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Land limits building of new houses

Article by Chris Sicks for The Washington Times

Last years new-home sales seemed to contradict a lot of other real estate news. Sales of new homes were down 27 percent compared to 2000surprising when you consider that existing-home sales were up 11 percent last year.

The primary cause of this disparity was a lack of developed land builders could use to put up homes. There was plenty of demand among buyers, but many builders didnt have anything to sell them. It was the slowest year for new-home sales in more than a decade.

(New-home sales figures reflected sales of single-family homes, town homes and condominium.)

Still, builders did rather well last year. The Labor shortages of recent memory have eased, making it less difficult to actually complete the homes that are sold. More important, homebuilders were able to raise prices because existing home prices shot up dramatically during the past two years.

While this certainly was welcome to the builders accountants, it may have also slowed new-home sales somewhat. Thats because new homes are more expensive per square foot than existing homes. Buyers who are already stretching their budget to buy a home often cannot consider new construction.

So, in a market where home shoppers already were suffering from sticker shock, the additional cost of buying a new home may have eliminated that option from some minds.

The base asking price for single-family homes rose 21 percent in Prince William County, for example. Thats a little more than the 18 percent increase among existing homes in that county. New-home prices also rose in other area counties, although not as much as in Prince William.

Generally speaking, price increases were higher for town homes than they were for single-family properties, and prices increased more in Virginia than in Marylandthe same thing that happened last year for new homes and resales.

Chris Sicks

The metro area includes the Maryland counties of Montgomery, Prince Georges Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.