York County tract offers opportunity, at a price
How much are builders willing to pay for the chance to erect new homes in a market where buyers are struggling to find homes to buy?
RSR Realtors is hoping to find out.
The Lemoyne-based firm is marketing a 56.6-acre property off Old Trail and Red Mill roads in Newberry Township, York County, for $2.9 million. The land is not far from Interstate 83 and the Newberry Commons shopping center.
The asking price, at more than $51,000 per acre, might seem steep. But zoning on the northern York County land allows for hundreds of townhomes and apartments, as well as single-family homes. The potential could justify the price tag for prospective buyers.
The zoning also allows for commercial buildings on the site, which could further widen its appeal. Land sales can vary widely in price in Central Pennsylvania depending on the size of the property and the type of homes and other uses allowed by local zoning.
A buyer of the Newberry tract could partner with a group of builders to subdivide the land and spread the risk. Bill Rothman, partner and co-founder at RSR, who is listing the property, believes that is the most likely scenario.
Since the last financial crisis, many Central Pennsylvania builders prefer to buy lots from developers as they need them to put up homes. It's common for multiple builders to build in the same subdivision.
Lots in the midstate can sell for a few thousand dollars but can exceed $100,000 each if building approvals and utility connections are in place. Prices also can be high in popular areas for home construction, such as the Cumberland Valley School District, where land is harder to find and home prices are higher than surrounding school districts.
The size of the Newberry Township property creates a long-term opportunity for housing developers to build homes and satisfy current buyer demand, Rothman said. It's in a good location, not far from Harrisburg and York, plus utility access is already in place.
"There is not a lot of land currently zoned on the West Shore with sewer and water," he said.
However, buyers could be concerned that the housing market cools off by the time new homes are ready for sale in this development. A buyer would still need to go through the local land development process, which can take a long time thanks to local, state and federal rules.
That is not to say large regional builders would shy away from a deal. Regional builders like Keystone Custom Homes are always looking for land in the Harrisburg, Lancaster and York areas as existing developments they are building in sell out.
Keystone has been building homes in the Rolling Meadows development in East Manchester Township, about 11 miles south of the Newberry Township site.
Keystone CEO Jeff Rutt said that he would like to do more projects in York County. But location and price are a factor, he said.
"There is definitely more demand for properly zoned parcels," he said in a recent conversation about 2018 housing trends with the Business Journal. "Compared to a year ago or five years ago, the demand is higher."
If developers remain optimistic about midstate housing growth, that could bode well for the Newberry Township site.
Much of the housing development that has occurred over the last decade was teed up for residential development before the recession. And in those long-approved subdivisions, homes are still going up.