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Wednesday, September 04, 2013

Survey: "Shortage of Lots Slows Housing Recovery"

by Calculated Risk on 9/04/2013 11:50:00 AM

I talked with several builders at the end of last year, and in early January I reported: "I've heard some builders might be land constrained in 2013 (not enough finished lots in the pipeline)."

Here are the results of a NAHB survey released today: Shortage of Lots Slows Housing Recovery

A shortage of buildable lots, especially in the most desirable locations, has emerged as one of the key factors holding back a more robust housing recovery, according to the latest survey on the topic conducted by the National Association of Home Builders (NAHB).

“In our August 2013 survey, 59 percent of builders reported that the supply of lots in their markets was low or very low—up from 43 percent September of last year, and the largest low supply percentage we’ve seen since we began conducting these surveys in 1997,” said NAHB Chief Economist David Crowe. “One reason is that many residential developers left the industry, abandoned certain markets or simply stopped buying land and developing lots during the downturn.”
The survey found that lot shortages tended to be especially acute in the most desirable, or “A,” locations. Thirty-four percent of builders said that the supply of A lots was very low, compared to 18 percent for lots in B and 12 percent for lots in C locations. The shortages have also translated into higher prices for builders who are able to obtain developed lots to build on. ...

... “Lot shortages are one of several barriers that have arisen, restraining builders from responding completely to increased demand. Other barriers include a shortage of labor in carpentry and other key building trades, limited availability of loans even for credit worthy home builders and home buyers; and, more recently, an uptick in interest rates.” [said Crowe].
emphasis added
Land developers are working to meet the demand from home builders, but it takes time to obtain all the entitlements - so this could still be an issue in 2014.