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EYE ON HOUSING

BY NATALIA SINIAVSKAIA on AUGUST 10, 2021


Lot values for single-family detached homes started in 2020 surged 18%, according to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data. As a result, the median lot price reached a new record high of $53,000. Though an 18% jump in lot values is unprecedented, it is consistent with other significant building material price hikes and undeniable supply challenges that have been constraining the pandemic-fueled housing boom.




Even when adjusted for inflation, lot values are now approaching the record levels of the housing boom of 2005-2006 when half of lots were going for over $43,000, which is equivalent to about $55,000 when converted into inflation-adjjusted 2020 dollars.

New England has been a division with the most expensive lots for decades and held on to the top position in 2020. Half of all single-family detached (SFD) spec homes started in New England in 2020 report lot values in excess of $120,000. New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that typical SFD spec homes started in New England are built on some of the largest and most expensive lots in the nation.

The Pacific division has the smallest lots. However, median lot value reached $103,000 in 2020, the second most expensive value in the nation and a new nominal record for the division. As a result, Pacific division lots stand out for being most expensive in the nation in terms of per acre costs.

Similarly, the neighboring Mountain division recorded a strong rise in lot values and set a new record with half of the lots priced at or above $73,000. This made Mountain division SFD lots third most expensive in the US.

The West South Central Division, that includes Texas, posted the fastest lot value appreciation with the median rising 20% to $60,000. Just 8 years ago, half of the SFD lots were going for $30,000 or less – half of the current median.

At the other end of the lot value distribution are two divisions in the South – East South Central and South Atlantic – where most of the lots are sold for significantly less than the national median. Half of the SFD spec homes started in South Atlantic have lot values of $35,000 or less. The corresponding median in East South Central is $40,000. The East South Central Division simultaneously records the second largest lots in the nation, thus defining some of the most economical lots as well as lowest per acre costs in the US.



For this analysis, median lot values were chosen over averages since averages tend to be heavily influenced by extreme outliers. In addition, the Census Bureau often masks extreme lot values on the public use SOC dataset making it difficult to calculate averages precisely but medians remain unaffected by these procedures.

This analysis is limited to single-family speculatively-built homes by year started and with reported sales prices. For custom homes built on owner’s land with either the owner or a builder acting as the general contractor, the corresponding land values are not reported in the SOC. Consequently, custom homes are excluded from the analysis.



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