Recent land sales in Sevier County have been sluggish to say the least. No matter the area – Gatlinburg, Pigeon Forge, Wears Valley, Sevierville, or any other area of Sevier County sales have been few and far between. There is an abundance of land on the market, but very few buyers willing to pony up the cash to invest in land. Normally this would create a situation where there is a buyers market and driving down prices. Although prices of land within the MLS have lowered, they are nowhere near in proportion to cabin and residential homes.
My speculation for the reasoning behind this stems from cabins becoming low enough priced now to become a wise investment with several cabins offering positive cash flow opportunities with 20% down. With the residential properties there is a need – people have to live somewhere and buyers are bargain shopping. Also, the price of residential homes lowering has made them more lucrative as long-term rentals. Land, on the other hand, offers no monthly income in most cases, so it can be a substantial drain on an individual’s cash position as reserves.
At this time, a lot of people are holding cash as the stock markets are faced with turmoil – along with the strengthening of the dollar recently. Although, I do feel the value of the dollar will be decreasing in the future as the Federal Reserve has been utilizing quite a bit of “quantitative easing” and increasing the monetary base. Once the banks utilize (either invest or lend) the money they received from the bailout packages, that money gets turned into the money supply as it gets put into circulation. I believe the long term result from this will be inflation – caused by the over compensation and manipulation of the markets in the current asset and commodity deflation. Continue reading this post…