Lot Shortages Climb to All-Time High

Lots are becoming increasingly scarce, especially in the western U.S.

Lots are becoming increasingly scarce, especially in the western U.S.

If finding skilled laborers isn’t your top concern, chances are, finding lots to build on is your No. 1 challenge.

For nearly 20 years, the NAHB/Wells Fargo Housing Market Index has periodically tracked builder sentiment regarding lot availability. In all that time, the percentage of builders reporting shortages has never been as high as it is now: 64% reported a “low” or “very low” lot supply — a 2% increase from the previous record set in May 2015.

Even back in 2005 — when the rate of housing starts was roughly twice that of today’s rate — the share of builders reporting shortages was down around 53%.

Nowhere is the scarcity of land more apparent than in the western U.S., where 39% of builders said lot supply was “very low” (compared to 23% in the South and 18% in both the Midwest and Northeast). But when referring specifically to premium “Class A” lots, builders from coast to coast reported more similar opinions of widespread shortages.

“Here in Northeast Ohio, the supply of ‘A’ lots has really dwindled,” said Bill Sanderson, vice president of Knez Homes, a Cleveland-area custom home building company. “A few spots are available for redevelopment, but that process takes time, and there still isn’t a ton of [land].”

Sanderson, who also serves as president of the Ohio Home Builders Association, says many builders have little choice but to look farther and farther out into the suburbs, where the prices need to be highly competitive to entice enough buyers.

“In those secondary locations, increased entitlement time and more regulations, including environmental and other issues, mean that lots are not coming online as quickly as planned,” Sanderson explained.

For a detailed analysis, go to EyeOnHousing.org.

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  1. John Bitely says:

    the consumer is going to have to pay pay pay to cover the costs to develop new lots and or get upset enough to go after the NIMBY and Tree Huggers. Regulations, entitlements, increased requirements are just pushing costs up at a staggering price.

    • Bill Sanderson says:

      unfortunately, true; in modest markets, there is a disconnect between the cost of land development and what buyers can, and will pay for a new home. It’s probably true in go-go markets, but employment opportunity and sustained housing appreciation (we hope!) change the buyer’s mindset and mask the disconnect with velocity.

  2. Truly Burton says:

    In South Florida – Miami and Fort Lauderdale – lot shortage is the BIGGEST housing affordability COST driver here: dwindling supply makes whatever left, even that much more expensive. High-Rise Council is my biggest membership group now.

  3. Look at home site alternatives for scrapes of existing homes, office parks, older shopping centers, warehouses, manufacturing plants, vacant institutional buildings, and recreational facilities. These facilities have utilities to them and are usually infill properties with immediate services aplenty!
    ONwards and UPwards!

    • Bill Sanderson says:

      Great points, and we do this in our business but there are challenges with cost and scale that still make this difficult and challenge to affordability. No question, for various reasons, land is in short supply compared to current and projected demand and we will all need to work together to ensure there are opportunities for home ownership and housing choice in all price points and all product types- NAHB is built on the American Dream of new home ownership and to paraphrase Mark Twain- rumors of home ownership’s death have been greatly exaggerated!

  4. Adam Henning says:

    As a developer I can tell you that the biggest problem we face in Louisiana is the issue of “Wetlands” as defined by the Army Corps of Engineers and the EPA. We are not trying to build subdivisions in swamps or marshes, but rather retired farmlands and upland woods. Yet because we live in a relatively flat area the ACOE forces developers to pay thousands of dollars per acre to build here. The true cost is borne by both homebuyers and the unfortunate families who have had land passed down through the generations only to learn that the government has taken this land out of commerce with the misleading label of “wetlands” and given them no compensation in return.

  5. William E. Myers says:

    In Piedmont North Carolina there are building lots aplenty. In Falcon Crest, a community near Salisbury, NC, there are plenty of 1 plus acre lots for sale. Schools are close, shopping is only minutes away. Quality lots are plentiful here ! Of c “on the cheap”.ourse, I don’t know of any lots that are for free, or even available “on the cheap”.

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