148,000 Approved Lots Waiting To Be Built On In Atlanta
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What scares me about the inventory situation across the country you ask?
It could be that the builders are just taking a break and waiting things out. New home construction has fallen way off as everyone is waiting for the excess inventory to be absorbed.
However is Atlanta is a typical situation, we may be right back into a glut situation once the recovery starts. Builders in Atlanta are sitting on 148,000 lots that are approved for building right now. That is nearly double the inventory of homes for sale in the metro region.
If we see an uptick in Atlanta and homesellers that were holding off selling enter the market at the same time builders start building like crazy again on the 148,000 lots available, we may see the mother of all double dips. The only thing that gives me a little solice is that many construction workers have left the industry and ramping back up will be difficult.
None the less, if it can happen in Atlanta it most likely can happen in other parts of the country.
And that scares the heck out of me.
The home construction slump means more Atlanta subdivisions are sitting incomplete, with few residents and big empty spaces.
Approximately 148,000 vacant home sites dot the 22 counties tracked by Metrostudy, a real estate research company. That’s up 42 percent since 2006, when the market decline began, Metrostudy’s numbers show.
Empty home sites can turn into ugly erosion problems or dumps. They tend to depress home values. Governments have to expend time and money monitoring them so they don’t fester into sore spots. via the ajc.com.
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Comment by Taylor Anderson on 12 January 2009:
Tom, I can’t imagine the builders returning to building like they were in 2004-2006 for a couple of reasons:
1. The number of builders is declining by the day.
2. The banks won’t allow builders to leverage themselves like they did in 2004-2006.
Many of these lots are so undesirable that we’ll likely see redevelopment of some subdivisions that never actually had a home built in them.
And of those 148,000 lots, I wonder how many are bank owned? Keep in mind many of those lots are “exurbs” lots - lots that are so far from even the perimeter that it may be a decade or more before they’re ever built on, even if things return to “normal”.
Comment by Tom Royce on 12 January 2009:
I do not disagree with you but the builders tend to be pack animals. They follow the herd, so once the word goes out that things are looking better, then they will stop worrying about hemorrhaging cash and start worrying again about market share. Watching all the construction that went on in Atlanta even in the past year in the face of the new screams insanity to me.
Comment by Doug Quance on 12 January 2009:
Since the National Association of Home Builders is exerting their pressure on Congress to get bailout funds - don’t be surprised if we don’t see a premature return to home building.
The justification that is presented is one of JOBS - and with those jobs comes VOTES.
Ultimately, the bottom line is that the home builders have to be able to build a product that will sell at a price that provides a profit margin - and therein lies the rub.
Comment by Brad Nix on 12 January 2009:
Assuming your theory is right and builders return en masse, this may only be a problem for the builders (which the inventory is currently their problem anyway as they sit on vacant lots). This only becomes a problem for the consumer if they rush out and buy these properties en masse without ensuring they are priced properly. As Doug says, builders must provide a product that will sell (and at a profit). If they can’t figure out this ‘rub’, then the problem is still their own and the banks’ who funded them. I expect more builder failures and bank failures in 2009 and less mass building efforts. The consumer has proven they will wait it out until price and timing are appropriate. Builders should pay attention to this message.
Comment by Todd Covington on 13 January 2009:
Over development, greed, and poor zoning are what got us into this in the first place. While seeing 148,000 developent would be a travesty, I find it hard to believe there is ANY kind of demany for those lots even when we do come out of this slump.
Taylor has some good points. I agree that builders are going out by the dozens. To be honest, I think this slump is good for the country. If we would have kept the 2005 pace up, this country would be in ruins by 2015. A slow recovery will be best for all involved.
Comment by Robert Unusual Loans on 14 January 2009:
The funny thing is that I am still getting calls from developers trying to make it. Many of them are buying up half way done projects for pennies on the dollar and looking to take out new loans.
Comment by Jennifer K Giraldi on 16 January 2009:
I agree with Brad. Now these empty lots belong to the banks who rolled the dice over the last few years. This will only make 2009 and maybe most of 2010 more of a mess. Todd we are fortunate for this market lapse, or we would be headed for a catastrophy. Great Article, I enjoyed it!