Lots of Catch Up

The Top 10 States for Lot Production

1 MIN READ

We have been talking for years about the lot shortages that builders are facing. Now, it’s time to talk about how many lots are being developed. Builders and developers are now playing “catch-up,” with builders buying land and lots and developers/investors paving roads and putting in infrastructure to serve the builders’ needs at a frenetic pace.

The pace of lot delivery (completion, ready for the builder) has gone up 140% in the past two years, much faster than the pace of housing production has rise (+84%). Nationwide, lot development STILL lags the pace of home production, and is still trying to catch up.

In some markets, the lot production machine is in full gear, and has caught up with demand. This is a good sign for builders, and a vital turning point for home production in 2015 and beyond.

The Top Ten States for Second-Quarter Lot Production

State 2Q14 Starts 2Q14 Lot Deliveries
1. Texas 19,714 18,931
2. Florida 12,416 10,974
3. California 10,050 10,219
4. North Carolina 4,866 3,168
4. Georgia 4,489 1,270
6. Colorado 3,985 3,276
7. Arizona 3,519 4,596
8. Maryland 2,436 2,122
9. Utah 2,328 2,498
10. Virginia 2,198 1,850

Note that California lot production has caught up with its new home production. Same with Arizona and Utah. Florida development is woefully far behind demand for lots, hence the skyrocketing cost of finished lots there.

Metrostudy defines “future lots” as those that are in the pipeline (some are pre-entitlement), and Florida has the deepest pipeline. Below are the top 10 states for future development lots.

Top 10 States for Future Development Lots 2Q14

State Future Inventory
1. Florida 1,597,055
2. California 1,378,299
3. Arizona 1,213,476
4. Texas 651,413
5. Colorado 406,613
6. Georgia 316,956
7. Illinois 281,054
8. Nevada 227,121
9. Maryland 194,829
10. Virginia 183,613

Learn more about markets featured in this article: Phoenix, AZ.

About the Author

Brad Hunter

Brad Hunter is Metrostudy’s chief economist and director of strategic consulting. Hunter directs Metrostudy’s consulting work nationwide and spearheads Metrostudy’s current work with the national development community as well as investment firms. Metrostudy is the nation’s premier advisor on local and regional housing market conditions. The firm’s unmatched database provides the quantitative foundation for its consulting and advisory work, and backs up Hunter’s forecasts of the housing market, which have been consistently more accurate than those of most other economists. Hunter also supervises the bulk of the company’s multi-market studies, and has orchestrated hundreds of site-specific or area-specific housing market studies over the past twenty-five years of his career. He oversees the company’s work for investment funds who are investing a combined $1 billion in residential property nationwide. With 25 years’ experience in real estate analysis and local market economics, Hunter is a full member of the Urban Land Institute, has authored numerous articles and chapters in ULI-published books, including Market Profiles, chairs various committees, and is an active member of the national Community Development Council. He is regularly cited in local and national journals including recent interviews by the Wall Street Journal, Business Week, and on CNBC and Bloomberg News. His analysis is also featured in the book Foreclosure Nation. Hunter graduated in 1985 from the Wharton School of the University of Pennsylvania with a degree in economics and has been a guest lecturer at Harvard University. Hunter is a speaker at conferences on real estate opportunities and investing, as well as at real estate think tanks, and is frequently called upon by key regulatory agencies of the U.S. government for his insights on the housing sector.

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