How to Buy a Vacant Lot

To Vicky and Mickey Popat, it seemed as if everyone in Orlando, Fla., wanted to buy a house last spring. “The market here was so skimpy that any time a decent property got listed, it would receive multiple offers right away and get snatched up,” said Ms. Popat, 39.

Much has been written about the extremely tight sales market for existing homes across the country, but there is a relatively unheralded segment of the market that has been experiencing a boom during the pandemic, and that is the market for vacant lots.

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If You Build It…

In a normal year, Grant Johnson, a real estate agent at RE/MAX Results in Minneapolis–St. Paul, Minn., divides his time equally between selling existing homes and developing land for new- home construction. But the pandemic has flipped Johnson’s business on its head.

“Listings have been very difficult to come by,” says Johnson. As a result, he decided to scale up his land development work. “Typically, the builder that I work with and I put together 20 to 30 lots a year,” he says. “This year we’re going to be developing 70 lots.” In addition to procuring the land, Johnson will represent the builder as a listing agent. “Creating our own inventory has helped us survive the pandemic,” he says.

Diversifying business streams amid a period of record-low inventory has been a productive move for Johnson and many real estate agents and brokers this year. National Association of REALTORS® Chief Economist Lawrence Yun says, “2021 is likely to have the most acute shortage of homes for sale in history.”

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Lumber Takes a Fall

Last spring, the coronavirus pandemic ground several large lumber mills in the U.S. to a halt—and homebuilders suffered the consequences.

Take Jesse Fowler, for example. Fowler, the president of Tellus Design + Build, a full-service general contractor based in Southern California, said in an interview with REALTOR® Magazine in November that lumber prices for his company had “gone through the roof.” “It’s tough on our business because we have to play the middleman and negotiate lumber prices for our clients,” Fowler said. In one instance, he said, a framer charged one of his clients who was building a new home $90,000 over what was originally estimated to compensate for rising lumber costs.

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