While builders and construction try to keep up with an increase in demand in the real estate market, their biggest problem has been finding good lots to build. According to a recent article by USA Today, construction is still going to reach post-recession highs, but lack of lots are deterring an even sharper increase.
Builders vocalized concerns blame strict regulations, buyers’ desire to live in already crowded cities and and a shortage of financing for lot development.
“It’s likely limiting the number of new homes for sale,” says David Crowe, chief economist of the National Association of Home Builders (NAHB).
Some of the regulations that builders say hinder construction are federal environmental rules. There is a wider definition of wetlands that builders have to avoid. They also say that banks have remained wary of financial land acquisition and development. An abundance of buyers who want to be in cities are also a challenge, because so many lots in cities are already developed.
Earlier this year, 57 percent of builders said that cost and availability of lots were among their biggest problems. In 2013, only 46 percent saw these as significant problems, according to research NAHB.
New home sales are up 18 percent for the year, despite a dip of 11.5% in September, according to the Commerce Department on Monday. Builders’ sales expectations are at a ten year high, and NAHB is expecting 1.1 million housing starts this year, 100,000 more than 2014. While this is still the most since the 2007 real estate crash, the US historical average is 1.5 million. If builders keep it up, this historical average may be in our future.
It is clear that the housing market is a popular place right now. While these statistics show that although construction is increasing, low availability of lots hurt the ability to build. While home values are increasing with the sharpness in demand, your chance to buy a house low is fleeting! Contact a RE/MAX Paradise agent today to buy or sell a property in Miami!