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Vacant Land
Las Vegas Vacant Land Prices May be Stabilizing
Banks are the new land sellers. 2012 could be the year of opportunity for buyers and investors to strike deals with banks for attractive pricing. There is still a lot of vacant land foreclosures being processed, and 2011 will continue to see very high foreclosure levels for vacant land. While Southern Nevada vacant land values inched upward somewhat during the fourth quarter of 20109, land prices overall remain down from last year as distressed sales dominate market activity. With nearly 90 percent of land transactions involving a lender through trustee sale or deed in lieu of foreclosure, pockets of opportunity are emerging for savvy investors and speculators as sellers reset their pricing expectations.
Not out of the woods yet. Many lenders have been forced to foreclose on property that was purchased at an inflated price, mostly from 2004 to 2006. With over 30 million square feet of vacant commercial and industrial space and 35,000 too many homes in the market, pure speculation remains the primary motivation for anyone to acquire undeveloped property. Land values are expected to remain depressed as long as the commercial sector continues to post high vacancy rates and foreclosures continue in the housing market.
The rate of decline in land pricing slowed in 2011. Average land prices increased to an average of about $264,000 an acre in the third quarter of 2009 from $255,309 in the previous quarter. A Las Vegas developer acquired a vacant 2.5 acres piece of land at the Las Vegas Strip and Harmon Avenue near Planet Hollywood for $25 million at a recent Clark County auction representing the first official land sale since November 2007 in the area of the Las Vegas Strip. When land sales were brisk in Las Vegas, developers and speculators fought over Strip parcels. Casino executives declared the land beneath their casinos was worth as much as $20 to $30 million per acre. Now most commercial land parcels on or near the Las Vegas Strip are priced at around $4 million an acre.
Las Vegas economic downturn. Now, in the worst economy in Las Vegas history, owners are struggling 
to pay down debt on that land. Las Vegas land prices on the Strip may be down as much as 90 percent from their peak. With the Clark County’s housing market, down nearly 60 percent, residential land including finished lots are finding few buyers. Prices may continue to decline as more vacant land is foreclosed by lenders as long as there are more sellers than buyers. The recession still has businesses trimming overhead by downsizing operations, thinning staff or closing their doors. Banks aren't likely to loosen lending criteria and building will not resume until there are at least eight months or more of sustained employment growth, and unemployment figures are cut in half, observers say.
Land prices may stablize in 2012. The decline in land prices may have begun to bottom out. Land prices may stabilize by the end of 2011. While no one has a crystal ball, if commercial land follows residential land pricing, we may see stabilization late 2011 as the economy continues to improve. Savvy investors and land speculators may see this as an opportunity to acquire prime property at bargain prices.