Tampa, FL-February 10th, 2025–Written By Bill Eshenbaugh, ALC, CCIM
As the two-year election cycle finally concludes, we’re left to ponder the changes it will bring to the housing market. Meanwhile, the end of 2024 delivered its own surprises, with a small interest rate cut triggering a significant stock market drop. The Dow Jones fell nearly 1,000 points in December, and homebuilder stocks followed suit as earnings missed expectations. As we enter 2025, questions loom about the sustainability of builder margins amidst rising labor costs and land prices.
The Growing Challenge of Land Inventory
One of the most pressing issues for 2025 is the replacement of land inventory for builders. Over the years, the timeline for obtaining developed homesites has stretched dramatically. Not long ago, raw land could be entitled in 12 to 18 months, developed in 6 to 9 months, and delivered as finished lots within a 24-month cycle. Today, those timelines are much longer. Entitlements alone now often require 24 to 36 months for land use, planning, and zoning approvals. Add to this extended periods for due diligence, permitting, development, and delivery, and builders face a significantly protracted process.
Innovative Approaches from Industry Leaders
Builders are finding new ways to adapt to these challenges. NVR/Ryan has fully embraced a model with no land on their books, instead relying on just-in-time delivery of developed lots. DR Horton has also innovated by leveraging its affiliate company, Forestar Development, not only to supply lots for Horton but also to sell lots to other builders.
Perhaps the most notable move comes from Lennar, which has spun off an estimated $6 billion in land assets to a REIT called Millrose. This strategic shift positions Millrose to deliver developed lots back to Lennar “just in time” for new home construction. By adopting this asset-light model, Lennar frees up a significant amount of cash while maintaining operational flexibility. This approach could enable Lennar to expand its market share by acquiring more builders and seizing future asset opportunities.
Major Land Deals Keep Florida in the Spotlight
Florida continues to attract national attention with high-profile land transactions. In recent years, we’ve observed some truly “whale” deals, including a $100,000,000 transaction in the Ft. Myers area, $165,000,000 in the Four Corners area of Lake County near the US 27/I-4 quadrant, $110,000,000 in Osceola County’s South Lake Toho area for the Bronson Ranch, and $50,000,000 for the 5R Ranch in Lake Wales. These deals follow the earlier $150,000,000 sale of the Green Island Ranch, now being developed as the Waterlin master-planned community.
Florida’s development scene remains red-hot as the state surpasses 23 million residents. The influx of capital highlights the Sunshine State’s enduring appeal for development opportunities.
A New Era for Large Transactions
At Eshenbaugh Land Company, we’ve seen a remarkable shift in the scale of transactions. What once seemed like a major milestone—closing a $10,000,000 deal—has evolved into celebrating deals of $24,000,000, $36,000,000, and $52,000,000. Recently, we’ve been working on a listing for $72,500,000 that is nearing contract.
Outlook for 2025
The search for “right-priced” land will continue in 2025, as developers look to strike a delicate balance: buying land at a price that ensures profitability while landowners feel they’ve maximized their returns. Joint ventures and participation contracts may also become more common, offering landowners a share in the upside once land is entitled and developed.
Additionally, we’ve seen renewed interest from multi-family developers seeking sites for rental unit deliveries by 2027. Industrial land scouts have also returned, exploring opportunities for speculative industrial projects—a trend we haven’t observed since mid-2022 when interest rates doubled.
The landscape may be evolving, but opportunities remain abundant for those who stay ahead of the curve. At Eshenbaugh Land Company, we’re here to guide you through this dynamic market.
For more insights or assistance, contact Bill Eshenbaugh, ALC, CCIM, at Bill@TheDirtDog.com or (813) 287-8787 x101. Let’s navigate 2025 together.
