New Home Replacement Lots Are Getting Harder To Find According To Zonda
The new home lot market is extremely competitive as builders are willing to pay top-dollar.
COSTA MESA, Calif., Feb. 17, 2021 /PRNewswire-PRWeb/ -- Today, the experts at Zonda, the housing industry's foremost advisors, released the New Home Lot Supply Index (LSI) for 4Q2020. The New Home LSI, backed by data from Zonda, shows lot supply tightened year-over-year across the United States. The index is a residential real estate indicator based on the number of single-family vacant developed lots and the rate those lots are absorbed.
The New Home LSI came in at 55.1 for 4Q20, representing a 20.4% decrease from 4Q19. On a quarter-over-quarter basis, supply declined by 11.6%. The national fourth quarter data represents a significantly undersupplied market and continues to highlight the lack of near-term lot supply in the residential market.
"The housing market is firing on all cylinders, from engaged shoppers to nearly 15-year highs for home sales and a hot land market," said Ali Wolf, chief economist at Zonda. "Lot inventory tells us about supply and demand dynamics and today, there is a sellers' market. Land is one of the hottest commodities around."
Lot supply trended below 4Q19 levels in nearly every top market across the country. Atlanta, a market that was considered slightly undersupplied last quarter dropped down to significantly undersupplied to end the year. Every other top market is categorized as significantly undersupplied as well.
The markets that tightened the most on a year-over-year basis in 4Q20 were Baltimore, San Diego, and Nashville. Baltimore's tight inventory highlights an idiosyncratic story of some growth moratoriums and desirable areas getting close to buildout. San Diego is a market with geographic land barriers. Builders would build far more homes if the land allowed it. Nashville was one of the clear winners of the COVID-19 pandemic as people re-evaluated where they lived. With no state income tax and a great quality of life, many have moved to Nashville over the past year, driving up housing demand and home prices. Topography issues are a main reason why more lots aren't available in the metro.
"The housing market is incredibly hot today in virtually every metro across the country. Builders are eagerly out shopping for land to better match supply with demand."
Methodology
The Zonda New Home Lot Supply Index (LSI) is built on proprietary, industry-leading data that covers the production new home market across the United States. The index values represent single-family vacant developed lot supply, lots that are ready to be built on, relative to equilibrium. Released quarterly, the New Home LSI provides an unrivaled look into the lot markets across the country, offering a current quarter snapshot as well as insight into the directional trend.
The New Home LSI is calculated based on each markets' specific equilibrium as determined by our team of local experts and historical activity. The comparative current value is adjusted to capture the "true" months of supply figure by applying a greater weight to vacant developed lots in subdivisions with more starts activity. Each index value is associated with a phrase highlighting the current lot supply dynamics. A value of 100, represents perfect equilibrium, while a value of 125 and above equals "Significantly Oversupplied", 115-125 - "Slightly Oversupplied", 85-115 - "Appropriately Supply", 75-85 – "Slightly Undersupplied", and 75 and below – "Significantly Undersupplied."
The foundation of the index is a quarterly release conducted by Zonda. It is necessary to monitor residential lot supply to understand how new home markets may be impacted by the incoming pipeline.
About Zonda
Zonda represents the housing industry's leading provider of rich data and the industry's top advisors for residential real estate development and new home construction. With products and services geared for homebuilders, multifamily developers, lenders, and financial institutions, we provide innovative solutions to maximize opportunities in today's real estate development landscape. To learn more, visit zondahome.com.
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Media Contact
Jessica Brewer, Zonda, 9162243047, [email protected]
SOURCE Zonda
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