May 25, 2018

Lot Shortages Leave Builders Scrambling

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Lot Shortages Leave Builders Scrambling

As demand picks up, builders are facing lot shortages and the challenge of finding new lots to support increased building. 

"No one has developed land in six years," Megan McGrath, MKM Partners home building analyst, told USA Today. Builders are now "running to catch up." 

The shortages of lots are driving up prices. Ninety percent of builders nationwide are reporting a rise in lot prices, according to a survey by John Burns Real Estate Consulting. Two years ago, that percentage stood at 10 percent. 

In some areas, lot prices are soaring higher than in others. For example, lots are about 25 percent higher in parts of North Carolina, 30 percent higher in Phoenix, and 15 percent higher in Denver and Orange County, Calif. 

"We're not worrying about whether we can sell houses anymore,” but builders are concerned about finding lots for future building, says Ure Kretowicz, a San Diego builder with Cornerstone Communities. 

Source: “Housing Market Builds (Some) Momentum,” USA Today (Dec. 19, 2012)