Bacon's Rebellion

Democracy Thrives in Sunlight

Told You So

—

by

James A. Bacon
in

The housing sector is picking up but recovery is being thwarted by a shortage of lots in desirable locations, reports the Wall Street Journal. No commentary is needed. The article says it all:

Today many [the available] lots remain empty. They often are in distant suburbs of cities and still owned by banks, builders or developers. The problem is that they are in places where few home buyers want to live. …

The Atlanta metropolitan area has about 120,000 vacant lots ready for building, some as far as 70 miles from the city’s downtown, according to the real-estate consultancy Metrostudy Inc.

“A lot of the demand during the boom was speculative demand, not real user demand, and speculative demand was blind to location,” said Brad Hunter, Metrostudy’s chief economis. “Real demand is now concentrated in those core counties.” …

“Of all the lots out there, probably 95% of them are unbuildable,” said Patrick Malloy, and Atlanta-area homebuilder. Mr. Malloy said home prices are recovering — but only in the city and nearby suburbs, starting in the established affluent neighborhood of Buckhead and going north.

Much farther outside Atlanta, the sales prices for homes are less than what the sticks and bricks cost,” Mr. Malloy said.

— JAB

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  1. Hydra Avatar
    Hydra

    If 95% of the available lots are unbuildable, then they are not building lots, are they?

    The shortage of lots is not caused by speculation, it is caused by the fact it is nect to impossible to get approval.

    I spoke to a business owner in PW who operates a storage facility for RV’s, a business he has had for many years. He was in the process of expanding his storage lot. He said it took five years and over $100,000 in paperwork to get approval to increase his storage lot size. His biggest problem was the objection of neighbors: neighbors who had moved in AFTER his storage lot was already in businsess for 30 years.

  2. Neil Haner Avatar
    Neil Haner

    Hydra

    I think there are a few distinctions to be drawn here. A lot of what probably held up your business owner was permitting… I imagine the increase in rainfall runoff for what is essentially a parking lot construction project caught the eye of the county engineers and required a lot of plans, fees, and paperwork.

    In this instance, though, I think the WSJ article is discussion ready-to-build lots, lots in established neighborhoods where all but the final building permits would need to be issued. It isn’t that folks just can’t buy the lots, it’s that there is such an oversupply of available land that there is more than enough within a reasonable distance of a metro center.

    Couple that with the new reality of gas prices, folks just aren’t willing to drive an hour to work when they can now find affordable housing only 20 minutes away.

    1. James A. Bacon Avatar
      James A. Bacon

      Thank you, Neil. You have it exactly. The article is talking about ready-to-build lots.

  3. accurate Avatar
    accurate

    Well, Mr. Bacon is again championing the ‘we gotta have folks live in urban areas’ cry. Again, some folks LOVE living downtown, but some folks DON’T. Again, I’d much rather have my OWN place (not a condo, not an apartment, not a townhouse) with my own plot of land (the bigger the better), than have to live next to, on top of, or underneath my neighbors. At least in Houston (and I’ve observed elsewhere), the closer you get to the core (minus areas where the buildings have been abandon), the more expensive it gets. I get it that some folks live living in 400, 600, 800 square feet and think that paying $200K for it because they live ‘downtown’ is a bargain; it’s not in my world. I DO live 20 miles from my work, I do live in a SFR that has 2500 square feet and I did pay less than $120K for it.

    Some folks LOVE walking downtown, with all the shops and art places and little cafes. My neighborhood has plenty of places to walk if we want to walk. Just up the highway a hop, skip and a jump we have more shops and art places, cafes, coffee shops and restaurants than you can shake a stick at. But at the end of the day, I come home to MY place, one where I don’t have to listen to my neighbors fight, or make love, or yell or whatever.

    I’m sure Mr Bacon is/will love living in an urban setting, I detest urban settings. It sure wouldn’t have worked for raising kids (and most young families feel the same way) and it was uncomfortable as an old fart (when I moved to Houston it took 2 1/2 years to get our house, that whole time in an apartment and it just reminded us of how horrible it is to live in a crowded multi-family situation).

    1. Neil Haner Avatar
      Neil Haner

      Accurate – I doubt anyone is trying to force folks to live within a certain radius of where the live and/or work. At the end of the day, folks do have that freedom of choice, and will continue to. I read this article and it sounds like most folks are already choosing to live within 20-30 miles of the metro core, as the prices there have dropped so substantially that they don’t have to go an hour away to find affordable housing anymore.

      This is just a really unfortunate side effect of the speculative real estate market that dominated the mid ’00’s, that we now have countless acres of subdivisions, with most of the infrastructure (roads, sewer, electric) already built out, and no demand to put houses on them in the near future.

      The practical lesson to be learned here is that localities shouldn’t approve these kids of speculative build-outs, not on the scale we saw 5 years ago. We’re left with ridiculous empty plots of land that can’t even be farmed anymore, or put to any commercial use.

      The question is then raised: what do we do with them?

  4. larryg Avatar
    larryg

    I think living WHERE you want involves highway infrastructure that someone has to pay for and it ought to be the folks that are using it to get to WHERE they can find economically-priced options for homes.

    I have a theory that HOT lanes are going to level the playing field on this.

    Any kind of direct tolling of infrastructure is going to make people think twice about buying far away from where they work. Many might still do it but but they’ll have to figure out if they want to pay for solo trips or change their driving behavior to carpool, rides vans or shift working hours.

    All of these things are the direct responsibility of those who make these choices not others.

  5. Darrell Avatar
    Darrell

    Atlanta? I was driving in the city between downtown and the Zoo. Blocks of tent city on the sidewalks, with some of the scariest looking people I have ever seen. And that’s saying a lot because I’ve lived in some pretty scary places. These realtors are just trying to rebuild their dream of riches.

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