The supply of buildable lots is shrinking. That has prompted home builders to return to the abandoned lots left behind during the housing crisis in efforts to revive dwindling inventories of homes for-sale, The Wall Street Journal reports. A surplus of vacant lots and half-built subdivisions still remains across the country, serving as reminders of when the housing boom took an abrupt halt.
Nearly two-thirds of builders reporting low to very low supply of available lots in their markets, according to a survey conducted last year by the National Association of Home Builders. The supply of vacant developed lots has dropped by more than 20 percent across more than 80 major U.S. markets since 2011, according to Metrostudy, a housing research firm. Notably, markets like Nashville, Tenn., and Charlotte, N.C., have seen inventories of vacant lots plunge by more than 40 percent over the past five years.
Shortages have caused median single-family-home lots to surge to record highs of $45,000 last year, according to NAHB data.
In Cobb County, Ga., a subdivision known as Cameron Springs had become a place of dying landscape and plagued with abandoned lots that were left behind in the 2000s. Only a fraction of the homes that were to be built had been. Investment firm Drapac Capital Partners purchased the 101 remaining lots in the neighborhood for $375,000. The firm spent $550,000 to finish half-built lots as well as upgrade the pool and clubhouse. It hoped the renovations would be enough to attract homebuilders back to the neighborhood and to finally finish it.
The firm’s gamble paid off. Drapac received 12 bids in the summer of 2016 for the neighborhood. It eventually sold to D.R. Horton for $6 million.
“I think they’re all panicking,” Sebastian Drapac, chief operating officer of Drapac Capital Partners, told The Wall Street Journal. “They’re trying to get lot positions wherever they can.”
Some developers and investors are changing the name of developments to remove any stigma left behind from the abandoned neighborhoods. Drapac Capital Partners, for example, tweaked the name of the neighborhood from “Brightwood – Established 2007” to “Brightwood on the Lake, Est. 2016.”
Source: “With Lots in Short Supply, Builders Revive Abandoned Projects,” The Wall Street Journal (Jan. 3, 2017) [Log-in required.]