NAHB Says Lot Values Surged to Record Highs
WASHINGTON – Builders say record-high prices for empty lots are a major reason new-home construction has become so expensive.
The median single-family lot price outpaced inflation to reach a record high in 2018, according to an analysis from the National Association of Home Builders: Half of lots sold at or above $49,500.
“Given that the nation’s lots are getting smaller and home production is still significantly below the historically normal levels, it might seem surprising that lot values keep going up,” NAHB reports on its blog, Eye on Housing. “However, the rising lot values are consistent with persistent record lot shortages that NAHB reported recently. They are also consistent with significant and rising regulatory costs that ultimately increase development costs and boost lot values.”
Single-family spec homes started on New England lots are the priciest in the nation. Half of all sold single-family homes started in the region last year were more than $140,000 – a record high for the area.
“New England is known for strict local zoning regulations that often require very low densities,” NAHB reports. “Therefore, it is not surprising that the typical single-family spec homes started in New England are built on some of the largest and most expensive lots in the nation.”
The Pacific division – California, Oregon and Washington – have the smallest lots in the nation, but median lot values reached $87,000 last year, the second priciest in the nation.
The West South Central region – Texas, Oklahoma, Louisiana and Arkansas – saw lot values rise the most in 2018. The median lot values in the region have more than doubled since the housing boom when lots were priced under $30,000. While usually the most affordable in the U.S., prices caught up with the national median in 2015. Half of the lots in the region sell for more than $62,000 – 25% above the national median lot value for single-family spec homes.
In the South Atlantic region – a large area that runs from Maryland to Florida – median lot prices were a relatively affordable $40,000 in 2018.
Overall, however, NAHB says that the lot price surge is a new nominal national record, but lot values, when adjusted for inflation, have not reached the same levels yet as they did during the housing boom years.
Source: “Lot Values Hit Record Highs,” National Association of Home Builders’ Eye on Housing blog (Nov. 11, 2019)
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