Big Reason for Housing Affordability Crunch
DAILY REAL ESTATE NEWS | FRIDAY, OCTOBER 14, 2016
Affordability issues have probably been making more of your clients nervous, and here's one culprit you can point to: lot shortages. The lack of lots suitable for new construction hit a new high in 36 major markets in August, according to a new report from housing research firm Metrostudy. Meanwhile, demand for new lots in those markets zoomed to all-time highs.
For nearly two years, builders have said they've faced a scarcity of lots in prime locations at a reasonable price. It's preventing them from being able to take on more affordable projects in major markets, they say. The shortage also has caused home values to escalate, says Robert Dietz, chief economist at the National Association of Home Builders.
Major markets like Dallas-Fort Worth, Seattle, and Nashville are facing "severe" lot shortages, the report notes. Shortages in Seattle are "forcing builders into areas they never thought they would go," says Todd Britsch, Seattle regional director at Metrostudy. Inventories are at all-time lows in Dallas-Fort Worth, which is pushing prices up so high that it's "virtually impossible to deliver lots [less than] $200,000," says Paige Shipp, Metrostudy's Dallas regional director.
Builders say stringent municipal regulations against high-density building are at the root of the problem. Also, builders say they're struggling to secure capital to finance land development projects.
Source: “Lot Shortages Continue,” BUILDER (Oct. 10, 2016)