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Builders biggest problem? A shortage of good lots
November 6, 2015

Builders biggest problem? A shortage of good lots

NEW YORK Nov. 4, 2015 Are all the good lots taken? Builders are increasingly vocalizing concern over the limited amount of developed lots available, which is greatly hindering their ability to ramp up construction.

Builders say restrictive regulations, a shortage of financing for lot development, and buyers' growing preference to live in or near cities where there is little unused land are the main reasons behind the lot shortage problem.

"It's likely limiting the number of new homes for sale," says David Crowe, chief economist of the National Association of Home Builders (NAHB).

What's more, tighter supplies raise the costs to build homes. Earlier this year, 57 percent of builders reported the cost and availability of developed lots to be among their most significant problems up from 46 percent who had rated it a big issue in 2013, according to NAHB research.

Builders say that federal environmental rules have become more stringent in recent years, which includes a wider definition of wetlands that builders must avoid or mitigate. In New Orleans, for example, pricier wetland mitigation mandates are severely reducing lot development, says home builder Randy Noel, president of Reve. He says the mandates increase land purchase costs by about $25,000 per lot.

Builders also say banks have gotten more leery about financing land acquisition and development, which is limiting the number of lots for builders.

Another hurdle: There's less buildable land in cities. Builders say part of the reasons is stricter zoning laws, particularly for multifamily complexes.

Resource: FloridaRealtors.org

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