2022 has been an interesting year. The first six months saw unprecedented price increases in all four states where we provide brokerage services. Why? Early 2022 was an excellent situation with low interest rates, and a strong stock market. We saw tremendous interest in real estate and closed numerous transactions.
On tracts that could be used for rural residential, we saw tremendous interest. To be rural residential, electricity and good access are a must. Most buyers were not local and were looking to move out of a city. They had jobs where they could work remotely, or they were at or approaching retirement. Most had cash to put towards the purchase and only a few took short term loans.
For recreational and timberland investment tracts, many buyers were cash buyers who have been investing in timberland for many years. On smaller timberland tracts, timberland investors had difficulties competing with rural residential buyers who could and would pay more for a one-time purchase.
The real estate market has cooled significantly in the last half of 2022. We haven’t seen a big decrease in prices paid for properties just yet. Rising interest rates for land purchases are now easily over 7% and this has brought land purchase interest down significantly. We continue to be successful with land sales, but the number of transactions the last half of 2022 has shifted much more towards timberland/recreational investors while the rural residential buyers have slowed significantly. We expect this reduced interest to continue as long as interest rates remain high. It will take some time for higher interest rates to feel “normal” and we’ll see how it plays out then.
Quality marketing is important for successful transactions. Kingwood’s philosophy to advertising is transparency. We want anyone who might have an interest in a tract to be able to find out all the information related to it up front. We see many other brokers advertise tracts for sale with no real information other than the acreage and price. This is a recipe for problems. If you are considering selling your land, contact your local Kingwood Broker to guide you through the sale process.