It kind of depends on when the land developers purchased and whether or not they spent a lot of money in the entitlement process. Once their interest in a site exceeds a certain point they’re in a tough spot. They have to worry that a current retail price for a finished lot at $450k doesn’t erode to $250k or less, ’cause if it does there won’t be enough margin between the finished lot value and the unimproved value to economically justify the remainder of the subdivision process.
It costs money to hold a property. I don’t see that holding land that already has entitlements for 5 years until the market rebounds is a plan. A couple of these developers seem to think things are going to firm up this summer, but I think that’s a fools dream. MLS sales of 2,200/month vs. 18,000+ listings is not indicative of an economic environment that’s going to lead to a lot of new demand in the short term.
FYI, I just appraised a proposed suubdivision site in 92009 (Carlsbad) wherein the land developer thinks the retail value of the finished sites will be about $350,000 by the time they get done with it next year; that’s down substantially from the peak. Based on his purchase price of the site and the money it takes to get the entitlements, grade the site and install streets and utilities, he cannot break even if the retail value of the finished sites decline from $350k to $250k.
I wish him well, but inasmuch as I think housing values in that neighborhood for new homes could slide another $100k in the next 24 months (’cause that’s how long it will take to build the homes and sell the majority of them off), I fear he may not realize his goals.