As local home prices and sales have bounced back, so has the federal land auction.
The Bureau of Land Management has scheduled a Jan. 16 auction to sell 28 local parcels totaling 440 acres, including a 248-acre tract in northeast Las Vegas that could have local homebuilders or master-plan developers salivating.
“Builders have to get some dirt. We’re burning through land quickly, because no one bought for a while,” said Nat Hodgson, executive director of the Southern Nevada Home Builders Association.
It wouldn’t be the biggest auction of federal land since the recession. That distinction goes to the June 2012 sale of a 480-acre Henderson parcel to Silver State Land for a stadium complex. The bureau canceled the $10.6 million deal and took back the land in the spring, after an agreement between the city of Henderson and stadium developer Chris Milam fell apart.
But January’s scheduled sale is the second-largest offering since November 2005, when the agency auctioned off more than 2,900 acres across the Las Vegas Valley. Exclude the aborted Milam deal, and the bureau will auction in January alone more acres than it has sold off since the recession began in 2007.
To understand what the sale means for the economy, look at how property ends up on the auction block. The bureau doesn’t decide what gets sold. Cities and counties do. The process starts when a prospective buyer — an investor or developer of anything ranging from a shopping center to a nursing home — sees a parcel that meets his needs in size and zoning. He then asks municipal officials to nominate the lot for sale. So bureau sales mirror demand for land, said bureau spokeswoman Hillerie Patton.
That’s why homebuilders all but stopped buying in the recession: As sales stumbled, so did the need for parcels.
“A lot of builders were just keeping afloat. And even when (home) sale prices started coming up last year, everyone was still skeptical. They were burned badly,” Hodgson said.
Now, 18 months into housing’s recovery, raw land is hot again. Local builders sold 5,027 homes from January through August, up 60 percent compared with the same period in 2012, according to local consulting firm Home Builders Research. They pulled 5,057 construction permits in the first eight months of 2013, up 26 percent year to year.
“If you look around the city, you’re seeing projects starting to move in neighborhoods, and that’s an indication things are starting to pick up,” Patton said.
Those glimmers of improvement are evident in land auctions, too. In January, a sister company of homebuilder Lewis Operating Corp. spent $606,000 to buy 12.5 acres in the southwest. It was the first time in more than five years that any mainstream homebuilder had purchased local land through a federal auction. In July, two more big builders jumped back in. D.R. Horton spent $6 million on two southwest parcels totaling 51.25 acres. And Pardee Homes dropped $4.6 million on 22.5 acres, also in the southwest.
Neither builder answered queries on whether they’d look to buy in January.
Most of the lots nominated for sale won’t appeal to big builders: Eighteen of them have fewer than 10 acres, and are likelier to go to investors cobbling together parcels to sell builders down the road, Hodgson said.
The remaining sites of 10 acres to 248 acres would be a fit for plenty of builders.
“I think we may see a bit of a frenzy,” Hodgson said.
But that excitement could fade a bit by auction time: New-home prices flattened a bit month to month in July and August, Hodgson said.
“Hopefully, before this land goes to market, everybody gets the message that we’re tapering off (on home-price increases),” he said. “People need to be realistic about how much they’ll be able to sell homes for, and how much they can pay for land.”
Bidding starts at fair-market value, which the agency plans to set in November. But prices can escalate quickly. One parcel D.R. Horton bought in July had a fair-market value of $3.2 million, and a winning bid of nearly $4.1 million. And a lot Pardee bought for $1.58 million had an appraised value of $790,000. Still, at about $200,000 to $250,000 an acre, prices stayed reasonable, Hodgson said.
Sale proceeds go to the state’s education fund, the Southern Nevada Water Authority, the purchase of environmentally sensitive land and public parks. About $25 million went to the renovation of Lorenzi Park. Other auction-funded projects include the visitors’ center at Red Rock Canyon, outdoor features at the Las Vegas Springs Preserve and amenities at Lake Mead, Patton said.
The bureau is accepting public comments on the auction through Oct. 28. To see the parcels, go to www.blm.gov/snplma, and choose “Land Sales” from the menu on the right. Mail comments to: BLM, Las Vegas Field Office, 4701 N. Torrey Pines Drive, Las Vegas, NV 89130.
Contact reporter Jennifer Robison at firstname.lastname@example.org. Follow @J_Robison1 on Twitter.