Sales of new homes rose 25 percent nationally in October over the same month in 2012. The majority of the nation’s home builders recently claimed confidence in the market for the sixth month in a row.
The fledgling recovery in the housing industry seems to be gathering strength. But could something put a crimp in the progress?
According to the National Association of Home Builders, yes – a shortage of lots.
Recently, the trade group warned that nearly 60 percent of the nation’s builders reported their lot supply was “low” or “very low” – up 17 percent from the same time a year ago.
The figure was “the largest low-supply percentage we’ve seen since we began conducting these surveys in 1997,” says David Crowe, the association’s chief economist.
Locals are divided on whether trouble’s ahead for Fort Wayne.
Long-time Fort Wayne developer Joe Zehr, president of NPT Development and founder of the North Eastern Group, says he doesn’t see a shortage looming here.
While many developers pulled back in acquiring land during the housing downturn, he says, his company held previously acquired property in reserve and continued to buy.
“We have available lots north, northeast, northwest and southwest, pretty much everywhere,” he says, adding that lots are open in existing and expanding developments and new ones.
“You shouldn’t have any trouble finding a place to build,” Zehr says.
But that’s not the whole picture, says Steve Smith, in sales and marketing for Delagrange Homes in Fort Wayne.
“I personally am getting concerned about lot availability,” he says. “The developers who have been developing are not developing as much, and especially (not) in the more moderate price points – that’s where the shortage is going to happen and is already happening.”
By “moderate,” Smith says he means lots that sell for between $30,000 and $40,000.
“There used to be subdivisions all over the place in that price range. That’s no longer the case,” he says, adding that availability is most pinched in southwest Fort Wayne.
Kim Davis, director of construction sales for Ideal Suburban Homes in Decatur, says people seeking to build may have to look farther afield for suitable or more affordable property.
“We have some open, but we are getting short on lots,” she says. “We are in the process of developing areas or expanding (existing developments).”
Ideal’s buildable communities, she says, are all outside Fort Wayne.
One new area is Bell Farm Estates on the northeast side of Decatur, which will have 150 single-family homes and 88 villas built as duplexes. The other, about the same size and composition, is Mitchell’s Reserve in Warsaw.
Davis says the latter was started because two Ideal communities in the Warsaw area – Tiger’s Retreat and the Paths of Deerfield – are running out of lots.
Ideal is working to expand the Villas of Roanoke and Claybrooke in Roanoke, Crown Hill Farm in Huntington and Lincoln Pointe in Columbia City, which was down to a single empty lot, Davis says.
While some projects will have dirt moving in the spring, some may not be ready until much later in 2014, Davis says.
How many lots are available regionally and their prices are difficult to determine, because no single agency keeps track.
However, in the fall, the Fort Wayne Home Builders Association published a list of more than 60 Fort Wayne area subdivisions with lot availability, with entry points (lot plus house) from $110,000 to $650,000.
Bob Blythe, a Realtor with NEG Realty in Fort Wayne who represents Westport Homes, says the number of lots in all price ranges in Allen County should be sufficient.
“Developers want to sell lots, and what developers try to do is get developments planned to meet everyone’s needs – entry level, mid-range and, next to them, higher-end, so they can accommodate whatever your price range is,” he says.
But, he adds, prospective buyers need to know that subdivisions often require a minimum size and price range of homes. That means not all homes can be built in all subdivisions.
Kim Ward, president of North Eastern Group Realty in Fort Wayne, says people who are considering building should realize that more recently acquired lots will likely have higher prices because of rising acquisition and infrastructure costs.
“The new lots that we are seeing on the ground – I’m having this conversation with clients all the time – they will cost more than things we have on the ground prior to 2006, 2005. The new lots – there’s a bit of a sticker shock for people,” she says.
Nonetheless, lots are selling – even upper-end ones, those in the business say.
Ward, who represents the upper-end Hawthorne Park Estates near the new Parkview Health campus, says that addition’s lots, described as “estate sized” in sales literature, have been selling well.
The addition lies just north of the existing Hawthorne Park on Crawford Road in north Fort Wayne. The entry point for a lot and home is listed at $500,000-plus on the local home builders’ list. Ward says the last section of 72 lots was just finished.
“The plat isn’t even recorded, and the last section is at least a third sold,” she says.
Blythe, who has been selling new-home construction for 17 years, says he sees a lot of pent-up lot demand.
“The phones are ringing, and people who had been sitting on the fence waiting are now jumping in and talking about building,” he says. “For this time of year, it’s really active. It’s been a long time since we had this amount of activity – maybe 2005 or 2006. It’s been as good or better than at any time since.”
With about a dozen subdivisions with lots, Ward expects 2014 to be busy, especially as conservative developers and builders are tending to work with smaller parcels of 20 to 30 lots at a time.
Two of the newest subdivisions for North Eastern Group are 20 acres on Hathaway Road in Fort Wayne that will extend Talon’s Reach and 80 acres on Old Auburn Road north of Union Chapel Road that will be called Milagro. Entry points are $200,000 and $300,000, respectively.
“I would say we don’t expect it to go gangbusters in 2014,” she says of lot sales. “I do think it’s going to be busy.”