News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
The “A” Lot Shortage and the Buying Frenzy Intensify: What’s a Builder to Do?
Brad Hunter / Metrostudy / March 18, 2013
As the lot feeding frenzy builds, more and more builders are scratching their heads at the prices they are being asked to pay for homesites. Builders have a strong motivation to increase their community counts, but they are having to pay near-peak prices for lots in order to do so. Decisions made by builders in the next six to twelve months will be absolutely critical to their ongoing financial health.
Last fall, we conducted a special nationwide study of all the public homebuilders’ lot positions, and we found that most of the public homebuilders had seen an erosion of their Vacant Developed Lot count (VDL). In that special study, we looked at the VDL’s that were associated with the builders, whether owned or optioned, for all of their communities within our footprint. We found that most builders saw a reduction in their lot inventory, but many of them started going longer on lots at that time.
We discovered the following changes in lot count, year over year:
Meritage’s lot inventory was down 22.4% from mid-2011 through mid 2012.
Lennar was down 18.2%…