NAHB Says Buildable Lot Shortage Problem Worsening
A new industry survey reveals the largest percentage of builders yet say there aren’t enough buildable lots in their area, reports RealtorMag. The latest survey from the National Association of Home Builders said a full 64 percent of respondents put the supply of developed lots in their area at “low to very low.” It’s said to be the highest percentage since the NAHB began tracking such metrics in 1997.
Lesser lot shortage rate during 2005 building boom
The article notes the lot shortage has risen substantially over the last several years. In 2012, 43 percent of builders surveyed put supply at “low to very low.” NAHB’s Eye on Housing blog offers more insights on the report, in one case noting the different interplay of housing starts and lot shortages that characterize the pre- and post-recession industry. “In 2005, when total housing starts were over two million, the share of builders reporting a shortage of lots was ‘only’ 53 percent,” writes NAHB. The latest shortage figure of 64 percent is paired with a much less intense housing start rate of less than 1.2 million per year.
West had highest rate of very low lot supply
The NAHB post reveals that shortage numbers varied somewhat, depending on region, lot type, and the size of a survey respondent’s building enterprise. Regionally, low and very low supply varied marginally between 62 percent in the Midwest and 68 percent in the Northeast. However, a very low supply rate of 39 percent in the West was almost double that of the other regions.
The types of lots in short supply also varied somewhat according to the report. Builders’ loosely defined categories of A, B, and C lots, with A lots being those in the most desirable locations, showed the shortage to be acuter for better lots. A lots were reportedly in short supply for 69 percent of builders, contrasted with rates of 60 percent for B lots and 47 percent for C lots.
Larger builders experiencing more shortages
The report found some surprising data, such as how lot shortages correlated to the size of a builder’s business enterprise. Larger builders, defined as those with more than 100 annual starts, were reportedly more likely to claim low or very low lot supply. Seventy percent of these builders reported a shortage problem, compared to 65 percent of mid-sized builders and 62 percent of builders who build 6 or few homes per year.