimproved land in the area was selling for $25,000 an acre. It’s now going into contract for $90,000 an acre, Vogel says.