The cost of buying land and building on it threatens to put an end to constructing any new residential projects, according to recent reports.

I wrote about it in a blog entry on the condoDomain website, yesterday.

Basically, from the part where I quote a guy, quoting another guy:

In the 46 biggest metro housing markets, land’s share of property prices increased on average to 51% in 2004 from 32% in 1984, according to the study authored by Michael Palumbo, chief economist in the Fed’s flow of funds section, and Morris Davis, a former Fed economist now at the University of Wisconsin.

The report concludes that land’s increased share of property values “could mean faster home-price appreciation, on average, and possibly larger swings in home prices.â€?

Scott “have I got a home for you” Van Voorhis jumps in with another story about it, in today’s Boston Herald.

[All developers] face the same double crunch - a condo market headed south combined with out-of-control construction costs.

That represents at least a $100 million run-up.

Now, don’t get all excited and think this is a good thing. Not necessarily. I don’t see this as leading to lower prices for housing, if that’s what you’re thinking.

The way I see it, if developers can’t afford to build anymore, one negative effect would be less supply. And, where you have less supply, but steady demand, you’ll have higher prices.

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