Key facts
- Toll Brothers is focusing on prime locations and relationships with land sellers.
- The company's average sales price nationally is approximately $1 million.
- Land sellers are showing more flexibility on deal terms like timing and delivery schedules, but not on price.
- Toll Brothers is selectively acquiring land from builders struggling with project-level returns.
Toll Brothers is adapting its land acquisition strategy to current market conditions by tightening underwriting standards and focusing on prime locations. The homebuilder is prioritizing deals that can remain profitable even if the market further softens, considering recent sales performance and internal rate of return (IRR) thresholds. This approach contrasts with builders who acquired land in a hotter market and are now facing liabilities. Land sellers are reportedly more flexible on deal terms like timing and delivery schedules, though prices have remained firm. Toll Brothers is also finding opportunities to acquire land from other builders whose project returns have deteriorated.