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The Shortage of Available Lots Is Here To Stay

The dwindling supply of available lots should be a matter of concern for every homebuilder, especially when considering two critical factors: 1) the process of developing a lot typically takes an average of 24 months; 2) lenders are increasingly cautious about extending funds to the development sector due to lingering fears of a repeat of the 2008 financial crisis.

The Shortage of Developed Lots Explained

The shortage of developed lots is primarily driven by a combination of factors. Zoning laws and land use regulations in many local jurisdictions have become more restrictive over the years, making it difficult for developers to obtain permits for new subdivisions. Heightened environmental concerns, infrastructure requirements, and limitations on density have limited the amount of land available for residential development. Coupled with the "Not In My Backyard" (NIMBY) mentality among some communities, the approval of new housing developments has been hindered. Factor in the cost of developing infrastructure for new housing projects, including roads, utilities, and public services, and it’s easy to understand why we’re facing a shortage of developed lots.

Consequences of the Developed Lot Shortage

The shortage of developed lots has far-reaching consequences for the housing market and the broader economy. As the demand for homes outpaces the supply of available lots, home prices have surged. This pricing pressure has made homeownership increasingly unattainable for many Americans, particularly first-time buyers. Low- and middle-income households are struggling to find housing within their budgets. Considering that the housing market is a key driver of the U.S. economy, the developed lot shortage has contributed to a slowdown in the construction sector, which can lead to temporary job losses and reduced economic growth in related industries.

Addressing the Developed Lot Shortage

The solution to the developed lot shortage is multi-faceted. Governments need to revise zoning and land use regulations to relax density restrictions, encourage mixed-use developments, and incentivize affordable housing units. This will streamline the approval process for new housing developments. Collaboration between government agencies and private developers will also helpaddress the infrastructure cost barrier. Public investment in critical infrastructure can make it more economically viable for developers to create new lots. Alternative housing models can also work to ease the housing shortage.


Production builders require an 18-month supply of lots through options or controlled takedown. Five-year lot plans are preferable. Considering the significant effects the lack of developed lots has on local economies, it should be a concern for every resident and government official.

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