Data Analysis Changing the Way Land is Developed



The introduction of new data analysis methods is changing the way builders in the United States are buying, selling and developing land. At a recent building and building products symposium in New York, builders were cautiously optimistic that the new homes market would rebound this year due to easier credit and increased flexibility.

A key factor in determining the type of housing that is built and its pricing is the current state of the land market and nowadays builders are looking beyond the actual price of the land itself. They are more likely to use data from multiple sources to carefully examine the type of housing being built in other areas so they can assess the kind of designs will work best for certain lots and even which builders would be best suited to make maximum use of the features of a particular piece of land.

Construction site sandy soil wide open space, tire tracks

The article in Propertywire highlights the fact that rather than building a particular set of homes on any given piece of land, developers may be more likely to sell their land on to a different type of developer or will choose to build the kind of home they wouldn’t normally construct, based on their data analysis.

At the moment there are currently very few entry-level or lower cost homes and communities being developed and this is thought to be down to high land costs and also perhaps less than realistic assessments by landowners about the real value of their property. In 2012 and 2013 land that could easily be developed rapidly appreciated in value in anticipation of a building boom that has yet to occur.

These recent trends may have led some landowners to be convinced that land is worth more than it actually is. The result is that builders are being forced to construct higher priced homes on developments in order to recoup the cost of buying more expensive land. This makes it very challenging for those builders who would like to construct homes catering towards lower end and first-time buyers, even though demand in these areas is expected to increase considerably in the next few years. Most real estate experts agree it’s only a matter of time before demand increases from millennial buyers and that if the entry-level buyer does come back then there may not be many opportunities to construct the kind of properties that will appeal.

Even so, there is an opportunity for private developers to build higher density projects on smaller building lots. Although these homes cannot compete on price compared with larger firms they do have the added advantage of design flexibility.

Allison Halliday About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

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