Builders looking for land in all the right places

LOS ANGELES – The housing bust left homebuilders with plenty of red ink on their books as they walked away from swaths of land they no longer needed.

But now homebuilders are on the hunt again, vying for choice parcels even in foreclosure-riddled markets like Las Vegas, Southern California and Orlando, Fla., where prices are cheap.

While not a full-blown land rush, experts point to a surge in land deals since early summer as home sales and prices began to stabilize. For the better lots, the competition is fueling bids well above the asking price.

Major players such as Ryland Group Inc. and Meritage Homes Corp. are among those that jumped into the fray.

Meritage recently signed contracts to buy 2,500 lots spread out over new communities in several states, including California. The builder plans to open nine new communities this year or early next.

This summer, Ryland bought land or signed option contracts to do so in several markets, including Indianapolis, Atlanta, Houston, Las Vegas and Baltimore.

“We are pursuing more deals than at any time in the past several years,” said CEO Larry Nicholson.

The timing of these land deals could be risky.

“The stability we’ve seen has been nice, but it hasn’t been for long, only five or six months,” said Megan McGrath, an analyst with Barclays Capital. “There is certainly some risk that if the market tails off again or we start to see cancellations pick up, some of those deals that previously penciled may not pencil anymore.”